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Wheat Prices Continue to Rise Amid Subdued Supply and Strong Demand

27 May 2024 5:44 pm
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New Delhi, May 27 (Commoditiescontrol): Wheat prices continued their upward trajectory across major trading zones in India today, driven by supply constraints resulting from declining arrivals in major production areas. The mismatch between ready supply and consumption demand for processing in the short term has fueled the price surge.

Wheat prices quoted up by INR 10-30 per quintal across major centers today. Arrivals have significantly declined in the Punjab/Haryana zone, while the supply situation in UP/MP/Rajasthan does not look promising.

Kandla buyers were active at INR 2625 per quintal, likely to transport wheat to South buyers through sea routes.

South buyers were very active, with prices in Salem/Tumkur/Erode crossing the 3000 mark and quoted at INR 3000-3030 per quintal, up by 30 compared to the previous session.

Sentiments were further supported by the possibility of the government decreasing or stopping Bharat Atta sales, as many millers have already halted receiving wheat for Bharat Atta processing deals.

Government procurement stands at around 263 lakh tons, with the practical overall procurement likely to reach around 265 lakh tons. With a starting balance stock of around 75 lakh tons, the supply situation may tighten if the government sells bulk quantities of wheat in the open market.

International wheat prices have surged by over 15% in the last 10 days, with Ukraine-Russian import CNF quotes now at USD 295-300 per ton.

If India removes import duty, CNF quotes could rise by at least USD 10-15 per ton, resulting in imports at ports costing around INR 2750-2800 per quintal.

Despite sluggish off-take of processed wheat products for now, wheat prices are expected to rise further in the near term. The supply constraints, strong demand, and potential changes in government policies and international market dynamics are likely to continue driving price movements in the coming weeks.

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