A head of its meeting, the Reserve Bank of India (RBI) can take some solace from the softening food commodity prices.
However, the events surrounding the last few weeks show that the fall may not be uniform across all commodities, and cereals like wheat and rice could be the outliers.
An agency report said that local wheat prices jumped to a record Rs 23,547 per tonne on Wednesday.
That is a 12 per cent rise from the recent lows that followed the government’s surprise ban on exports on May 14.
The spike was due to rising demand amid dwindling supply of a crop damaged by heat wave, Reuters said.
In case of paddy, patchy monsoon since the start of June over the main paddy growing regions of UP, Bihar, Jharkhand, West Bengal and Odisha has pulled down acreage.
Till the middle of July, the acreage was almost 17 per cent less than last year.
“Till July 25, out of the 36 subdivisions, only seven received deficient rainfall during this period.
"However, there has been uneven distribution of rainfall and there is growing concern that this may translate into lower sowing, resulting in lower production.
"This, in turn, may even adversely impact food inflation,” Jahnavi Prabhakar, economist at Bank of Baroda, said in a note released a few days back.
With the revival of monsoon over several hitherto-parched lands of UP, Bihar, Jharkhand and West Bengal, there is hope that paddy planting would pick up and cross last year’s levels.
However, given that a sizeable portion of the sowing is happening after the peak period, there are questions on the final harvest.
“Yes, the situation was bad till a few weeks back, that is till the end of June, but since the middle of July, there has been a revival in rains.
"This makes us hopeful that in the final analysis, overall paddy acreage may not be much less than last year,” Vinod Kaul, executive director of All India Rice Exporters’ Association, told Business Standard.
He said the price rise seen in the last few days in case of rice was largely due to the deficient rains in some of the major growing states.
“In case of exports, we are confident that India will be able to export 20-22 million tonnes of rice this year.
"This includes 4.5 million tonnes of basmati rice,” Kaul said.
However, all are not so optimistic.
Rahul Chauhan, a commodities analyst at iGrain India, said that rice markets have improved as rainfall in eastern parts of India is not up to the mark.
And, globally there is a shortage of all grains, including rice.
“Major rice exporting countries either have less stocks or their prices are more than Indian rates. This is why export enquiries from India are high,” Chauhan said.
He added that rice exporters are also in a hurry to ship more as they fear wheat and rice exports may be restricted if prices keep on rising.
Chauhan said rice prices in the near future may moderate and all eyes will be on export restrictions if the government moves towards that direction.
The only saving grace is that, unlike wheat, rice stocks in the central pool are much higher than required.
As on July 1, rice stocks in the central pool were almost 134 per cent more than the buffer stock requirements.
On July 1, stocks in the central pool were around 31.5 million tonnes.
This is much higher than the requirement of 13.5 million tonnes.
These rice stocks do not include around 23.15 million tonnes of unmilled paddy lying with millers.
This is the highest since 2015, official data showed.
As and when it gets added to the central pool, the stock will mean another 15.51 million tonnes of rice for PDS and other operations of the government.
In contrast, wheat stocks at the same time (July 1) was around 28.51 million tonnes.
This is just around 1 million tonnes more than what is required to be kept as buffer and strategic reserve.
The last time wheat stocks in the central pool were lower than this (as on July 1) was way back in 2008.
The stocks were then pegged at 24.91 million tonnes.
Wheat procurement in FY23 dropped by almost 59 per cent to 18.78 million tonnes compared to the same period last year.
This was because farmers opted to sell to private traders outside the official procurement system due to high prices.
This came as overall production dropped to 106.41 million tonnes, according to the third advance estimate, from 111 million tonnes expected earlier.
In total (both wheat and rice), the data shows that as on July 1, India has around 83.36 million tonnes of foodgrains in its stocks.
This is the lowest in the last three years but does not include coarse cereals, which is nominal.
To manage its dwindling wheat inventories, the Centre, in early May, replaced around 5.5 million tonnes of wheat with rice under the Pradhan Mantri Gareeb Kalyan Yojana.
It later replaced another 6.1 million tonnes of wheat with rice under the NFSA.
It freed up around 11 million tonnes of wheat to manage stocks.
The Centre recently said that wheat stocks in the central pool at the start of the next fiscal are expected to be 13.4 million tonnes.
This will be almost 80 per cent more than the buffer norm.
Meanwhile, a few of the scanty rain-hit states like Jharkhand have already started taking contingency measures to minimise the damage to agriculture and crops.