| Food Corporation of India (FCI) today increased the wheat OMSS (open market sale scheme) sale price by Rs 15 per 100 kilograms for all states for the October-December period this year, according to FCI sources. | |||||||||||||||||||||||||||||||||||||||||||||
| Traders and analysts feel that the increase is below market expectations. "While the markets in the northern states were expecting a rise of Rs 25 per 100 kg, the southern states were expecting Rs 40 per 100 kg hike," said a senior analyst of a Mumbai-based brokerage firm. | |||||||||||||||||||||||||||||||||||||||||||||
| The National Commodity and Derivatives Exchange (Ncdex) wheat contracts have seen sharp upward movement since Saturday in anticipation of the OMSS price rise and increase in festive buying. | |||||||||||||||||||||||||||||||||||||||||||||
| "Basically, it has been 'buy' on rumour and 'sell' of fact. Thus, there is little room for prices to rise and these may even see a correction now," the analyst added. | |||||||||||||||||||||||||||||||||||||||||||||
| On Thursday, the Ncdex November wheat contract is likely to see resistance at Rs 815-820 per 100 kg.On wednesday, the contract ended at Rs 812 per 100 kg, while the October contract ended at Rs 794.80. Delhi spot wheat traded at Rs 784.5 per 100 kg. | |||||||||||||||||||||||||||||||||||||||||||||
| OMSS sale price is basically the rate at which FCI sells stock in the open market. Though the corporation barely sells 1.5-2 lakh tonne wheat in the open market in the whole season, the OMSS sale price usually acts as a cap on the market. | |||||||||||||||||||||||||||||||||||||||||||||
| A section of the industry feels that the price hike may push up costs of raw materials for flour millers and biscuit manufacturers, which finally may be passed on to the end-consumer. | |||||||||||||||||||||||||||||||||||||||||||||
| However, another section of the industry feels that the hike was anticipated, and the level of hike has been lower than expectations. Thus, market prices will not be burdened.Wheat prices have shown sharp increase due to the non-functioning of the open market sale scheme of FCI. | |||||||||||||||||||||||||||||||||||||||||||||
Futures as well as MSP (minimum support price) and OMSS are price risk management mechanisms with the same objective to help remove uncertainties arising due to price volatility in wheat.
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FCI hikes wheat open market price by Rs 15, traders feel soar
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First Published: Oct 06 2005 | 12:00 AM IST
