Indian wheat prices jumped to a record high yesterday due to dwindling supplies amid robust demand from flour mills that are struggling to secure the grain to operate at full capacity, industry officials told Reuters.
The record prices are likely to lift retail inflation, which eased in November after surging to a 14-month high in October, and could influence the central bank’s decision on interest rate cuts.
“Wheat supplies are limited in the market. Even after paying record prices, flour mills are unable to secure enough to operate at full capacity,” said Ajay Goyal, managing director of Shivaji Roller Flour Mills.
In December, New Delhi lowered the limit on wheat stocks that traders and millers can hold to help boost the grain’s availability and moderate prices.
But the curbs failed to bring down prices, which were trading around 33,000 rupees ($384.66) per metric tonne in New Delhi, up from 24,500 rupees in April and far above the government fixed minimum support price of 22,750 rupees for last season’s crop.
The stock limit failed to improve supplies and bring down prices, indicating that private players are holding few supplies, and the government needs to sell more wheat from its reserves to bulk consumers, said Pramod Kumar, a flour miller.
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