Millers, especially in the South, are finding it difficult to source wheat. This is even as wheat prices have firmed up in recent weeks amid a slowdown in arrivals while exports have gained momentum.

No trader is willing to commit since exporters, who are active in the market, seem to have deeper pockets. Further, farmers are also holding back produce anticipating better prices.

Wheat production has been estimated at a record at 94 million tonnes, and the Government’s procurement has also been at an all-time high. “So the Government has procured more than what was seen as extra production,” said M.V. Balasubramanian, Managing Director of Sarathy Enterprises (formerly Narasu’s Roller Flour Mills).

Also, there are no details on the exact quantity procured by exporters. The overall wheat exports since September last year are pegged at 1.8 million tonnes.

Adi Narayan Gupta, President, Roller Flour Millers Federation of India, said: “The availability of wheat is poor and we feel the Government should stop exports by private trade.”.

Until the news of drought affecting the US and Black Sea wheat crop came, wheat was available in ample measure.

Balasubramaniam said: “Even if someone commits to supply wheat, it will take at least 25 days now.” “We are now seeing shortage throughout the country,” he said adding that there should be a ceiling for exports by private parties.

‘confusing situation’

S. Pramod Kumar, Executive Director of the Bangalore-based Sunil Agro Foods, said, “The situation is pretty confusing. Despite a record harvest there’s a physical shortage of wheat.”

Uttar Pradesh and Rajasthan were reported to have surplus wheat but all that now has gone missing. Either exporters have bought the produce or farmers are holding on to stocks expecting better prices. Most of the available wheat is now moving towards ports such as Kandla and Visakhapatnam.

Grains analyst Tejinder Narang said: “The private trade is going ahead with exports as the market prices are supportive. As a result, farmers are also getting better prices.” The meeting of Russian Commission on Food Security, scheduled to be held on August 8 to discuss the grain market and exports, could set the price trend. If Russia decides to allow exports, there will be pressure on prices or else they’ll firm up, he said.

Prices have firmed up by an average of Rs 200 a quintal in the past one month. Gupta of the Millers Federation said that this is being reflected in prices of products such as atta and maida, which are also seeing a rise. The wheat prices that were quoting around Rs 16,500 a tonne a month ago are now ruling at Rs 17,250 a tonne for delivery in Tamil Nadu.

The Centre came up with the open market sale scheme wherein it was to sell 30 lakh tonnes at Rs 1,170 a quintal. Of this, 13 lakh tonnes were to be sold during July, August and September. However, it has stopped the sale abruptly after prices began to increase in the global market.

At least 60 per cent of the allotted wheat has been sold and millers see two reasons for the abrupt end to the open market sale. Either the Centre does not have the required wheat or the demand is far higher, they say. Though there were rumours that the price will be raised to Rs 1,285, there has been no announcement in this regard. Some of the wheat earmarked to states such as Karnataka and Delhi is being diverted to other States, millers claimed.

Australian wheat which was offered at $310 a tonne in containers is now quoted at $460. Balasubramanian said: “Prices are likely to firm up further since the drought effect in the Black Sea region is feared to be worse than anticipated.”

“The way things are going, we may not get wheat for conversion into maida for Diwali,” he said.

(This article was published on August 7, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.