The Hindu Business Line : Wheat prices gain on Centre's signals

Grain scenario
Demand for flour, maida likely to pick up after monsoon sets in.
Prices have gained on Pawar's statement that private imports may not be allowed.
Ample supply keeping price rise in check.

Chennai , June 12

Wheat prices have begun to gain during the last couple of trading sessions but the rates are likely to remain under control at least until the monsoon sets in. This is in view of low demand for wheat products such as flour and maida, according to trade sources.

Also with supply being ample, the rise in the prices has been moderate.

Getting required quantity

Even the increase has come only in view of contrasting signals from the Centre, said the sources, who did not wish to be identified.

"Currently, wheat supply to the market and mills is adequate. We are even able to get 20 lorries at a stretch if we want to. Traders and brokers who have been holding stocks are the ones who are offering wheat in the market," they added.

"Mills are a bit slow in procuring since demand for products is a little low. But we expect it to pick up soon."

While prices for mill delivery are steady at Rs 875 a quintal, market prices are around Rs 780, the sources said.

"We have seen some improvement in the market prices by Rs 6-8 in the last couple of days."

Only for buffer

According to traders, the Union Food Minister, Mr Sharad Pawar's statement last week in Washington, that imports would be stopped once the quantity for buffer stock is bought, has led to some rise in the prices. "

Mr Pawar had earlier hinted at the user industry such as flour mills and biscuit makers being allowed to import. But this statement is a bit contradictory, leading to some nervousness in the market," the sources said.

Speculators' role

The trade is also pointing out at speculators and some select players behind the current rise. "Those holding long positions in the futures market are interested in keeping the prices at higher levels. This is also one of the reasons for the rates looking up."

On Monday, wheat dara was quoted at Rs 842.50 a quintal at Hapur against Rs 832 a week back. In Delhi, the same quality wheat was quoted at Rs 863-65 against Rs 853-55 last week.

Futures price

In the futures market, wheat for June delivery is quoted at Rs 871 a quintal on the NCDEX and Rs 874 on the MCX. For July, the prices are Rs 901 and Rs 903 respectively.

December contracts on the NCDEX are currently ruling at Rs 1,000. During most part of April, December contracts hovered around Rs 1,050 a quintal.

"Prices in the futures and market are certainly lower than what they were when arrivals began in the market. That was because the Government procurement agencies and private firms rushed to buy," said a flour mill industry source.

Prices may firm up

"With procurement operations off, farmers and intermediaries are bringing in stocks. They are also not feeling any pressure as was seen during April and early May." Also, quality of the arrivals is good.

However, trade sources expect prices to firm up by Rs 20 in the next couple of weeks, as demand for flour and other wheat products is expected to increase once the monsoon sets in.

Going by the arrivals, the sources said, wheat production was seen at around last year's level. The Centre has estimated production at 72 million tonnes, while subsequently lowering last year's production to a little over 68 million tonnes.