This is the time Rabbi (Winter and spring) Crops, especially wheat, are still in the wild and cannot be completely determined for the yield to be harvested.
But the problem of production is not limited to wheat. Similarly, if not more, the sugar situation is serious. Output prospects and stock positions are also important For food inflationthese two commodities seem the most uncertain today.
Wheat: Manage Stocks
In wheat, the silver lining is the opening stock before the new crop purchase on April 1.
Stocks in government warehouses on April 1 last year, 7.502 billion tons (LT) were the lowest on that date since 2008 at 58.03 LT and exceeded the minimum buffer required for 74.6 LT.
One of the main reasons for the 16-year low in stocks is the 2024 Lok Sabha election. During 2023-24 (April-March), a record 100.88 liters of wheat were dropped from Indian food companies to enter the open market. From the November 2023 poll, most sales occurred, including 6.73 LT under the Bharat Atta plan, which provides wheat flour at a subsidized retail price of Rs 27.5.
Although aggressive open market sales contribute to moderate wheat prices, it is a risky gambling. If the crops in 2023-24 are bad, as they did in the previous two years – government agencies will work hard to purchase enough wheat to supplement the stocks in the pot that are barely above. Thankfully, production is sufficient to achieve 266 LT procurement, exceeding the 262 LT and 188 LT in 2023 and 2022, respectively, although far from the 341-434 LT range for the previous four years (see see table).
However, this time, the Narendra Modi government did not take any risks. It has unloaded only 9.59 liters of wheat under the Open Market Sales and Bharat Atta Program only under the Bharat Atta Program from April to 25, 2024, and may not exceed 30 lt of the entire fiscal period. Government stocks are about 140 lt as of March 1, and are expected to be 120 lt at the start of the new procurement season on April 1. This is higher than last year’s 75 LT opening stocks.
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Wheat is wholesale in Delhi at Rs 2,950-3,000 per month per rupee, compared with Rs 2,400-2,450 a year ago. Unlike last year, the Modi government has not tried to lower prices through excessive open market sales and stock reductions. Instead, it imposes inventory restrictions, not allowing traders to accommodate more than 250 tons, and each export accommodates only 4 tons of retailers. These restrictions apply to March 31.
It’s all about temperature
Having more stocks has given the government some comfort compared to last year, reducing the pressure on procurement.
Currently, open market prices – Rs 2,950-3,000/quintile in Delhi, Rs 2,600-2,650 in Madhya Pradesh (MP) Ujjain and Indore Mandis – The minimum support price to dominate the centre is Rs 2,425.
Once new crops arrive, prices may drop – from March 2 to March 3, March 3 to April’s week 1, MP and early April in Rajasthan. How much they will increase to make the government’s work easier, depending on the height of production.
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Ground reports indicate single-use crops in central India. This was not the case last time, when the decline in cereal yields was due to delays in winter (affecting the vegetative growth and tillage of crops), followed by mist and lack of sunlight in January (inducing poor pollination and seeds).
There are no such major temperature anomalies or fog/smoke conditions this time. Rajbir Yadav, chief scientist at the New Delhi-based Indian Institute of Agricultural Research, predicts that the average wheat yield for MP is 15-20%.
The question marks mainly exceed the yields in northern and northwestern India, where crops are in the cereal filling stage. The general rule of thumb is that every day of the day is given an additional wheat yield of 40-50 kg per hectare every day. As long as the maximum temperature does not exceed 35 degrees and there are no sudden spikes, the core will continue to accumulate starch and other nutrients.
As things seem, the temperature is good in the range. If they remain in good shape by April, and production in northern and northwest India is as good as last year (as it was central India this time), inflationary distress in wheat will end, with no cereal scarcity. Mandis Or government warehouse.
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Sugar: Not so sweet
Among sugars, sugars that all outputs are estimated to be wrong do not look so optimistic.
The preliminary estimate of the Indian Association of Sugar and Bioenergy Manufacturers is the total production of sweeteners for the 2024-25 quarter (October to September). With 40 lt of sugar transfer deducted to mix ethanol with gasoline, this translates to a net yield of 293 LT, down from 319 LT in 2023-24.
But as the breaking season develops, the estimates continue to decrease. As of February 28, net production was hardly 220 LT, compared with 255 LT for the same period in 2023-24. In addition, among the 533 mills, 186 mills stopped crushing due to lack of sugar cane, while 72 of last year were no longer crushed.
The latest industry estimates that net sugar production is 265 LT, and some even estimate it to be 255 LT. Given the opening stock of 79.23 LT, 285 lt domestic consumption and 10 LT exports (government allowed on January 20), net production of 265 LT will provide 49.23 LT on September 30.
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If output drops to 255 LT, closing stocks will be lower. In the case of less than 40 LT, their domestic consumption is enough for less than 1.7 months. That itself is not a problem. But with both Diwali and Dusselah falling in October, coupled with factories that did not start crushing their businesses before November, it could create a demand mismatch and raise prices.
The price of former items sugar in Uttar Pradesh (UP) (UP) and Maharashtra (UP) has been around Rs 40.10-41.10 per kg, with full-year levels of Rs 37.30-38.50 and Rs 33.80-34.25. It wouldn’t be surprised if the government wants to limit the stock restrictions on sugar, and even make imports easier in the coming months.
Apparently, in addition to the increased susceptibility of the Co-0238 sugar cane species that dominates red rot, but increased rainfall in Maharashtra and Karnataka, more red rot and top-grade shooting pest attacks are also estimated. It is also displayed in production numbers.
