India's wheat stocks at 16-year low after record sales

NEW DELHI/MUMBAI, Apr 20 (Reuters): Indian wheat stocks held in government warehouses dropped to their lowest level in 16 years after two straight years of reduced crop yields prompted New Delhi to sell record volumes to boost domestic supplies and bring down local prices.
Wheat reserves in state stores totalled 7.5 million tonnes at the start of April, down from 8.35 tonnes a year ago, according to data compiled by the state-run Food Corporation of India. Over the past decade, wheat stocks on April 1 averaged 16.7 million tonnes.
"The stocks came down as we sold a record 10 million tons last year to stabilise prices," a senior government official said.
Despite the tight supply, New Delhi has resisted calls to encourage imports by cutting or removing the current 40 per cent tax, or by buying directly from top suppliers such as Russia.
Instead, it has dipped into state reserves to sell wheat to bulk consumers, such as flour millers and biscuit-makers, to try to curb domestic prices that have been above the state-fixed minimum buying price since the last crop was harvested.
"Even after selling a massive quantity, we managed to ensure that the stock level didn't fall below the buffer norm. Going forward, the government is keen to ensure that wheat stocks do not fall below 10 million tons," the government official said.
The government has buffer and strategic reserve norms that mandate holding wheat stocks at or above 7.46 million tonnes on April 1.
This year, the government needs to achieve its target of procuring 30 million to 32 million tons of wheat from farmers to ensure that stock levels remain above the buffer norm for the next season, said a dealer.