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The government had 27.7 million tonne wheat in its stocks at the beginning of this month, down 11.8% from 31.4 million tonne a year ago. The stocks are down despite a bumper crop this year as lower output in last two years had taken the government stocks to a multi-year low of 9.4 million tonne in March. The procurement target is higher as India’s wheat production in 2016-17 (Jul-Jun) is seen at 97.4 million tonne, up from 92.3 million tonne a year ago. So far, 28 million tonne wheat has been procured across the country, up nearly 24% on year.

Wheat futures on NCDEX traded higher for the sixth consecutive session due to declining arrivals in spot markets. June contract on the NCDEX ended up 0.8% from previous close. wheat prices were down in major wholesale markets due to subdued buying by bulk buyers and stockists. Mill quality wheat sold in Delhi, down 10 rupees and in Indore, down 20-30 rupees from previous clsoe. In Kota market prices remained unchanged.

The government has procured 28.0 million tonne of wheat so far in the 2017-18 (Apr-Mar) marketing year, up nearly 24% on year. In Madhya Pradesh, where 6.2 million tonne wheat has been purchased so far, the total procurement is likely at 7.0 million tonne against the target of 8.5 million tonne. In Uttar Pradesh, where the state government had set an ambitious target of 8.0 million tonne against the centre estimate of 3.0 million tonne, only 1.8 million tonne has been purchased so far. The government crossed its procurement target in Punjab where 11.6 million tonne has been bought so far, up 9.8% from a year ago. In Haryana, another major wheat producing state, 7.4 million tonne has been bought so far, up 10.1% on year and close to the target of 7.5 million tonne.

Prices of wheat in the key wholesale markets were largely unchanged amid thin trade. Arrivals in Indore were pegged at 15,000 tonne (1bag=100kg), up from 14,000 bags. Arrivals are increasing as procurement by the government is nearing an end. The most-active June wheat contract on the National Commodity and Derivatives Exchange ended up 0.1% from the previous close.

The Centre is likely to allocate 4 million tonne of wheat for the open market sales scheme during the 2017-18 (Apr-Mar) marketing year. During 2016-17, the government sold 4.6 million tonne wheat across the country at a base price of 1,640 rupees per 100 kg compared to the initial plan of selling 6.5-7.5 million tonne. The quantum of wheat offered under the open market sale scheme is lower this year because of tight government stocks. Carryover stocks at the beginning of the season were at 7.4 million tonne, which when added to the expected procurement of 30 million tonne wheat this year will take total stocks in government reserves to 37.4 million tonne.