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Wheat Prices Steady to Weak Amid Subdued Demand

28 May 2024 6:02 pm
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New Delhi, May 28 (CommoditiesControl): Wheat prices traded steady to weak today as demand was muted due to record heat affecting many states. Arrivals have significantly declined in the Punjab/Haryana zone, and the supply from UP, MP, and Rajasthan also looks unfavorable.

In Kandla, buyers were active at INR 2625 per quintal, purchasing wheat for transportation to South India through sea routes. In South India, buyers in Salem, Tumkur, and Erode were very active, with prices crossing the INR 3000 mark and quoted steady at INR 3000-3030 per quintal.

Market sentiments were supported by the possibility of the government decreasing or stopping "Bharat Atta" sales. Many millers have already ceased receiving wheat for "Bharat Atta" processing deals. If the government starts selling wheat through the Open Market Sale Scheme (OMSS), it is expected to discontinue "Bharat Atta" sales simultaneously.

The government has procured around 263 lakh tons, with an overall practical procurement target of approximately 265 lakh tons. The starting balance stock was around 75 lakh tons. The government requires around 180-200 lakh tons for various schemes. Given the current stock scenario, the supply situation might tighten if the government sells large quantities of wheat in the open market.

In the Delhi market, prices traded lower by INR 20 per quintal at INR 2600 per quintal. In Rajasthan, new wheat traded steady at INR 2630 per quintal. In Bengaluru, prices traded steady at INR 2940 per quintal (net). In MP, wheat traded steady at INR 2650 per quintal ex-warehouse. In UP, wheat traded steady at INR 2540 per quintal, while in Gujarat, it traded steady at INR 2650 per quintal.

International wheat prices have increased by over 15% in the last 10 days. Ukraine-Russian import CNF quotes are at USD 295-300 per ton. If India removes import duty, CNF quotes would rise by at least USD 10-15 per ton, bringing imports at ports to around INR 2750-2800 per quintal. Adding freight and CHA charges of INR 200-250 per quintal would deliver it around INR 2950-3050 per quintal. Even if import duty is removed, it will take at least two months for wheat to arrive in India from the Black Sea/Russia.

Looking at the current scenario, wheat prices are likely to rise further in the near term despite the sluggish off-take of processed wheat products currently. Supply is expected to remain weak in the coming weeks as the government is unlikely to start selling through OMSS before the first week of June, coinciding with election result announcements.

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