• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

M.R. Subramani

Growers reluctant to sell stocks; FCI procurement down

Chennai , April 21

Wheat growers have turned reluctant to sell their stocks as futures contracts for December delivery have gone past Rs 1,000 a quintal. This, in turn, is leading to problems for the Union Government to procure the grain for its buffer stocks.

UNWILLING SELLERS

"Farmers are not willing to sell wheat at the minimum support price (MSP) fixed by the Government. They have taken cue from the futures rates on the National Commodities and Derivatives Exchange (NCDEX) as well as the Multi Commodities Exchange (MCX)," trade sources said.

"Yes, farmers are reluctant to sell stocks to the Food Corporation of India in view of rise in futures contracts," said a Food Ministry official when contacted.

On Friday, standard wheat for December delivery ended at Rs 1,019 a quintal on NCDEX. On MCX, wheat for July delivery closed at Rs 948, while on NCDEX the same contract hit Rs 950.

In fact, on NCDEX, wheat for delivery from August onwards are close to the Rs 1,000-mark. August contracts are now quoted at Rs 970.

SPOT BUOYANT

The rise in futures contracts is also leading to buoyancy in spot prices. The rates in Hapur are currently ruling above Rs 800 a quintal from less than Rs 750 during the first week of this month.

In New Delhi, it was quoted at Rs 815-817 on Friday. MSP this year has been fixed at Rs 650 a quintal with the Centre raising it further by Rs 50 on Friday. According to official sources, FCI has so far mopped up 73 lakh tonnes of wheat, which is at least 10 lt lower than stocks procured during the same time last year. FCI has been set a target of 162 lt for wheat procument.

"Procurement is lower since arrivals were late," the sources said.

Unhappy growers

Trade sources said going by current trends and growers' unwillingness to part with their stocks at lower prices, FCI was unlikely to meet the target.

"We also feel there could be problems in meeting the target," official sources said.

More imports

Trade sources said this could result in the Centre resorting to further imports apart from the five lt contracted with AWB Ltd now.

FCI needs 180 lt of wheat for distribution through the public distribution system. Various agencies, including the US Wheat Associates, expect the country to import somewhere between 10 lt and 20 lt. (The Union Food Minister, Mr Sharad Pawar, late on Friday said the Centre would import an additional 30 lakh tonnes.)

REALISATION

"One thing is clear. It is the farmer who is benefiting from the current price trend. They realise that prices are bound to rise and, therefore, are holding back their stocks. That should explain the reason for lower arrivals," trade sources said.

As a result, arrivals are down by at least 15 lt this year. Last year, the arrivals were around 100 lt.

"If the farmer brought 100 bags of wheat last year, he is bringing in only 40 bags this year," the sources said.

Govt projection

Wheat production this year is projected by the Centre at 73.03 million tonnes (72 mt). The trade, however, feels it could be around last year's level.

"The net result will be, we think, FCI may procure around 130 lakh tonnes only," trade sources said.

More Stories on : Wheat | Commodity Exchanges

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
DGCX completes 100 days of trading

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line