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Chennai, Nov. 2

Wheat prices in the domestic market have raced to a record Rs 1,400 a quintal with the Centre fixing a higher price for selling the grain under the open market sale scheme.

During the weekend, prices in the New Delhi market, the benchmark, were quoted at Rs 1,405 a quintal for the dara (loose) variety that is used by roller flour mills. On September 30, dara was quoted at Rs 1,200. In the futures market, wheat for delivery this month was quoted at Rs 1,426 a quintal on NCDEX. Prices have been rising on reports that the Centre plans to sell five lakh tonnes (lt) in the open market to bulk users at Rs 1,379.70-1,728.23 a quintal. The price, applicable for October only, depends on the distance of the place where the wheat is to be delivered. Bulk users will have to foot an additional Rs 17 a quintal this month towards warehouse and interest charges.

In view of the higher wheat prices, flour mills have increased maida prices to Rs 1,000 for a 50-kg bag, and that of sooji to Rs 1,050 from Rs 950. "The Centre's move on free sale has led to a flare-up in the market. The offer price for bulk users is very high," said industry sources.

Buffer-stocks

The decision to sell wheat from the buffer-stocks, estimated to be 281.8 lt on October 1, was taken by the Cabinet Committee on Economic Affairs. Though the Food Ministry's note to the Food Corporation of India talked of tenders being floated for wheat sale to bulk users last month itself, nothing has happened so far.

"The stocks with the Government are above the buffer norms. Global prices too are low. The only reason for this run-up is the Centre's move to sell wheat at higher prices," the sources said.

Wheat on the Chicago Board of Trade closed up at $211 (Rs 9,925) a tonne during the weekend in view of the delay in harvests in the US. The price is expected to drop to $158 (Rs 7,430) by December, according to analysts.

Some of the flour mills in the South are toying with the idea of importing wheat. This is despite the Centre imposing stringent phytosanitary norms for wheat imports.

"Overseas sellers are charging an additional $25 a tonne to sell to us in view of the stringent phytosanitary norms. That too, we may get it in containers only, and not in bulk," said the sources.

Inflation

They said with a high buffer stocks the Centre will have to offload before March when the new arrivals begin. "The Centre it will have to fix a lower price for wheat in the open sale if it intends to keep inflation under control," the sources said.

A target of 82 million tonnes of wheat has been set for next year against 80.58 million tonnes this year, according to the Agriculture Secretary, Mr T. Nandakumar.

More Stories on : Wheat | Commodity Markets | Economy

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