After the conflict between Russia and Ukraine, the wheat market experienced a surge. In 2022, the global wheat market remained bullish. During this period, India exported a record amount of wheat to foreign countries, resulting in a shortage of wheat in India's buffer stocks. There is an expectation that wheat prices will reach record levels in the near future. According to trade experts, the global market has witnessed unprecedented growth in wheat prices in the past three months. Let's delve into what the future holds for wheat prices.
Despite the government's efforts to stimulate wheat procurement, farmers have displayed no interest whatsoever in buying wheat at MSP. Government wheat procurement this year, coupled with bonuses, is set at Rs. 2400 per quintal by the governments of Madhya Pradesh and Rajasthan, whereas the support price for wheat stands at Rs. 2275 per quintal. Farmers have encountered diminished wheat yields this year due to adverse weather conditions, prompting them to sell wheat briskly with the support price and bonus of Rs. 2400 per quintal. In the meantime, wheat priced at Rs. 2400 is currently commanding Rs. 2500 in the open market.
A significant 9% rise in wheat prices has been observed in the global market over the course of a month. Experts attribute this surge to export difficulties faced by Russia and America. Incidents affecting shipments from Ukraine, such as attacks on Black Sea ports, have also been reported. According to the USDA report, global wheat stocks have dwindled this year, reaching their lowest point in nine years.
Wheat Prices in 2024: With the reduction in wheat stocks in India's reserves, it's been estimated that wheat production in foreign countries hasn't met expectations this year. Conflict-related disruptions to wheat cultivation in Russia and Ukraine have spurred increased demand in local markets, causing a surge in global wheat prices. It's projected that wheat prices in the country could soar up to Rs. 3500 per quintal.
Hope for Reduction in Central Stocks: Wheat procurement in the country has witnessed a decline, with purchases dropping by as much as 37%. As of April 1st, the wheat stock in central government reserves has hit its lowest level in the past 16 years. A target of procuring 372.9 lakh tons of wheat has been set for the marketing year beginning April 1st.
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