NEW DELHI (Commoditiescontrol) - Wheat prices are expected to rise up to Rs. 50-150/100kg by June end. Consumer industries and trading companies are buying aggressively at the moment, while supply is dwindling at a faster pace. Traders expect wheat prices may follow government pricing policy. Currently, wheat is traded below government’s base price for sale.
Prices of mill quality wheat are hovering between Rs. 1,330-1,340/100kg in various markets of Rajasthan. The variety’s prices are little better at Indore and Madhya Pradesh at Rs. 1,350-1,425/100kg, while it is available at Rs. 1,500-1,550/100kg in Delhi. Prices stay at higher level in Delhi due to increased consumption and logistic costs. Few days ago, the commodity was sold around Rs. 50-75/100kg cheaper than present price when supply reached its peak. But lower supply at present is supporting market sentiments.
A Kota-based trader Mr. Uttam Chand Jethwani says that wheat prices may rise up to 100-150/100kg because present price level is very much supportive. Large sized consumer and trading companies are buying wheat very aggressively. They are offering attractive quotes so that they can incur huge profit by selling at physical markets. They are offering wheat in the range of Rs. 1,500-1,525/100kg at their godown at Delhi and other parts of country. So, traders are very comfortable to supply wheat to these companies.
According to Mr. Jethwani’s estimate, these companies have procured around 35-40 lakh bags wheat from Rajasthan. The daily supply has decreased to 2-2.5 lakh bags in the state, which has crossed 4-5 lakh bags two week ago. Mr. Jethwani said that there are no signs of bearish tone and the market is ready to see higher price level.
Another trader from Bhopal Mr. Manohar Khandelwal said that supply declined to around 50,000 bags in the state. Farmers are reluctant to sell wheat as they have fulfilled their immediate financial needs. Scorching heat is also discouraging them to bring the supply in the market yards. He said that quality of wheat is better so there is no scope of lowering the prices. Prices are getting support from regular buying of large sized companies. However, companies are cautious for quality. Now quality is not an issue as inferior quality supply has already been sold out.
A Delhi-based trader Mr. Rajesh Jain said that wheat prices will get support during mid June when supply would be negligible. Wheat prices may gain by Rs. 50-60/100kg then. While it will rise further Rs. 100/100kg till June end or July. He explained that the government had fixed base price of Rs. 1,500/100kg in Punjab and Haryana. Mill delivery price is around Rs. 1,600-1,650/100kg.
This year, the Central government will definitely increase base prices so there is margin of around Rs. 100-150/100kg. It may release wheat under Open Market Sale Scheme (OMSS) very soon. The government’s base price will determine market sentiment, Mr. Jain feels.
The market is also getting support from the fact that wheat production may decline from it’s previous estimate due to adverse weather during March and April this year. According to the third advance estimate of the agriculture department, wheat production may fall to 907.8 lakh tonnes, much lower than the government’s set production target of 940 lakh tonnes. Last year, wheat production in the country was seen at 958.5 lakh tonnes.
(By Commoditiescontrol Bureau;+91-22-61391533)
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