The Hindu Business Line : Wheat prices flare up again

Rising concern
The rise in prices comes despite imports gathering steam and the Centre striking deals to bring more wheat into the country.
Flour mill industry sources said traders in Delhi were pointing to global prices for quoting higher rates.

Chennai , Aug. 17

Wheat prices are in the news again. The prices have flared up sharply in the past week and a majority of the traders seem to have no clue as to what is happening in the market.

"It is difficult to say what is happening. But we are also not getting any offer, either from the global or domestic market," said a South-based flour miller.

Spot prices for wheat (Dara) in New Delhi were quoted at Rs 966 a quintal, a little off from the high of Rs 985 it hit on February 4 just after the Centre decided to import wheat. Futures contract prices, too, have moved in tandem and rates for November and December topped Rs 1,000 a quintal on Thursday. Wheat for September delivery is quoting at Rs 972 on NCDEX, while November and December deliveries are ruling at Rs 1,006 and Rs 1,019 respectively.

The rise in prices comes despite imports gathering steam and the Centre striking deals to bring more wheat into the country.

"Trade is almost at a standstill. Prices have gone through the roof. Yesterday, the prices were Rs 940 in Delhi and today, they have gone up again," said Mr R.K. Mohan, President, Tamil Nadu Flour Mills Association.

That translates to a cost of Rs 1,160 for wheat free-on-rails (f.o.r)Bangalore/Coimbatore.

"It is a psyche due to rains affecting parts of Gujarat from where some of the supplies come. Wheat is available," said Mr Vinod Kapoor, President of Wheat Products Promotion Society.

Flour mill industry sources said traders in Delhi were pointing to global prices for quoting higher rates. Wheat for September delivery was quoted around $162.50 a tonne on CBoT and on Thursday, the US market looked bullish as Egypt bought 60,000 tonnes and trade talked of India entering the global market again for wheat.

"The global market is looking up in view of dry weather in Europe, where harvest has begun early, and reports of lower yield. Reports from China talk of foodgrains production being affected," said the flour mill industry sources.

Though private imports, at a concessional duty of 5.2 per cent, are gathering steam, flour mills are complaining that the quality of wheat was ordinary. "The quality of Canadian and Ukraine wheat that have arrived in the South aren't encouraging," said Mr Mohan.

On Wednesday, a flour mill in Coimbatore bought around 3,000 tonnes of Canadian wheat that has arrived in Tuticorin at Rs 1,143 plus 2 per cent tax f.o.r Tuticorin.

Australia's AWB had come forward to sell wheat at $220 a tonne two weeks ago but nothing had translated into any deal, the sources said. Some private traders have got together to contract another consignment of Russian wheat at $190 a tonne and loading is on at one of the Black Sea ports. "It is an old obligation. Now, Russian wheat is quoted at $200," said the sources. The fact that Russian wheat is sold at discount to Indian wheat was not being taken into account, they added.

"The Centre will have to step in. It can release the wheat it has imported at market prices to cool down things. It can also extend the date for import of wheat by private traders. It can also crackdown on speculation by insisting on delivery of futures contract," Mr Mohan said.

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