Essentials just got cheaper

In a development that will sound like Christmas carol to the common man, the prices of essential commodities, which touched new highs this year, have begun to fall. No more rude shocks in the new year, as prices are expected to stay soft for some time.

The skyrocketing prices had led a Parliament committee to suggest a ban on futures trading in agri-commodities.

However, increased acreage and better yields have pushed up production estimates with the result that spot and derivatives prices have begun to fall.

Sugar prices, which started the year around Rs 1,900 a quintal and pierced the Rs 2,000 mark in April, have fallen 13 per cent since August to Rs 1,657 a quintal. The export ban too has helped in this case.

"Prices have stabilised, although there may be a correction owing to the partial lifting of the export ban," said Prakash Naiknavare, the managing director of Maharashtra State Co-op Factories Federation.

The country is expected to produce a record 26.95 million tonne this sugar year, which is from October 2006 to September 2007. This is an increase of 22 per cent over last year's production.

Wheat -- after six years, India became a net importer of this commodity this year -- moved up to Rs 1,165 in mid-November this year, a rise of 16.5 per cent over the price in the earlier part of the year.

With wheat production estimated at 74 million tonne, up 7.25 per cent over last year, its price fell to Rs 1,100 a quintal in New Delhi market this week, a drop of over 5.5 per cent.

The near-month futures dropped by 10.21 per cent to Rs 1,046 this week against the mid-November prices, which were quoted at Rs 1,165 on National Commodity and Derivatives Exchange (Ncdex).

The prices of pulses have fallen about 9-19 per cent since touching a high in September. Chana price plunged 18.82 per cent, and Urad desi's and Tur desi's 17.62 per cent and 15.29 per cent, respectively.