Wheat Output Estimate Discrepancy Sparks Market Concerns
There is a significant gap between the wheat output projections from the agriculture ministry and the processing industry, with estimates differing by over 5 million tonnes for the 2024-25 crop year. This variance has raised concerns among trade sources that it could lead to market speculation and potential price increases. Although such discrepancies in estimates are not unusual, traders caution that they often cause market instability. In the past three years, the government’s projections have been higher by 5-8 million tonnes compared to those made by flour millers. For the 2024-25 crop year (July-June), the agriculture ministry has forecast a record wheat output of 115.4 million tonnes, while the processing industry has projected a lower figure of 110 million tonnes. Wheat harvesting began last week. According to a flour miller, the difference between the government’s and the industry’s estimates has narrowed this year. The divergence in wheat production projections began in the 2021-22 crop year, following a period of excessive heat prior to the March harvest, which negatively impacted yields. In that year, the government estimated wheat production at 107.7 million tonnes, while the industry’s forecast was much lower. Since 2022, India has imposed a ban on wheat exports. Navneet Chitlangia, president of the Roller Flour Millers Federation of India, stated that domestic wheat usage, including for seeds and processing, is expected to be around 102-103 million tonnes. Given this, along with the output estimates, he believes wheat prices will remain stable this year. Inflation in wheat prices was recorded at 9.17% year-on-year last month. A senior official explained that the ministry’s wheat output estimates have typically been based on average yields and cultivation areas reported by states. These estimates, however, are subject to change as better yield data becomes available through crop cutting experiments. Since the 2024 kharif season, the government has implemented digital crop surveys using technology to generate more accurate crop production data. The agriculture ministry’s estimate for the 2023-24 crop year was 113.29 million tonnes, while the flour millers projected 106 million tonnes. Harvesting for this year’s crop has begun in Gujarat, Madhya Pradesh, and Rajasthan, with Uttar Pradesh, Punjab, and Haryana set to start in the coming weeks. Officials have indicated that a strong harvest this year is expected to increase buffer stocks, with the government targeting 31 million tonnes of wheat procurement for the 2025-26 rabi marketing season (April-June). As of Sunday, the Food Corporation of India (FCI) holds 12.42 million tonnes of wheat, surpassing the required buffer of 7.46 million tonnes for April 1. The FCI has also sold approximately 3 million tonnes of wheat in the open market through weekly auctions this fiscal year.