Business Daily from THE HINDU group of publications
Friday, Aug 25, 2006
Business Daily from THE HINDU group of publications Friday, Aug 25, 2006 |
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Agri-Biz & Commodities - Exports & Imports Southern flour mills strike deal to buy Australian wheat M.R. Subramani
Millers' choice The Australian wheat will cost us Rs 1,300 plus tax at mill gate. In contrast, domestic wheat will cost us Rs 1,160 free-on-rails Bangalore/Coimbatore. The Australian wheat is preferred by the flour mills since it is more suitable for rotis and chappathis. On the other hand, Russian and Canadian wheat are suitable for biscuits.
Chennai , Aug. 24 Roller flour mills in southern India, in search of quality produce and assured supply, are coming forward to pay higher price for wheat. On Thursday, Australia's AWB sold two consignments of wheat to the flour mills. While one consignment of 27,500 tonnes was sold at $229 a tonne c&f, Tuticorin, the other of 22,000 tonnes was sold at $231.50 a tonne c&f, Tuticorin. According to trade sources, the deal has been struck purely on AWB's efforts, which got in touch with individual mills and pooled in their demand. The first consignment will arrive in November and the other in December.
Import deals
The deals are on the heels of the private trade arranging to import some 1.5 lakh tonnes in the course of the next couple of months. While Kolkata-based R. Pyarelal has contracted 50,000 tonnes of Russian wheat at $187-194 a tonne, two other private parties have struck deals of 50,000 tonnes each to bring Russian wheat in the next six weeks. These deals have been struck around $195 a tonne c&f South India. Thursday's AWB deal comes at a time when wheat prices tended to rise again after witnessing a fall earlier in the week. Prices in New Delhi declined by nearly Rs 30 a quintal on fears that the Centre may impose stock limits after Parliament passed the Essential Commodities (Amendment) Bill, 2005 on Tuesday. The amended Essential Commodities Act empowers the Union Government to add or delete an item from the list of essential commodities for six months.
Stock limits
"Prices declined on Tuesday and Wednesday as traders feared stock limits may be imposed. But no one was willing to sell despite quotes being lower. Today, prices have gone up again," said a Bangalore-based flour miller. An Uttar Pradesh-based flour miller said stocks were available but sellers were looking for prices around Rs 1,000 a quintal. "Everyone wants a higher price. No one is ready to settle for a lower price," he said. Mr Pramod Kumar, Executive Director of Sunil Agro Foods Ltd, said: "Stocks may be available now. But there are seven months to go for the next crop to arrive in the market. That should speak for sellers and growers demanding higher price." "If the Centre threatens to clamp stock limits, prices will go down immediately. But that situation will prevail only for a couple of days. After that, it will be back to square one as it happened on Thursday," a South India-based miller said.
Price chart
On Thursday, wheat (dara) was quoted in Delhi at Rs 972-974 a quintal against Rs 970 on Wednesday. On Friday last, it topped Rs 1,000 a quintal. In the futures market, wheat for September delivery was quoted at Rs 966.20 on NCDEX and Rs 981 on MCX. October contracts ruled at Rs 989.40 on NCDEX and Rs 1,005 on MCX. The quotes are marginally higher than Wednesday but lower than what was quoted on Friday last. "The Australian wheat will cost us Rs 1,300 plus tax at mill gate. In contrast, domestic wheat will cost us Rs 1,160 free-on-rails Bangalore/Coimbatore. The quality of wheat is the same as the one AWB is offering the State Trading Corporation (STC) but it is not of the one which we imported from Down Under seven years ago," said Mr R.K. Mohan, President, Tamil Nadu Roller Flour Mills Association.
Buffer stocks
STC is importing wheat on behalf of the Centre to build its buffer stocks. The Centre decided to allow wheat import first by STC in February for building buffer stocks and then by private trade in June to overcome short supply. This year, wheat production is seen lower at 69.48 million tonnes (mt) against initial projections of 75.05 mt. The Australian wheat is preferred by the flour mills since it is more suitable for rotis and chappathis. On the other hand, Russian and Canadian wheat are suitable for biscuits. In fact, wheat originating from the erstwhile Soviet Union is sold at discount to Indian wheat. However, flour millers say the wheat imported from Russia or Australia would be blended with Indian wheat so that consumers would face problems in consuming them. Meanwhile, Mr Mohan said the Centre could release around 60,000 tonnes for use by flour mills in the South to calm down the market. "The Centre can release the wheat at market rates to the mills in southern States. It can review the situation after two months and decide on the next course of action," he added.
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