NEW DELHI (Reuters) - Indian wheat prices rose to their highest level in nearly nine months on Wednesday and could surge further during the festival season unless the government starts releasing stocks from its warehouses, industry figures told Reuters.
"Wheat supplies are falling by the day and the overall supply situation looks worse than last year, and that's why the government should immediately start offering wheat from its stocks," said a large flour mill owner from the wheat-consuming states of southern India.
Wheat prices have touched 28,000 rupees ($334) per metric ton, up from 24,000 rupees in April, he said.
Last year the government started selling wheat from its reserves in June, and between June 2023 and March 2024, it sold a record amount of nearly 10 million metric tons from stocks.
That helped bulk buyers such as flour millers and biscuit makers to secure supplies of the staple at affordable costs.
"We are in the second half of August now and the government is yet to start offering wheat from state reserves, and this delay has led to a further rise in wheat prices," the flour mill owner said.
India initially planned to sell wheat from its state reserves to bulk consumers in July, Reuters reported in June, citing a government order, but this was delayed and there has been no subsequent update on its plans. A government spokesperson didn’t respond to an emailed request for comment.
Trade tensions between China and the European Union rose once more on Wednesday.
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Another flour miller from the southern state of Karnataka said the government should no longer drag its feet over freeing up some stocks from its inventories.
Both flour millers, who did not wish to be named ahead of any government decision, said India should also remove a 40% wheat import tax to facilitate imports from countries such as Australia and Russia.
Earlier this year, Reuters reported that India was poised to begin wheat imports after a six-year gap to replenish depleted reserves and hold down prices that jumped following three years of disappointing crops.
"In the physical market, supplies are dwindling since farmers have sold almost their entire crop. Everyone is now waiting for the government to start releasing stocks," said a New Delhi-based dealer with a global trading firm.
India will celebrate Dussehra in October and Diwali in November when wheat demand usually rises.
The government is delaying wheat sales because it has limited stocks for market intervention until the next crop starts in April, the dealer said.
Wheat stocks in India's government warehouses on Aug. 1 were 26.8 million tons, down 4.4% from a year ago.
After five consecutive record harvests, a sharp rise in temperatures shriveled the wheat crop in 2022 and 2023, pushing up prices of the staple and prompting the world's No. 2 producer to ban exports.
Even this year's crop is 6.25% lower than a government estimate of 112 million metric tons.