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Even as Food Corporation of India’s godowns are overflowing with 43.15 million tonnes of wheat – more than three times the buffer and strategic reserve requirement of 14 mt now – open market wheat prices are on the rise.
Loose wheat is currently trading at Rs 1,575 a quintal in Delhi, a gain of 20 per cent since April this year, when it was trading at around Rs 1,250-1,300 levels.
On Monday, contracts for November 2012 delivery on the NCDEX ended three per cent higher at Rs 1,585.
The futures contracts for December delivery rose 2.64 per cent to close at Rs 1,594.
Traders and millers attribute the rising trend in prices to thin supplies in the open market, where private stocks have almost depleted.
Trade sources said the Government had been slow in releasing wheat under the open market sale scheme (OMSS).
The Government has hinted at releasing seven million tonnes from the OMSS scheme to meet the demand for the next six months.
However, such a proposal was yet to be approved by the Union Cabinet, sources said.
Rising wheat prices was one of the key reasons for higher food inflation in September 2012. Wheat prices, which rose by 18.63 per cent, had resulted in higher food inflation of 7.81 per cent in September this year.
The bullish price trend in the domestic market ahead of the festive season was also aided by global cues.
The talk that Indian wheat may witness demand in the global market as Ukraine has banned exports from November 15, is aiding the futures price.
Exporters see a potential rise in demand for Indian wheat shipments in the months ahead of the Ukraine ban.
Ukraine is one of the top 10 global wheat exporters, which saw its harvest fall by a third due to drought this year.
On Wednesday last, Ukraine decided to stop wheat exports from November 15, a move that saw global prices firm up.
Wheat exports from India have crossed three million tonnes, bulk of which is from private trade.
The Government agencies have contracted about eight lakh tonnes for exports and have actually shipped about four lakh tonnes so far.
Bulk of the Indian exports so far have been to the Far Eastern nations such as Korea, Taiwan and neighbouring countries such as Bangladesh, Sri Lanka and Yemen among others.
> Vishwanath.kulkarni@thehindu.co.in
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