Wheat Prices Soften Amid Mixed Weather Conditions, Quality Concerns

Mumbai, 16 Feb 2024 (Commoditiescontrol):Wheat prices experienced declines across major Indian trading centers today. While delays in arrivals due to unfavorable weather in some regions supported prices, improving conditions in other zones exerted downward pressure.

New wheat prices are currently trading between INR 2300-2400 per quintal in major markets. Delhi saw a drop of INR 50 per quintal, trading at INR 2650 per quintal. Gujarat's local wheat market showed an upward trend with cloudy weather reported in parts of the state. New arrivals in areas like Gondal, Junagarh, Rajkot, and Kodinar totaled approximately 30,000-35,000 bags, but high moisture content pushed prices between INR 2300-2800. Rajasthan's wheat market remained steady within the INR 2500-2520 per quintal range.

In Uttar Pradesh, wheat traded weaker by INR 50 per quintal at INR 2650 per quintal, with millers as the primary buyers. South UP wheat saw a decline of INR 25 per quintal to INR 2750. Madhya Pradesh, on the other hand, saw wheat prices rise by INR 25 per quintal to INR 2475, attributed to delayed arrivals of some early-sown crops. South MP wheat also inched upward by INR 10 per quintal to settle at INR 2735. It's noted that rake loading has commenced in MP to supply southern states.

Adverse weather patterns have the potential to curb wheat production growth, hindering the government's stock-building initiatives. A third consecutive weak harvest could force India to import wheat, despite the government's reluctance ahead of general elections.

Although the government forecasted a potential 1.3% increase in wheat production to 112 million tons, traders project a 2-3 million ton shortfall due to recent adverse weather events. Further, hot weather expected in the second week of March adds to production concerns.

Last week's rainfall is expected to impact wheat quality. Consequently, higher prices are anticipated for good quality wheat, while lower quality wheat may experience downward price pressure. However, a significant decline is unlikely, with government procurement at MSP (plus bonuses in some states) providing a price floor, limiting drops beyond INR 50-75 per quintal.

Market participants are advised to closely monitor government policies for clearer guidance on the wheat price outlook.