What next for Wheat?
First, we had the jump in inflation: As India grows prosperous, inflation starts spiraling
Wholesale price inflation has accelerated to 6% from 4% last spring. Consumer price indexes have risen nearly 7% in urban areas over the past year and almost 9% in rural areas, where more than two- thirds of the population lives and where higher food prices are having the biggest effect.
Next came the (ridiculous) ban of trading of wheat futures: India Fools Itself With Wheat, Rice Futures Ban
Farm Minister Sharad Pawar said on Feb. 21 that trading in futures is not responsible for the increase in prices; it’s the gap between supply and demand that caused prices to rise.
And yet, “If all constituents demand a ban in futures trading, we will have to succumb to their demand,” he said. “I don’t know for how long I will be able to resist.”
Next comes news of lower than expected domestic wheat production - The oncoming wheat crisis
Private trade doesn’t seem enthusiastic about duty-free imports as the international market prices are not to its liking. Thus a severe crunch in government stocks will be faced in April.
In any case, the government cannot impose any restraint on the private sector purchases as it will be treated as anti-farmer. And it is election time in UP—a wheat-growing state.
And now it seems that India’s Wheat Imports May Exceed Government Forecast
Imports may reach 4 million metric tons this year, a third more than the 3 million tons Agriculture Minister Sharad Pawar has said the government may purchase . . .
Increased imports by India may strain global stockpiles of the grain forecast to slide to a 25-year low. Wheat demand may reach 75.5 million tons, exceeding a government output estimate of 73.7 million tons
Looks like we should be long wheat & long inflation!
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