India’s wheat stockpile will more than halve this season, to their smallest in 15 years, thanks to high prices of the grain, which have remained above government purchasing levels despite export curbs.

Indian wheat stocks close 2022-23, on an April-to-March basis, at 8.53m tonnes, the US Department of Agriculture’s New Delhi bureau said – an inventory which would represent the lowest carryout since 2007-08.

The shrinkage from the 19.50m tonnes at which Indian wheat inventories will close this season reflects in part the country’s drought-sapped harvest, which the bureau pegged at a five-year low of 99.0m tonnes.

“Trade sources continue to estimate the 2022-23 wheat crop to range of [sic] 92m-100m tonnes, notably lower than the Ministry of Agriculture & Farmers Welfare’s third advance estimate of 106.4m tonnes.”

High prices

However, the extent of the decline also reflects the inability of a wheat export ban unveiled in May to curb prices of the grain, which have remained above values offered by the government through its minimum price support (MSP) scheme.

“While the initial rally in local wheat prices were partially attributed to strong export demand on high global prices, the May 13 export ban could not cool down the domestic prices,” the bureau said.

Average spot prices during as of early July in major growing states average 20,400-22,950 rupees ($258-290) per tonne, “well above the government MSP” of 20,150 rupees per tonne.

Government wheat procurement under the MSP programme is this season “likely to barely reach 18.9m tonnes, less than half of last year’s record procurement”.

Exports, meanwhile, look like totalling 6.0m tonnes this season a figure which, while below the 10.0m tonnes expected before May’s ban was unveiled, would still represent a historically elevated amount, the fourth highest on USDA data going back to 1960-61.

‘Food inflation concerns’

Already India’s key government-held inventories as of the start of last month, at 31.1m tonnes, were “half of the wheat stocks at the same time last year”, the bureau said.

While the government has, in the face of the shrinkage, cut the wheat allocated to the PMGKY poverty relief scheme, which has more than 800m registered beneficiaries, and the NFSA food subsidy programme, “, it remains committed to providing 18m tonnes through the balance of 2022-23”.

Furthermore, the bureau noted industry expectations that the government may need to release wheat to private millers “to contain the rise in wheat prices out of food inflation concerns”.

Such sales are more likely in the October-to-March half, “riding on the surge in demand coming from the Indian festival season”.

Export performance

The bureau estimated at 3.5m tonnes the volume of wheat and wheat products that India exported in the April-to-June quarter, despite the export ban, with further shipments expected under a pledge to keep ports open to countries with food security concerns.

“Sources inform that several countries have submitted requests to the Indian government to allow wheat exports by Indian exporters.