Wheat Prices Shoot Up, Expert Predicts ‘Crisis’ in 4-5 Months

As Wholesale Price Inflation (WPI) soars to 14.6%, common people are in for another attack on their finances as the prices of wheat, a major cereal consumed in the country, are up by 5% to 7% on reports of lower yields of the crop being harvested across the country.

According to The Economic Times, Punjab, Haryana and Uttar Pradesh have reported a 10-35% fall in yield due to the early onset of the summer season and excess rainfall in December and January shrinking grain size. The fertiliser crisis has also contributed to this fall.

“Supply of wheat has reduced as everyone is holding the crop expecting the prices to increase further due to bullish market sentiments. Wheat prices in the open market are ruling 5% to 7% above the minimum support price (MSP) levels and are expected to rise another 5% to 7% in about a month,” Anjani Aggarwal, president, Roller Flour Millers Association told the ET.

Punjab has set up a committee to study the actual loss of yield in wheat, even as there is growing demand to compensate the farmers for their losses. Gurvinder Singh, director (agriculture), Punjab said, “According to the preliminary reports received till now, the average yield loss is more than 8%. The average productivity that we are getting this year is 44.7 quintals per hectare as compared to the average productivity of 48.68 quintals per hectare in the previous year.”

The price rise comes at a time when India is attempting to fill the gap as a global wheat supplier in the wake of the Russia-Ukraine war.

Traders said wheat prices that dipped with the arrival of the new crop 10 days ago, have started moving upwards. “Following the news about Egypt buying 1 million tonnes of Indian wheat and the reports about loss of yield, the market jumped up again on Monday. From Rs 2300/quintal free on board (FOB)-price inclusive of all expenses incurred till the port-at Kandla, wheat prices have now increased to Rs 2450/tonne in the past 10 days,” Ajay Goel, chairman, Shivaji Roller Flour Mills told the ET.

Seasoned agricultural journalist Sayantan Bera took to Twitter and predicted that the country would be in the throes of a wheat crisis in the coming months. He said, “After speaking to farmers in several states, experts and industry insiders, my sense is that a wheat crisis is imminent for India in the next 4-5 months, or earlier.”

“The agri ministry is estimating a crop size of record 111 million tonnes, but actual production is likely to be at least 10% lower due to the March heatwave and also shift in acreage from wheat to mustard,” Bera continued, adding that “India is aspiring to feed the world but might end up with egg on its face when domestic consumer prices rise sharply in near future.”

A consequence of the simultaneous price rise and export of wheat could be that “India may even be forced to impose stock limits and an export ban as and when atta prices cross 40 rs a kg, marking a major pain point for consumers in addition to already high cooking oil prices,” Bera believes.

He also pointed out how China, a leading wheat producer, was on a “stocking spree since last year,” marking a distinction from how India was dealing with the high global price of the commodity.