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India's Wheat Surplus: Storage Woes and Export Challenges
29 Apr
Summary
- Limited storage capacity constrains new wheat procurement.
- Indian wheat remains uncompetitive globally due to high prices.
- Government increased procurement targets and export approvals.
India is grappling with a substantial wheat surplus, compounded by restricted storage capacity that impedes further procurement efforts. The government has raised its wheat procurement target by 15% to 34.5 million tonnes and approved an additional 2.5 million tonnes for exports, aiming to support prices and ease stock pressure following a bumper harvest expected to reach 110-120 million tonnes in 2025-26.
However, industry players express concern over surplus management, noting that Indian wheat remains largely uncompetitive on the global market. The Minimum Support Price (MSP) of Rs 2,585 per quintal keeps domestic prices elevated, making exports costlier by $20-40 per tonne compared to international origins.
With annual Public Distribution System (PDS) requirements at 18-20 million tonnes, closing stocks by the end of the next season could swell to 30-35 million tonnes, far exceeding the buffer norm. This surplus is likely to necessitate sales via the Open Market Sale Scheme (OMSS), possibly starting earlier than usual in July.
Unseasonal rains in April delayed wheat arrivals, causing procurement to fall significantly compared to the previous year. Experts anticipate only a modest uptick in wheat prices due to these storage constraints and the necessity of stock liquidation through OMSS, which is deemed inevitable.
