India imposes stockholding limits on wheat to augment supplies, check prices

The Indian government has imposed stockholding limits on wheat at 3,000 mt for wholesalers to augment supplies and rein in rising domestic prices, a statement from the food ministry said June 24. The fresh limits will be in place until March 31, 2025.

The government has also mandated stockholding limits for small retailers at 10 mt and for big-chain retailers at 10 mt per outlet.

"The primary target is to ensure hoarding is not happening and supplies are available," an official with the food ministry said.

India has seen a surge in wheat prices over recent months. At the benchmark market of Indore, prices rose more than 4% month on month to Rupees 26,000/mt ($311.41/mt) June 24, local traders said.

The government has pegged India's wheat output in crop year 2023-24 (July-June) at 112.9 million mt, slightly higher than the 110.55 million mt harvested in the previous season. However, an S&P Global Commodity Insights survey of 13 analysts and traders found India's wheat harvest in MY 2023-24 is likely slightly lower year on year at 107 million-108 million mt.

Despite the estimated increase in production, prices have been increasing across retail markets due to a lower-than-expected procurement by government agencies.

The Food Corporation of India had procured 26.6 million mt of wheat in MY 2024-25 (April-March), higher than the 26.2 million mt of a year earlier, it said. However, overall procurement was lower than its target of 33.5 million mt of wheat produced in MY 2024-25.

The government claimed it has adequate supplies for the public distribution system and other welfare schemes, which is approximately 18.4 million mt.

The government is keeping a close watch on the market price of wheat and will intervene to keep supplies stable, the statement said.

India's wheat stocks had dropped to a 16-year low of 7.5 million mt at the start of April, from 8.4 million mt a year earlier. The government was able to meet the buffer and strategic reserve norms that mandate holding wheat stocks at or above 7.46 million mt April 1.

Traders expect the government to extend its export restrictions on wheat until March 2025 to keep prices in check.

On March 30 the Indian government ordered mandatory declaration of wheat stocks available to traders, private warehouses, retailers and processors on a government-managed portal from April 1 and every Friday thereafter, in a bid to ensure availability and prevent hoarding.