Wheat buffer to stay low till next year

Wheat buffer stock will continue to remain below the mandated norms till fresh procurement begins next year.

The current stock of wheat in the central pool is about 82 lakh tonne against the buffer norm of 171 lakh tonne for the period between July and September.

The average monthly requirement of wheat under various government schemes is about 13 lakh tonne. At this rate, about 78 lakh tonne would be directed towards these schemes by December. This would leave the stock at four lakh tonne at end of December.

Even if the all the shipments of imported wheat were to arrive by December, the central stock pool at the end of December would be not more than 38 lakh tonne.

The buffer stock norm for October-December is 110 lakh tonne. The norm for January-March period is 82 lakh tonne. But the stock would continue to remain well below the buffer norm.

Wheat stock touched a minimum of 20.09 lakh tonne in April this year against buffer stock norm of 40 million tonne. To meet the public distribution system (PDS) requirements, it was decided to import 35 lakh tonne of wheat. Of this, only 91,000 tonne has arrived thus far.

The consignment of wheat imports would start coming from September onwards but these are meant only for the government-sponsored schemes and would have no impact on the market price.

The government had in the previous years intervened in the market to moderate the open market price. But with lower stocks this year, the government would not be able to impact the market price.

"The lowering of duty for private importers from 50 to 5 per cent has not led to any imports thus far. The import duty must be reduced to zero for actual users such as flour mills and biscuit manufacturers if the government wants to control the price", said the joint secretary of Roller Flour Millers' Federation of India Veena Sharma, the government has refused to bring down the import duty to zero.

While the government claims to have adequate buffer stocks of wheat to stabilise the price, the reality seems to otherwise. The spot price of wheat at the Multi Commodity Exchange (MCX) has gained Rs 22 per quintal to Rs 882 in the last two weeks. And the coming festive season would further fuel the price on account of rising demand.

The futures price of wheat at the MCX for September delivery has also rose to Rs 910 a quintal, giving a clear indication of how price would be in the coming months.

"The price of wheat in September-October would be in the range of Rs 900-950 despite imports as imported wheat would cost more," said an analyst with Karvy Commodities.