New Delhi, May 16 (Commodities Control): In Delhi, wheat prices remained steady at INR 2475-80 per quintal, while Rajasthan's new wheat traded at INR 2570 per quintal, maintaining stability.
Bengaluru prices also traded steady at INR 2800-20 per quintal (net), and Madhya Pradesh wheat traded at INR 2550-60 per quintal ex-warehouse. However, Uttar Pradesh witnessed steady to weak prices at INR 2410-20 per quintal, and Gujarat traded at INR 2580-85 per quintal.
The anticipated outflow of wheat supplies from Uttar Pradesh (UP) hasn't materialized as expected, as the government is actively procuring most of the wheat. Informal restrictions on wheat sales to private traders have been observed in some areas of UP.
Furthermore, the free flow of wheat transportation out of the state is not being observed, contributing to relatively firm prices in states outside UP. Consequently, a sluggish trend is observed in wheat prices within UP, as a significant portion of supplies remains within the state.
Wheat stocks in India's government warehouses totaled 26 million tons, marking a 10.3% decrease year-on-year. Wheat procurement reached 25.4 million tons as of May 14, falling short of the target of 37.2 million tons.
This dynamic indicates a cautious market sentiment driven by supply constraints in UP and lower-than-expected procurement levels, contributing to the overall stability in wheat prices across major markets.
Reasons for low procurement are as follows:-
✓ Farmers are dumping more produce in mandis than government procurement
centers as mandi prices are ruling above MSP.
✓ Farmers in MP have little faith over bonus of INR 1250 per ton as they haven’t
received their paddy bonus yet declared by state government in 2023 kharif season.
✓ Also, in MP, quality of wheat has been affected by weather aberrations in the month of Jan/Feb due to which wheat has been rejected as per govt. quality parameters.
✓ In UP, crop is expected to be up by "8 to 10 % y-o-y but farmers are hoarding wheat as they see bullishness in second half of 2023.
Also, farmers are more interested in selling to mandi agents for prompt payment. The UP Mandi authorities are creating undue pressure on local traders to go slow on private procurement and forcing them to support FCI procurement. Now all participants are watching how much wheat supplies government procures. If the government procures a relatively lesser quantity of wheat, then there is a possibility that import duty may be reduced/abolished.
Russia wheat production has been reduced to 90.4 million MTs, a reduction of 2 million MTs from last estimate. Last year wheat production came at 93 million tons.
Global wheat prices are on peak upward trend due to unfavorable weather in Russia. With increased import prices the parity has gone down and Import margins are positive only when India completely removes import duty of 40%. So, any major decline in prices is not expected as per current global wheat scenario.
Processed wheat products demand is expected to improve after the arrival of monsoon.Also, festive season will start from June end/July which can improve the offtake of wheat products.
Southern wheat prices are currently trading on a steady note. Majority of wheat is travelling from MP only as there is restriction to load rakes from UP. The government can impose stock restrictions and start OMSS by June in case prices jump in near term.
Overall, import can help the Govt to improve the situation by ensuring better wheat availability and thus control the prices in medium to long term.
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