New Delhi, Feb 15 (Commoditiescontrol): Wheat prices continued to trade steady to weak in various markets, driven by the combination of rising OMSS (Open Market Sale Scheme) supplies and optimistic expectations for the upcoming new crop, keeping sentiment under pressure.
In the Indore mandi, 1300 bags of new wheat arrived today, with prices quoted at Rs 2500-2550 for mill quality, while Lokwan new wheat was priced at Rs 2600-2690.
Government wheat stocks with the Food Corporation of India (FCI) witnessed a 14% year-on-year and a 19% month-on-month decline to 132 lakh tons as of February 1. Despite being at a nearly seven-year low, the wheat stock exceeds the buffer norm requirement, indicating sufficient stocks for potential control of any major uptrend in prices in the coming weeks.
Since the initiation of OMSS auctions on June 28, FCI has sold more than 80 lakh tons of wheat this year, including nearly 33 lakh tons in the open market during the current fiscal year (2022-23).
Market-wise, Delhi witnessed a decline of Rs 50 per quintal, trading at Rs 2500 per quintal. Bihar wheat prices decreased by Rs 10 per quintal, reaching Rs 2560 per quintal. Kolkata reported a decrease to Rs 2690 per quintal, down by Rs 10 per quintal due to an increase in OMSS supplies in local markets.
In Uttar Pradesh, the market traded down by Rs 50 per quintal at Rs 2500 per quintal, with muted demand from Southern Millers. The UP-Bengaluru line traded at Rs 2950 per quintal, down by Rs 10 per quintal. Rajasthan also witnessed a decline of Rs 50 per quintal, trading at Rs 2500 per quintal. The Madhya Pradesh market traded at Rs 2540 per quintal, down by Rs 20 per quintal, with OMSS supplies putting pressure on prices.
Black Sea wheat is being traded at CNF 275 per ton, remaining steady due to low export demand. There is a healthy parity of USD 30-40 per ton if India opens up imports this year.
Given that the Minimum Support Price (MSP) of new wheat is at Rs 2275 per quintal, and government procurement starts at that rate, mandi prices may decline to the range of Rs 2250-2275 from the current Rs 2400-2425 range. However, if the government provides a bonus for procurement, prices may not decline significantly.
Considering that the revised wheat stock limit is applicable until March 31, 2024, any major stock buildup by bulk stockists is unlikely in the near term, leading to expectations of weak wheat prices in the coming months.
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