Wheat stock in central pool close to minimum threshold amid low procurement

Grain inventory in central pool, as on July 1, 2022, lowest since 2019

The wheat stocks in the Central pool as on July 1 dropped precariously close to the minimum required to maintain a healthy operational buffer stock and strategic reserves, due to low procurement and fall in production in the 2021-22 crop marketing year.

The rice stocks during the same period are, however, higher than the buffer and strategic reserve norms by a long margin (134 per cent up).

July 1 usually sees the peak stock levels of wheat because it comes after the main procurement months of April, May, and June. The latest data shows that the wheat stocks as on July 1 are around 28.51 million tonnes, as against the 27.58 million tonnes required to be kept as buffer and strategic reserves.

The last time the wheat stocks in the Central pool were lower than this on July 1 was way back in 2008, when the stocks were estimated at 24.91 million tonnes. This is also the nearest the stocks have reached the buffer and strategic reserves on July 1 since stocking norms were altered in January 2015, the data shows.

In contrast, the rice stocks in the Central pool as on July 1, 2022, are estimated to be around 31.5 million tonnes as against the requirement of 13.5 million tonnes. The stocks do not include around the 23.15 million tonnes of unmilled paddy lying with millers.

This, as and when they are added to the Central pool, will mean another 15.51 million tonnes of rice for public distribution and other operations of the government. The stocks of unmilled paddy are the highest since 2015, the official data showed. In total (both wheat and rice), the data shows that as on July 1, India has around 83.36 million tonnes of foodgrains in its stocks, which is the lowest since 2019 (this does not include coarse cereals, which is nominal).

The Centre’s wheat procurement in FY23 dropped by almost 59 per cent to 18.78 million tonnes as compared to the same period last year because farmers opted to sell to private traders, who offered higher prices, while production also suffered.

Wheat production in the 2021-22 crop season ended June has been estimated at 106.41 million tonnes, according to the third advance estimates.

This is 3.8 million tonnes less than last year’s output and 4.39 per cent lower than the first estimate of 111.32 million tonnes. A heat wave in the main crop growing stage crimped output. The low wheat stocks, several traders and market watchers said, could put additional pressure on rice inventories to ensure steady supplies for public distribution and other needs.

“Due to low stocks it seems Food Corporation of India (FCI) will not be in a hurry to sell wheat and rice in open markets. And, millers will have to buy wheat directly from either stockists, farmers or mandis. Prices may jump during festivals and due to demand from millers,” Rahul Chauhan, commodity analyst at iGrain India, told Business Standard.

To manage its dwindling wheat inventories, the Centre in early May replaced around 5.5 million tonnes of wheat with rice under the Pradhan Mantri Gareeb Kalyan Yojana. The same thing was done for another 6.1 million tonnes of wheat under the National Food Security Act.