Global prices of cereals have begun to surge since mid-June as fears of the US facing one of its worst droughts gripped markets. Since then, wheat and corn have gained over 45 per cent. The rise in corn price, in particular, has made feed grains costlier than foodgrains in India.
In fact, despite wheat gaining between Rs 200 and Rs 400 a quintal in the domestic market, it is still ruling below the minimum support price level of Rs 1,275.
In the US, the Midwest is going through its worst dry period in the last five decades, raising concern over corn and soyabean crop. This has, in turn, pushed up wheat prices.
A US forecast of next week being dry has further pushed up prices, while deficient monsoon in India has added to market woes all over. One of the main reasons for feed grains being costlier is the surging prices of soyabean and soyameal. Soyabean prices have increased over 30 per cent since mid-June to Rs 46,000-48,000 a tonne now, while soyameal has surged to Rs 41,000-41,500 from Rs 29,800-29,900 during the same period.
The feed industry uses soyameal for making compound feed. Maize (corn) and bajra are seen as immediate alternatives for soyameal.
Maize prices have increased to Rs 12,600 a tonne from Rs 10,560 during the period, while bajra rates are up at Rs 12,500 from Rs 10,650.
Paddy is also ruling lower than the feed grains but rice prices are higher in view of higher conversion costs.
Compared with global markets, prices of wheat, maize and soyabean are lower in the domestic market. Currently, wheat from the Black Sea region that is seen on a par with Indian wheat is quoted at $302 a tonne (Rs 16,700). Corn futures are quoting at $7.95 a bushel (Rs 17,250 a tonne) on the Chicago Board of Trade, while soyabean futures have soared to $16.86 a bushel (Rs 34,250 a tonne).
In the domestic markets, prices of various grains began rising after the monsoon began to falter. Since mid-June, jowar has gained over 20 per cent, finger miller or ragi by 10 per cent, maize and bajra 20 per cent and wheat between 10 and over 20 per cent.
The monsoon is 22 per cent deficient till this week. Fears of the El Nino that warms up the sea surface temperature leading to drought have only compounded the situation in the market.According to sources in the wheat milling industry, wheat prices could gain further in view of the situation in the global market. Also, 15 to 20 lakh tonnes wheat have been exported, while the Centre has procured nearly 38 million tonnes for buffer stocks. “This has left lower stocks in the hands of farmers and arrivals will continue to be low,” a miller said.