Analysis Grains
India adjusts wheat stock limit to curb speculation
The friendly tone for the wheat market in this week's Wasde report continued to have an impact yesterday. News from Russia also supported the market. India is struggling with issues of a completely different nature. There, the government is making desperate attempts to keep wheat affordable in times of record prices in the domestic market.
The March contract for wheat on the Matif closed yesterday €1.75 higher at €230.75 per ton. Wheat on the CBoT closed 0.3% higher at $5.43½ per bushel. Corn took a step back by 0.6% to $4.38 per bushel. Soybeans remained almost stable and closed ¾ cent higher at $9.95½ per bushel.
SovEcon expects Russia to export 3.4 million tons of wheat in December. This is significantly lower than the 4.1 million tons exported in November. The higher export duty imposed by the Kremlin on December 1 is putting a brake on exports according to SovEcon.
Russian farmers have less interest in wheat this season, according to analysts at Ikar. Growers are expected to sow up to 1 million hectares less wheat, as anticipated by Ikar. The reason is quite simple. Due to lower wheat prices, the margins for growers are under pressure, leading them to seek more profitable crops. Oilseeds are more popular among Russian farmers. Ikar does not mention it, but the dry autumn undoubtedly plays a role as well. This caused problems during sowing and crop development.
Record Price
India is not facing problems with a relatively low wheat price but rather the opposite. The government is concerned about how to keep wheat as a staple food affordable amid record prices in the domestic market. A new measure in this regard is reducing the wheat stock that traders are allowed to hold. "As part of our efforts to control the wheat price, the central government has decided to revise the limit on wheat stocks, which will be effective until March 31, 2025," the Ministry of Food writes.
According to the revised standards, wholesalers can hold a maximum of 1,000 tons of wheat compared to 2,000 before the change. Retailers can have a maximum of 5 tons per location in stock compared to 10 tons previously. Processors/millers can have a maximum of 50% instead of 60% of the maximum monthly processing capacity. The stock position must be reported to the ministry weekly. With the stock limits in effect since June 24 and tightened on September 9, the Indian government aims to prevent hoarding and speculation with wheat.
In Ukraine, the harvest of maize is almost complete. According to the Ukrainian Ministry of Agriculture, 96% of the sown area has been harvested. The yield is 8.5% lower compared to last season and stands at 24.6 million tons as of December 5. The total grain harvest in Ukraine, according to preliminary figures, is 54.3 million tons. This time last year, it was 57.1 million tons.
