India has bought 2.08 million metric tons of new-season wheat from domestic farmers since March 15, up 44.4% from last year, government sources said, indicating a robust crop that will help New Delhi shore up its depleted reserves and avoid imports.
The government-backed Food Corporation of India (FCI) has primarily purchased early varieties of wheat from the central state of Madhya Pradesh.
FCI's wheat procurement period has gotten off to a strong start and is expected to gather steam in the coming weeks as harvests from bread-basket states such as Haryana, Punjab, and Uttar Pradesh start to trickle into the market.
The initial trend of FCI's wheat procurement indicates a strong wheat crop this year, said the sources, who did not wish to be named as they were not authorised to talk to the media.
Both harvests and FCI's purchases are expected to be satisfactory this year, they said.
"Farmers are getting better prices from the government because Madhya Pradesh is giving them a bonus on top of the minimum support price set by the centre," said a New Delhi-based dealer with a global trade house.
India has set a purchase price of 2,425 rupees ($27.98) per 100 kg for wheat bought from farmers. Madhya Pradesh is offering an additional bonus of 175 rupees per 100 kg.
Last year, FCI aimed to purchase 30 to 32 million tons, but the state stockpiler procured only 26.6 million tons, indicating a poor harvest.
As a result, Indian wheat prices surged to a record high earlier this year.
Last month, the government estimated this year's wheat output at a record 115.4 million tons of wheat.
"Harvests have just started to arrive and the crop looks quite good in terms of both yields and overall production," said Navneet Chitlangia, president of the Roller Flour Millers Federation of India.
($1 = 86.6820 Indian rupees)
