Mumbai, 22 May 2024 (Commoditiescontrol): Wheat prices continued to trade steady to firm across major centers in India, supported by weak domestic arrivals and reports of relatively low stock availability with the government. The limited possibility of the government starting the Open Market Sale Scheme (OMSS) soon has further buoyed market sentiments.
In Delhi, prices remained steady at INR 2510 per quintal, while Rajasthan's new wheat traded steadily at INR 2570 per quintal. Bengaluru saw prices increase by INR 10 per quintal to INR 2870 per quintal (net), and Madhya Pradesh (MP) wheat prices rose by INR 5 per quintal to INR 2580 per quintal ex-warehouse. In Uttar Pradesh (UP), prices remained steady at INR 2460 per quintal, and Gujarat continued steady trading at INR 2610 per quintal.
The wheat processing industry has urged the government to remove the 40% import duty on wheat to improve local market supplies, as current procurement is lagging behind targets and the carry-forward stock at the beginning of the fiscal year was the lowest in 16 years. Future wheat imports will depend on the monsoon, local inflation, and international markets, necessitating close monitoring. Sources indicate that with the current level of procurement, lifting the restriction on wheat export this year is improbable. The government may adjust the wheat-to-rice ratio in Public Distribution System (PDS) schemes, potentially increasing rice allocation to manage wheat stocks within the buffer. Last year, the government's PDS offtake was 17.3 million tons against an allocation of 18.6 million tons.
Rumors suggest the government plans to discontinue the distribution of Bharat Atta after June 30th, replacing it with Bharat Wheat through PDS shops. In Shahjahanpur, UP, mandi prices rose by INR 10 per quintal to INR 2360 due to lower-than-expected arrivals, which are significantly down from last year's 8000-10000 quintals to 3500 quintals. Last year, around 50 racks were dispatched from the Shahjahanpur zone, but none have been dispatched this year, despite poor mandi arrivals.
Nationally, wheat procurement reached 26.1 million tons by May 21, against a target of 37.2 million tons. FCI officials expect to procure only 27 million tons. Punjab and Haryana arrivals have significantly declined, making wheat supplies scarce at current rates, and the slow government procurement pace suggests no major rise soon. Global wheat prices are on an upward trend due to unfavorable weather in Russia, impacting import margins, which remain marginally positive only if the 40% import duty is removed. As a result, a significant decline in prices is not anticipated.
Millers are facing difficulties in passing on the increased wheat prices to consumers due to a 20-25% decrease in demand amid prevailing heatwave conditions. However, demand for processed wheat products is expected to rise with the onset of the monsoon and the upcoming festive season. South Indian millers are actively purchasing, with good trades for Bengaluru line wheat from MP at INR 2990 per quintal. Most bulk stockists are unlikely to sell supplies in the coming months, maintaining steady to firm wheat prices. Additionally, the sharp rise in global wheat prices amid unfavorable weather in Russia and Ukraine makes imports at lower rates unlikely in the near term. Overall, the wheat market sentiments appear strong in the medium to long term, with steady to firm prices expected to continue.
(By Commoditiescontrol Bureau; +91-9820130172)
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