The Hindu Business Line : Govt move may keep wheat prices under control

The Union Government has extended duty-free wheat imports by the private trade till February 28 from December 31. The move is seen by the trade and flour mills as one that could help keep wheat prices on leash.

"Prices of wheat may not go up in view of the Centre's decision. But we suspect if the Food Ministry can procure the targeted quantity of wheat for buffer stocks when arrivals begin in March," flourmill sources in Tamil Nadu said.

The decision could also help liquidate stocks lying in some of the warehouses in southern ports. The wheat is said to have been brought by multi-national companies. "Nearly 70,000-80,000 tonnes of unsold wheat could be sold to mills in the South," the sources said.

`Not much gain'

A Bangalore-based miller said the decision to extend duty-free imports may not result in much gain. "Imports have come down to a trickle due to high prices," the miller said.

Trade sources said multi-nationals such as Cargill and Concordia were bringing in about 50,000 tonnes each of Russian wheat.

While the user industries such as flourmills are not facing problem of wheat availability, they are mainly helped by the imported consignments.

"Imported wheat can be consumed only in South and by mills within 200-300 km range from the ports. Every port in the South has some material to be sold," the sources said.

Currently, imported wheat mill delivered costs Rs 12,000 a tonne, domestic wheat is quoted at Rs 12,800-12,900. However, the mills have to do with whatever quality is supplied by the sellers/importers.

"Importers say they are giving Russian wheat but they don't say what type or quality it is," the sources said.

On Friday, wheat dara was quoted at Rs 1,100-1,102 a quintal in New Delhi, much lower from the peak of Rs 1,160 a quintal touched during the second week last month. In the futures market, December contracts on NCDEX were quoted at Rs 1,017 a quintal, while on MCX it ruled at Rs 1,100. But contracts for subsequent months ended lower with January being quoted at Rs 1,058 and March at Rs 968.

Lower wheat production during the last two years has forced the country to import wheat this year. While 55 lakh tonnes are being imported by the State Trading Corporation for the Food Corporation India, the private trade is believed to have imported at least 15-20 lakh tonnes.

"Imports under current global market situation are a costly proposition. Wheat from Russian origin, which is usually discounted to Indian wheat, is currently quoting around $250 a tonne compared with $200 three months ago," the sources said.

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