The Hindu Business Line : Import talk stirs up a dull wheat market

Knotty issues
At current global prices, landed price of imported wheat could cost Rs 15,300 a tonne.
In contrast, the price of domestic wheat at the door-step of the user industry is Rs 12,500.

M.R. Subramani

Chennai, Aug. 20 Wheat prices have more or less stabilised around Rs 1,025 a quintal level, but on Monday reports of the Centre’s plans to float a tender for the grain’s import stirred up the market.

“The statement that an import tender will be floated soon moved the market,” industry sources said.

Up Rs 20/quintal

On Monday, wheat (dara) in New Delhi was quoted at Rs 1,037 a quintal, up Rs 20 over the weekend prices.

“Until Monday, the market was dull with prices in Khanna market ruling around Rs 955 a quintal. In fact, there is no demand from the user-industry, particularly the flour mills,” said a trader from Khanna, Punjab.

The Centre’s recent announcement that it would be allocating wheat to the States without any problem and also that it was in a position to sell wheat in the open market had made the market rule stable, the trader said. Price in the New Delhi market had touched Rs 1,067 a quintal on July 13 but the announcement talked the market down.

Prices also came down as growers, particularly in Punjab, took advantage of the higher rates and sold part of their holdings. During that time, arrivals in Khanna market was over 100 tonnes a day.

“Currently, arrivals in Khanna market are around 50 tonnes a day and farmers are hoping for a price of Rs 1,100 to bring more. In Punjab alone, there should be 4-5 lakh tonnes of wheat with the farmers,” the trader said. “Farmers are not interested in offloading the stocks with them,” he said.

Supply intact

The flour mills are not worried about availability of stocks this year unlike last year, when they pressed the panic button. “There is no problem with regard to supply. We have a better crop this time,” said Mr Pramod Kumar, President, Karnataka Flour Mills Association and Executive Director of the Bangalore-based Sunil Agro Foods.

Wheat production this year is seen above 74 million tonnes (mt) against 69.3 mt last year. On the other hand, carryover stocks of wheat last year was negligible but this year imported wheat of over 40 lakh tonnes are lying near various ports.

“Private mills are unlikely to import wheat as global prices are far higher than domestic prices,” said a South-based miller.

The Centre had on July 10 announced import of 5.11 lakh tonnes of wheat through the State Trading Corporation at a price between $317 and $330 a tonne c&f after having cancelled an earlier tender in which the offers were around $260 a tonne.

Currently, wheat prices are ruling firm on tight supply and it was quoted at $307.25 (Rs 12,250) a tonne f.o.b Europe in the global market on Monday. If freight charges are to be added, then the prices could be around $375 (Rs 15,300).

‘SUFFICIENT STOCKS’

For the user-industry, especially in the South, the price of wheat at their door step is around Rs 12,500 a quintal, according to trade sources.

“We fail to understand why the Centre says it will float a new tender to import wheat when the stocks are sufficient,” wondered an industry source.

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