Friday, June 28, 2024
Business Session 2: Wheat Economics: Demand, Supply, and Pricing
This session was moderated by Ms. Manisha Gupta, Group Commodities Editor at CNBC-TV18, and featured an insightful panel discussion with industry experts on the dynamics of wheat economics, covering demand, supply, and pricing strategies.
Panel Discussion Highlights:
Evaluating Global Wheat Demand and Supply Dynamics
Mr. Arnaud Petit, Executive Director of the International Grain Council, provided an overview of global wheat production and consumption trends. He highlighted that global wheat production is forecasted to remain stable at 793 million tons, impacted by adverse weather conditions in Europe and Russia. Consumption is projected to decline to 800 million tons, primarily due to reduced feed demand, leading to a contraction in global trade.
Decoding Supply Chain Mechanisms in Wheat Distribution
Mr. Somnath Chatterjee, Executive Vice President - Head of Procurement & Logistics at ITC Ltd. - Foods Division, discussed the importance of efficient supply chain management to handle fluctuations in wheat supply and demand. He emphasized the need for improved infrastructure to support wheat distribution in India.
Strategies for Navigating Wheat Pricing in the Global Market
Mr. Sumit Gupta, CEO of Asia Business at McDonald Pelz Global Commodities, shared strategies for navigating global wheat pricing. He discussed the impact of Black Sea region exports and competitive pricing from Russia and Ukraine on global markets.
Insights on Canadian Wheat Demand and Supply
Mr. Leif Carlson, Director of Market Intelligence and Trade Policy at Cereals Canada, provided insights into Canadian wheat production. He reported that seeding in western Canada was complete, with early-season precipitation supporting a larger hard red spring and durum wheat crop. He highlighted the importance of continual monitoring of growing conditions and official estimates.
Leadership in Wheat Products Promotion and Supply Chain Management
Mr. Ajay Goyal, Chairman of the Wheat Products Promotion Society (WPPS), focused on promoting wheat products and strengthening supply chain management to ensure consistent availability and quality.
Impact of Global Wheat Supplies
Mr. Ashish Chaturvedi, General Manager for Rice and Grains Business at Olam Agri India Pvt Ltd, discussed discrepancies between government production data and private trade estimates, advocating for better data transparency and accurate reporting.
Wheat Market: Current Trends and Future Perspectives
Mr. Sanjeev Asthana, CEO of Patanjali Foods, discussed current trends in the wheat market, including the potential benefits of imports to stabilize prices and prevent hoarding.
Key Takeaways:
Government Production Data vs. Private Trade Data:
There is a discrepancy between government production numbers and private trade data, highlighting the need for better data transparency.
Wheat Consumption Data:
Estimating wheat consumption in India is challenging, and reliable government consumption data is necessary.
Wheat Imports:
Wheat imports should be considered to enhance stock availability, control prices, and discourage hoarding. Current global prices are favorable, with potential CFR prices from the Black Sea region around $275-$280 per ton.
Logistics and Warehousing:
South Indian ports can handle only 3 to 4 million metric tons (MMT) of wheat in the next 6 to 8 months, even if imports are allowed. Improved logistics and warehousing capacity are needed.
Government Buffer Stocks:
Increasing government buffer stocks is recommended to enable timely market interventions and price controls.
Recommendations:
🔹 Data Transparency:
Publish reliable consumption data to aid better market understanding and planning.
🔹 Import Strategy:
Consider wheat imports to stabilize domestic supply and prices, especially from the Black Sea region.
🔹 Logistics Planning:
Improve logistics and warehousing capacity, particularly in southern ports, to handle increased import volumes efficiently.
🔹 Buffer Stock Management:
Increase buffer stocks to allow the government to manage supply and intervene in the market when necessary.
🔹 Monitoring and Regulation:
Monitor and regulate potential hoarding and unreported stocking to ensure market transparency and stability.
🔹 Supportive Policies:
Implement policies that support the development of the wheat supply chain, including infrastructure improvements and incentives for private sector participation.
These recommendations aim to enhance wheat availability, control prices, improve nutritional quality, and ensure sustainable and secure food production and supply chains in India.
For a detailed discussion and expert insights, watch the full session video linked below. Don't forget to like, share, and subscribe for more updates on wheat economics and supply chain management.