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Wheat prices in India rise on export demand, surge in global market

In the global market, wheat has gained a little over three percent since the beginning of 2021 to 661 US cents a bushel. Lower crops from Russia and Argentina will boost demand for Indian wheat.

January 14, 2021 / 03:42 PM IST

Wheat prices in India have gained more than Rs 100 a quintal since the beginning of the year on demand from the neighbouring countries and a surge in the global market.

“Since the last 10-15 days, wheat prices in the domestic markets have gone up by as much as Rs 170 a quintal. We hear there is demand for exports,” said Bengaluru-based Krishna Flour Mills Pvt Ltd Managing Director M K Dattaraj.

“The world wheat market is on fire since Russia has imposed export tax for consignments going out of Black Sea ports. The crop is also lower there and in Europe. In addition, China has also been buying,” said Roller Flour Mills Association of India (RFMAI) Vice-President Pramod Kumar.

According to the agriculture ministry, wheat prices in Uttar Pradesh have increased from around Rs 1,575 a quintal to Rs 1,700. In Madhya Pradesh, wheat has gone up from around Rs 1,500 to Rs 1,710 in Ujjain district, while in Indore, the price has climbed from Rs 1,700 to Rs 1,850 a quintal.

The Centre had fixed the minimum support price of Rs 1,925 a quintal for the 2019-20 (July-June) crop year. The wheat that is arriving in the market is the stock held back by traders or farmers after the harvest of the rabi crop in April.


Wheat is grown during November-March, with harvest taking place around February-end in states such as Gujarat and March-end or early April in other parts of the country.

In the global market, wheat has gained a little over three percent since the beginning of 2021 to 661 US cents a bushel.

According to the International Grains Council (IGC), wheat export prices are ranging between $284 (Rs 20,750) a tonne from Argentina and $292 (Rs 21,325) from the US free-on-board.

The US department of agriculture (USDA) foreign agricultural service in its Grains: World Markets and Trade report said that Bangladesh, which used to traditionally buy wheat from Russia, has shifted its purchase to India.

“Until now, India’s exports have been minimal with its domestic support price (MSP) making it uncompetitive. But with strong global demand and tight exportable supplies from traditional exporters resulting in high prices, India is now relatively competitive to its nearby markets such as Bangladesh with its forecasting rising to the highest in six years,” the report said.

The USDA expects India to more than offset the lower exports projected from Argentina and Russia in the global market this year.

This has resulted in the USDA raising India’s wheat exports by eight lakh tonnes to 18 lakh tonnes this crop year. It pegged the wheat shipments at 10 lakh tonnes last month.

“Gujarat Rabi wheat crop, which is expected to be harvested in February, could be exported since prices there are usually lower than MSP,” said RMFAI’s Kumar.

The USDA also projected India’s wheat production for the crop to be harvested during March-April at 107.59 million tonnes, up from its 2019-20 estimate of 103.6 million tonnes. India’s agriculture ministry and Farmers Welfare (MAFW) pegged production at 107.59 million tonnes.

“Wheat production could even touch 110 million tonnes,” said Kumar.

“The trade anticipates wheat production at 114-116 million tonnes. This year, the weather and soil moisture have been favourable. Unless something drastic happens with the weather, the crop will be good,” said Krishna Flour Mills’ Dattaraj.

As per MAFW data, wheat has been planted on 335.46 lakh hectares this season against the normal 303.28 lakh hectares and last year’s 326.75 lakh hectares.

“For farmers, cultivating wheat is easy as input costs are less and MSP is guaranteed. They need to put in much less effort compared to crops such as paddy. It is also a safe bet as diseases in wheat plants have been controlled,” said Dattaraj. The higher MSP of Rs 1,975 a quintal this year was another plus, he said.

According to the USDA, India could be left with 31.31 million tonnes of wheat carryover stocks this April when the Centre begins its procurement for buffer stocks used for the public distribution system.

“I think it could be 29 million tonnes to 29.5 million tonnes since stocks with the Food Corporation of India (FCI) at the beginning of this month were 34.3 million tonnes. If we take into account the wheat that will be consumed till March-end, then it could be lower than what USDA has projected,” said Kumar.

In January 2020, FCI had 32.79 million tonnes and on April 1, the stocks were 24.7 million tonnes.

(Subramani Ra Mancombu is a Chennai-based journalist based who writes on commodities and agriculture)
Subramani Mancombu is a journalist based in Chennai who writes on commodities and agriculture
first published: Jan 14, 2021 03:42 pm

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