Wheat Market February Week 4: Declining Price Trends and Outlook

Wheat markets from the north to the south line are currently following stable to declining trends due the government interventions and anticipations of good supply. Wheat millers have abundant stocks impacting agriculture market dynamics. Continue reading to understand in detail the factors influencing the wheat market movement and the outlook for the industry.

Wheat Market Trends

These are the wheat price movements across major markets:

• Delhi: In the Delhi wheat market, prices opened at Rs. 2590/quintal on 19 February 2024 and closed at Rs. 2580/quintal on 24 February 2024. The wheat price difference showed a decline of Rs.10/quintal. Currently, the wheat prices are quoted at around Rs. 2555/quintal.

• Indore: In the Indore wheat market, the prices declined by Rs. 15/quintal opening at Rs. 2515/quintal on 19 February 2024 and closing at Rs. 2500/quintal. Current wheat prices in the Indore market are at Rs. 2475/quintal.

• Bangalore: Wheat prices in Banglore held steady last week with prices currently at Rs. 2910/quintal.

• Varanasi: In the Varanasi wheat market, prices declined by Rs. 100/quintal, opening at Rs. 2710/quintal on 19 February 2024 and closing at Rs.2610/quintal on 24 February 2024. Wheat prices in Varanasi are currently at Rs. 2610/quintal.

Wheat Procurement Initiatives

To refill the wheat stocks within the central reserve which is already below 7 years, the government is urging states to initiate the procurement process at the earliest. The government is anticipated to increase the number of wheat procurement centers to reduce the farmer’s travel distances. Furthermore, the decision has been made to ensure that payments to farmers are completed within 48 hours of purchasing their produce.

The central government is anticipated to hold a meeting with major wheat-producing states to discuss wheat procurement strategies.

Uttar Pradesh is likely to start wheat procurement by 1 March 2024 while other states are expected to start it by mid-March 2024. As compared to other years, wheat procurement this year is ahead of normal procurement schedules.

OMSS Wheat e-auction Update

During the latest wheat e-auction held on 21 February 2024 around 4.63 LT wheat was sold. The average price of wheat at the e-auction was Rs. 2,237.15/quintal out of the offered 5 LT. The next wheat auction is scheduled on 28 February 2024.

The government is likely to discontinue the wheat open market sale (OMSS) before mid-March 2024 before the start of new crop procurement. However, sales of wheat flour (atta) under the Bharat brand will continue with a target of selling around 1.5 million tons over the next 4-5 months.

Wheat Market Outlook

The wheat market is undergoing shifts influenced by factors such as new arrivals, and government interventions. The government remains optimistic about the current rabi wheat yield, projecting a record output of 114 million tons. The market may witness an increase in wheat supply in the coming weeks.

OFB’s Insight on Wheat Market

The wheat market is anticipated to maintain a stable to declining trend ahead. While the government is likely to discontinue the wheat sales under OMSS, the continuation of Bharat atta sales serves as a crucial factor in maintaining market activity. The government’s initiatives to start wheat procurement at the earliest may ease the concerns of 7-year low stocks within the central pool. With the increased arrivals and good harvest, the wheat market prices are likely to ease further.