Rains Delay Wheat Procurement in India, Raising Concerns Over FCI Stock Replenishment

Wheat procurement by the Food Corporation of India (FCI) has been delayed due to recent rains that have pushed back the harvest, resulting in low crop arrivals in the market. This delay comes amid expectations of an early procurement start, with Madhya Pradesh and Rajasthan announcing bonuses on top of the Minimum Support Price (MSP), drawing traders' and stockists' attention towards Uttar Pradesh and Bihar in anticipation of purchasing wheat at or below the benchmark price. Procurement in Uttar Pradesh was slated to start on March 1, and in Rajasthan on March 10, but no procurement has occurred yet. Madhya Pradesh is considering moving up its procurement start date from March 22 to March 15 as arrivals have begun.

The central government aims to procure 30-32 million tonnes (mt) of wheat for the season starting April 1, with an actual target possibly around 33.4 mt based on state contributions. This year's wheat production is expected to hit a record 112.03 mt, with significant contributions from major producing states. Last season, the government procured 26.2 mt of wheat, falling short of the 34.15 mt target, and significantly less than the previous year's procurement of 18.8 mt against a 44.4 mt target.

The procurement this year is crucial as wheat stock in the Central Pool is depleting, and prices are currently ₹80-150/quintal higher than the MSP of ₹2,275, thanks to the bonuses announced by Madhya Pradesh and Rajasthan. If Uttar Pradesh also announces a similar bonus, purchasing prices could exceed ₹2,400/quintal. As of March 1, the government's wheat stock is at its lowest since 2017, highlighting the importance of this season's procurement to replenish reserves and stabilize market prices.