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December wheat stocks hit 7-year high on poor offtake; may pose storage challenge

December wheat stocks hit 7-year high on poor offtake; may pose storage challenge
Vishwanath Kulkarni Bengaluru | Updated on December 18, 2019 Published on December 18, 2019



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Wheat stocks in the central pool at the beginning of December stood at 351 lakh tonnes, a seven-year high, on muted demand for the grain sold by the Food Corporation of India due to its high price.
These stocks could add to the storage worries of the government in the days ahead as farmers are seen planting more wheat in the current rabi season, raising the prospects for a bumper harvest.
Anticipating a huge crop, large traders and stockists, including some corporates, have been offloading their stocks in the recent past, sources said. Millers prefer to buy wheat from the open market as the cereal offered by FCI under the Open Market Sale Scheme (OMSS) is priced higher.

EXPAND
The government had set a base price of ₹2,080 per quintal for the current fiscal under the OMSS and has been raising it by ₹55 every quarter to cover costs. The minimum support price (MSP) for wheat during the 2018-19 season was ₹1,840 per quintal.
Sanjay Puri, President, Roller Flour Millers Federation of India, said the government, in a bid to make the FCI wheat more attractive, should fix a realistic price for the cereal.
“The FCI price for the OMSS wheat should be linked to the NCDEX price. Such a move would help the government attract buyers and trim stocks,” Puri said.


High taxes
Further, Puri said the high taxes charged by Punjab and Haryana are keeping buyers away from markets in these States. The MSP should be inclusive of taxes to attract private buyers, Puri said.
Meanwhile, wheat acreages were up by about 10 per cent till December 12. “Farmers in Madhya Pradesh, Maharashtra and Gujarat are seen shifting from chana (gram) to wheat on account of high soil moisture and water availability resulting in higher acreages,” said GP Singh, Director, Indian Institute of Wheat and Barley Research.
He expects wheat acreage to go up by at least 1-1.5 million hectares this year over the normal area of 31 million ha and the increase to result in a bumper harvest. “The wheat crop would be in excess of 105 million tonnes this year depending on the weather conditions in February and March,” Singh said.
The MSP for wheat during the ongoing 2019-20 season has been fixed higher at ₹1,925 per quintal. Wheat output stood at 102.19 million tonnes in 2018-19, according to the fourth advance estimates issued by the Agriculture Ministry.

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