Forget oil, wheat issues fresh price rise threat amid Russia-Ukraine war

Prices of wheat in India hit a fresh lifetime high on Friday due to strong export demand for the foodgrain. The ongoing war between Russia and Ukraine is expected to reduce supply as both countries are major producers of wheat.

In the key market of Indore in Madhya Pradesh, the foodgrain was sold at Rs 2,400-Rs 2,500 per quintal (100 kg) on Friday as against Rs 2,400 the previous day.

Until recently, it traded at around Rs 2,000-2,100. "The current rise in prices of wheat will reduce the inflow of the foodgrain into the mandis as the buyers will purchase it from the farm gate itself," an Indore-based trader said.

"Wheat trading above MSP is also an indication that the Centre will have a relatively lower quantity to procure directly from the farmers," the trader told IANS.

READ | DNA Explainer: How Ukraine-Russia war will impact export of various commodities?

The Minimum Support Price for wheat for the 2022-23 marketing season is fixed at Rs 2,015 per 100 kg.

Farmers usually show interest in the central procurement programme when the commodity's market price typically falls below the Centre's assured support price.

Notably, Russia is the second-largest exporter of wheat. In its most recent report on February 9, the US Department of Agriculture estimated Russia's shipments for 2021-22 (July-June) at 35 million tonnes (mt), next only to the 37.5 mt of the whole of European Union. 

According to Bloomberg, Egypt and Turkey import over 50% of their wheat from Russia and Ukraine. Ukraine is the fourth largest exporter of wheat with 24 mt just behind Australia with 26 mt.