 "Millers stare at high wheat prices")
New wheat crop arrivals, which usually begin by now in Saurashtra (Gujarat) and Madhya Pradesh, have been delayed due to the prolonged winter. In traditional wheat-growing states, such as Punjab, Haryana and Uttar Pradesh, arrivals are likely to start in the second week of April, provided temperatures start rising.
As on February 1, government warehouses had 30.8 million tonnes (mt) of wheat, against the quarterly buffer requirement of 8.2 mt. Wheat production in rabi 2011-12 stood at 93.9 mt, while procurement stood at 38.1 mt. This rabi season, production is estimated at 94 mt, while government agencies aim to procure about 44 mt. However, supply of wheat in the open market by the Food Corporation of India (FCI) is still a concern for millers, as they aren't securing enough stocks. Also, the delayed arrival of the new crop has made buying from markets difficult.
Ramesh Saraf, president of Gujarat Roller Flour Millers' Association, said mills in Gujarat were buying wheat at Rs 1,650 a quintal. Prices, he said, decreased Rs 60-70 a quintal in the last fortnight, as wheat exporters had deferred purchases.
"We purchased at Rs 1,190 a quintal last year. But the situation is different this year," Saraf said, adding wheat prices had risen due to the withdrawal of subsidies and the cost of gunny bags.
This year, wheat arrivals have been delayed due to a drop in temperatures in the last week of February. If temperatures rise in March, arrivals could gain momentum and prices may drop to Rs 1,550 a quintal. In the export market, prices stand at about Rs 1,550 a quintal. Indian exporters have many takers in Southeast Asia, West Asia and Africa. These exporters trade at low margins, but high volumes.
Adi Narayan Gupta, president of the Roller Flour Millers' Association of Uttar Pradesh, said despite Uttar Pradesh being a wheat producer, millers there were securing wheat at Rs 1,730 a quintal. This had to be rationalised, Gupta said.
FCI officials said wheat procurement in Uttar Pradesh only met public distribution requirements in the state. As wheat sold under the open market sales scheme was secured from other states, the landed cost was high.
Millers refrain from buying from the open market because government policies are inconsistent.
Gupta added, "We may buy wheat from the open market and incur storage costs and interest on bank borrowings. However, the government may, at any time, announce a decrease in the price of wheat sold through the open market sales scheme. This discourages us from buying in advance."