Wheat Prices Fall with Government Stock Limit Cuts, New Arrivals Dampen Sentiment

New Delhi, Feb 13 (Commoditiescontrol): Wheat prices traded steady to weak across major centers as the government's decision to decrease stock limits exerted pressure on prices. The initiation of new arrivals further contributed to subdued sentiments. In Indore mandi, 3,000 bags of new wheat arrived, with prices quoted at Rs 2,450, while Lokwan new wheat was priced between Rs 2,600-3,000. MP Rajgarh mandi saw arrivals of 6,200 bags, and Dhar mandi reported 5,000 bags. The influx of good arrivals in MP mandis is pressurizing wheat prices across India.

Wheat harvesting is gradually gaining momentum, leading to increased supplies in mandis. This surge in supplies is expected to keep wheat prices steady to weak in the near term. Although current conditions favor a bumper crop, the upcoming two months' weather will be crucial. Any deviation from normal temperatures could significantly impact wheat yields, potentially affecting the government's estimated production of 114 million tons.

Delhi witnessed a slight decline of Rs 50 per quintal, settling at Rs 2,550 per quintal. Bihar saw a decline of Rs 20 per quintal, trading at Rs 2,580 per quintal. Kolkata observed a decline to Rs 2,710 per quintal, down by Rs 20 per quintal, attributed to increased OMSS supplies in local markets.

UP market traded down by Rs 30 per quintal at Rs 2,550 per quintal, with muted demand from Southern Millers. UP-Bengaluru line traded at Rs 2,970 per quintal, down by Rs 20 per quintal.

Rajasthan traded down at Rs 2,550 per quintal, and the MP market traded at Rs 2,570 per quintal, down by Rs 30 per quintal, with OMSS supplies putting pressure on prices.

Black Sea wheat is being traded at CNF 278 per ton, with a healthy parity of USD 30-40 per ton if India opens up imports this year.

Since the Minimum Support Price (MSP) of new wheat is at Rs 2,275 per quintal and government procurement starts at that rate, mandi prices may decline to the Rs 2,250-2,275 range from the current Rs 2,400-2,425 range. However, if the government provides a bonus for procurement, prices may not decline significantly.

With the revised wheat stock limit applicable until March 31, 2024, major stock build-up by bulk stockists is unlikely until then. Consequently, wheat prices are expected to trade weak in the near term.