New Delhi, Apr 3 (KNN) India, the world's second-largest wheat producer, has asked global and domestic trade houses to refrain from purchasing new-season wheat from local farmers.

This move aims to help the government-backed Food Corporation of India (FCI) procure large quantities and replenish its depleting reserves.

After banning wheat exports in 2022, India is keen on bolstering stocks and controlling prices, which surged due to dry weather conditions that affected output in 2022 and 2023.

The rising wheat prices forced the government to sell record quantities, leading to a drawdown in reserves essential for the world's largest food welfare program, which provides free grain to nearly 800 million people.

The government has informally asked private traders to avoid buying wheat at least in April, as wheat procurement typically tapers off after mid-May.

Traders active in India's grain markets, including Cargill Inc, Hindustan Unilever Ltd, ITC Ltd, Louis Dreyfus Company, and Olam Group, are likely to comply with the directive to avoid potential restrictions on wheat stock holdings.

The top wheat-growing states have been requested to ensure that private traders do not interfere with FCI's plans to purchase at least 30 million metric tons this year.

In 2023, FCI bought 26.2 million metric tons of wheat from local farmers, below its target of 34.15 million metric tons.

Lower wheat inventories in government warehouses, currently at 9.7 million metric tons as of early March, tend to drive up open market prices.

Despite falling inventories, New Delhi has resisted calls for wheat imports, as overseas purchases could anger the influential farmer voting bloc ahead of the parliamentary election scheduled from April 19.

The United States Department of Agriculture has reported that India's lower wheat stocks could force New Delhi to import 2 million metric tons of the grain this year.

FCI has started buying new wheat from farmers at a state-set price of 2,275 rupees (USD 27.29) per 100 kg, lower than the open market rates of around 2,500 rupees.

(KNN Bureau)