 "Wheat up 15% in a month as traders build inventory")
Wheat prices have risen over 15% in one month due to a spurt in stockists’ demand ahead of rabi sowing. Stockists do not rule out a further price rise of up to 25% till the next harvest arrives in mandis in April.
The fair average quality wheat in the Delhi mandi is now quoted at Rs 2,250 a quintal, up 16.2% from a month ago. Wheat in the Kanpur and Kota markets is sold at Rs 2,033 a quintal and Rs 2,048 a quintal, up 16.6% and 15% from their respective prices a month ago.
Following the spot market move, wheat for delivery in December was quoted on Monday at Rs 2,125 a quintal, up 15% from a month ago. Experts do not rule out the price rise being a fallout of demonetisation.
Before demonetisation farmers were enthusiastic about rabi sowing because of adequate soil moisture. This year’s winter crop was expected to be the best in several years.
“Traders are building inventory more than required. Controlled release of wheat by the Food Corporation of India (FCI) is also feeding the price rise. Some traders forecast wheat prices will rise 25% in the next couple of months,” said Vimal Sethi, proprietor of Amritsar-based wheat trading firm Pooja Trading Corporation.
Traders are anticipating wheat output of 88 million tonnes in 2015-16 against the 93.5 million tonnes estimated by the government.
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An FCI statement said it would release 45,500 tonnes of wheat through open market sales on November 24 in Delhi and its neighbouring areas, up from the 29,000 tonnes released in the first week of November.
FCI has a wheat inventory of 18.84 million tonnes in the central pool, compared to 29.91 million tonnes stored a year ago.
Flour mills in the south have started importing wheat from the Ukraine. “The landed cost of wheat at Tuticorin works out to Rs 17.60 a kg. If the imported wheat is transported to Delhi, we will incur an additional cost of Rs 2.40 a kg. We do not see any why wheat prices should go up further,” said Veena Sharma, secretary, Roller Flour Millers’ Federation of India.
Flour mills have imported 1 million tonnes of wheat and have contracted for another 1 million tonnes to land by December.