Essentials wilt under a strong Re

The appreciating rupee is helping the government in its fight against inflation. It is impacting the prices of key commodities such as wheat, cotton, edible oils, and cement, by either making imports feasible or hampering exports.

The rupee appreciation has facilitated wheat imports from Pakistan. The May/June delivery at Mumbai port is priced at around $220 a tonne and at southern ports, it is $227 a tonne. The cost of wheat has come down by at least 4-5 per cent owing to rupee appreciation, according to traders.

The Pakistan wheat is of Punjab quality and its landed cost to southern millers is Rs 1,075, which is close to the cost of sourcing wheat from Punjab. Private players are understood to have procured wheat at Rs 860 to 870 a quintal. As the situation improves, it is expected that private traders will stay away and FCI would step in.

The appreciating rupee has disincentived cotton exports, especially to China. Arunbhai Dalal of Ahmedabad-based Arundalal & Co said, "There is no incentive of profit now, but exports are happening to Turkey, Bangladesh and so on. Exports are done mainly for the purpose of turn-over increase."

Cotton prices too are on a downward trend. They are currently at Rs 19,800 and may go down to Rs 19,500. Dalal, however, believes that prices may again go up after a month as the New York futures are quoted at a premium of 20 per cent to January 08 delivery spot price.

Maize is currently quoting at Rs 730 a quintal and the delivery at consumption regions in the north comes to nearly Rs 900. Amit Sachdev, consultant to US Grain Council told Business Standard that "appreciating rupee will help Indian importers import relatively cheaper."

Indian maize prices are stable even as Argentina and US corn arrivals have started. Importers estimate Argentina crop may be available at $206 a tonne C&F, while the US rates will be around $215 a tonne. In the coming months, local maize would become scarce and prices may go up, thereby, making imports more feasible.

Internationally, gold prices have gone up by $20, but the local prices are almost stable as gold strictly tracks the international prices. Had the rupee been where it was a month ago, gold would have been few hundred rupees higher, said an analyst.