Private trade waits for the fall to fulfil its needs

Private traders are waiting for wheat prices to drop with arrivals picking up in Uttar Pradesh, the country’s largest producing State, but with relatively low governmental procurement operations.

The central UP districts of Shahjahanpur, Hardoi, Mainpuri, Etawah and Kanpur are among the key markets from where millers and exporters procure wheat to meet their requirements. The arrivals this year have been delayed due to high moisture in the grain because of the recent rain and are expected to pick up after April 15.

“It will take some time for the full-scale arrivals. We expect the prices to come down by about Rs 100-150 a quintal by end-April and May,” said Adi Narayan Gupta, President of the Roller Millers Federation of India.

Currently, the average prices in UP are around Rs 1,420 a quintal, marginally higher than the Government’s minimum support price of Rs 1,350. However, in mandis such as Shahajanpur and Sitapur, the prevailing prices are below the support price.

On Monday, arrivals in Shahajanpur were at over 5,250 quintals and the average price of milling ‘dara’ wheat was Rs 1,280 a quintal.

“We are waiting for the arrivals to pick up in UP and Rajasthan to cover our requirements,” said Pramod Kumar, Executive Director of the Bangalore-based Sunil Agro Foods. UP produced about 30 million tonnes (mt) of wheat last year, a third of the country’s output.

M.P. scenario

Meanwhile, in Madhya Pradesh, the procurement by Food Corporation of India has picked up and the Government agencies have, so far, procured about 1.4 mt, almost same as that of last year.

The MP Government has announced a bonus of Rs 150 a quintal, resulting in a higher procurement price of Rs 1,500. MP is targeting a procurement of 11.5 mt, up from 8.5 mt produced last year. The wheat harvest is almost over in Gujarat, while it is yet to begin in Punjab and Haryana.

The total wheat crop this year is expected to be higher than last year at around 96 mt. The Centre expects to procure a record 44 mt of wheat in the rabi marketing season 2013-14 that has started from April 1. This is about 6 mt or 15 per cent more than 38.14 mt procured last year.


“Prices are definitely expected to fall further,” said Anil Monga, Managing Director of Emmsons International, a wheat exporter. The declining trend in wheat prices of Black Sea origin on rebound in production and a softening corn prices will exert further pressure on the Indian wheat.

The Government has so far allowed exports of 4.5 mt from the Central pool stocks by the State trading agencies – STC, MMTC and PEC. Of this, about 3.6 mt has been tendered, while the actual shipments by these agencies are about 3 mt.

Amidst price decline, the state agencies cancelled two tenders last week as they did not receive any bids from global buyers.

This may force the Government to review the floor price for export of Rs 1,480 a quintal as storage may become a major issue with the commencement of full-scale procurement operations in the weeks ahead.

Though the Government has decided to give the private players access to about 5 mt of wheat for export from the Central pool, it is yet to notify the same.

(This article was published on April 8, 2013)
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.