The Hindu Business Line : Private grain trade makes a comeback — Depleted public stocks boost price sentiments

AFTER a prolonged hibernation stretching over three years, the private grain trade is back in business, courtesy better price realisations and improved market sentiments arising from depleted public stocks.

Of the total kharif paddy arrivals of 13.10 million tonnes (mt) in the various mandis of Punjab during the ongoing 2003-04 marketing season (October-September) till November 7, private millers and traders have purchased 3.35 mt or almost 26 per cent. During the same period last year, the private trade had bought a mere 1.57 mt (13.4 per cent) of the total market arrivals of 11.72 mt in the State.

In Haryana, the enthusiasm has been even more marked. Of the cumulative mandi arrivals of 2.46 mt so far, the trade has mopped up 1.51 mt or 61 per cent, as against 0.9 mt out of 2.35 mt (38 per cent) for this period last year. In both these States, the overall crop size and market arrivals have been higher this year and, at the same time, private purchases have also gone up significantly, reflective of improved price sentiments.

IR-8 rice is currently quoting at Rs 925-960 per quintal in Delhi against Rs 810-870 per quintal during this time last year. A similar bullishness is apparent in wheat as well, with wholesale `dara' selling at Rs 740-750 per quintal, representing a year-on-year jump of Rs 100 per quintal.

Active private buying has meant that the Food Corporation of India (FCI) and State agencies have so far been able to procure only 7.69 mt of rice for the Central pool in the current market season, which is marginally below the previous season's corresponding level of 7.85 mt. This is in spite of the Agriculture Ministry estimating this year's kharif rice production at 75.05 mt, way above the previous season's drought-affected crop of 66.51 mt.

At this rate, it looks as though the total procurement for the season would end up at around the 2002-03 level of 16.4 mt. Food Ministry officials, nevertheless, believe that the figure would be closer to 20 mt. "Last year, Andhra Pradesh contributed only 2.6 mt, compared to its usual 6.5-7 mt. This year, we expect higher procurement on the back of good monsoon rains there", they noted.

The trade's perception, however, seems different and what is particularly emboldening it to undertake large-scale purchases is the huge depletion in public stocks.

As on October 1, rice stocks in the Central pool amounted to 5.24 mt -- the lowest in over a decade for that date (since the 5.1 mt level of October 1, 1992!).

At this level, rice inventories are below even the 6.50 mt minimum buffer norm prescribed for October 1.

If one includes wheat stocks of 18.43 mt, total grain inventories in the Central pool as on October 1, 2003, at 23.68 mt, are the lowest since the 15.34 mt level of October 1, 1997.

A far cry, indeed, from the situation when stocks ruled at 58.28 mt on October 1, 2001 and peaked at 64.83 mt on June 1, 2002.

Small wonder, then, the Government is now going slow on foodgrain exports, having physically shipped out 22.52 mt (13.47 mt wheat and 9.05 mt rice) between November 2001 and September 2003.

During this period, exporters have lifted an aggregate total quantity of 30.14 mt, while making payments for 34.22 mt.

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