New Delhi, July 5 (CommoditiesControl): Wheat prices traded steady to firm today, supported by a delay in the commencement of the Open Market Sale Scheme (OMSS). Increased demand from southern players and Delhi millers, driven by cooling weather conditions, also contributed to firm market sentiments.
Private entities are required to report their wheat stock positions every Friday on the Department of Food and Public Distribution's portal. Stock limits on wheat were imposed on wholesalers, merchants, and processors last Monday and will remain in effect until March 31st.
Regional Price Overview:
- Delhi: Prices increased by INR 10 per quintal to INR 2710 per quintal.
- Rajasthan: New wheat remained unchanged at INR 2680 per quintal.
- Bengaluru: Prices remained stable at INR 2925 per quintal (net).
- Madhya Pradesh (MP): Stable at INR 2630-2640 per quintal (ex warehouse).
- Uttar Pradesh (UP): Prices rose by INR 10 per quintal to INR 2610 per quintal.
- Uttarakhand: Unchanged at INR 2620 per quintal.
- Gujarat: Steady at INR 2690 per quintal.
- Kolkata: Unchanged at INR 2750 per quintal.
- Bihar: Prices increased by INR 20 per quintal to INR 2600 per quintal.
- Goa: Mill supplied rates remained stable at INR 2890-2900 per quintal.
Wheat arrivals in North India have dropped sharply, and stockists are hesitant to sell at current prices, leading to expectations of a price rebound soon.
Import Duties and Government Policy:
The government has not yet reduced wheat import duties, despite market players advocating for it to balance domestic demand and supply. The current 40% import tax deters influential merchants. Although food department officials recently denied plans to reduce import duties, Food Secretary Sanjeev Chopra indicated that the Centre would consider all possibilities to maintain market stability.
Millers argue that importing wheat could ensure adequate supply for the festival season, beginning mid-August. Some states' mills have extra wheat reserved for the holiday season when prices typically rise. This poses challenges for other millers short on supplies.
Market Insights and Projections:
- Optimal Import Period: Market participants suggest August as the best time to order wheat imports, allowing shipments to arrive before Diwali.
- Processed Wheat Demand: Expected to strengthen in the coming weeks, with active buyers across major centers in India, particularly southern millers.
- Government Policy Impact: Despite low likelihood of imminent duty reductions, any significant price increases will be constrained by government policy.
- Global Market Influence: The recent 7-8% drop in global wheat prices, due to Turkey's import embargo and minor crop increases in Russia and Australia, has improved parity. A reduction in import duties could facilitate the arrival of 2-3 million tons at southern Indian ports, with CNF quotes for shipping to India currently between USD 270 and USD 275/ton.
Given current market conditions and physical supply levels, wheat prices are unlikely to drop significantly, even with potential government measures such as OMSS or stock limit adjustments. Conversely, any substantial price increases in the medium to long term will likely be limited by government interventions.
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