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Govt is going to offer 3 million tons of wheat to bulk consumers to bring down prices

NEW DELHI/MUMBAI: India will supply 3 million tons of wheat to heavy consumers such as flour mills as part of efforts to lower prices, which hit a record high on Wednesday, a government official told Reuters.
The allocation exceeds traders’ expectations of approximately 2 million tonnes. The market waited almost two months for government approval, while stocks dwindled at the end of the wheat marketing season, while demand rose sharply.
“There is consensus that large consumers are allowed to buy up to 3 million tons of wheat from government stocks,” said the official, who declined to be named in accordance with official rules.
Wheat prices India, the world’s largest consumer of grain, is reaching new peaks as farmers and traders run out of supplies.
On Wednesday, wheat prices in the Indore market – a benchmark – rose to a record 29,821 rupees ($365.61) per ton, up nearly 9% so far this month after a 37% rise in 2022.
In New Delhi, wheat prices rose by almost 1.5% to a record 32,500 rupees.
India banned exports in May 2022 after a sudden rise in temperatures curbed production, even as exports picked up to make up for the global shortfall caused by Russia’s invasion of Ukraine.
Traders say record high wheat prices despite the export ban point to a much larger drop in production from last year.
According to government estimates, wheat production fell from 109.59 million tons a year earlier to 106.84 million tons in 2022.
“In two weeks, prices have risen by about 300 rupees. The government’s decision could push prices down, but a major correction is unlikely,” said a New Delhi-based dealer of a global trading house.
“Record prices forced many flour mills to close operations, and now they would be fighting for the allocation to secure stocks of the 3 million ton quota for bulk consumers,” he said.

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