High import bids fuel wheat prices

Wheat prices in the domestic market seem to have started taking cues from the high rates quoted in the latest import tender. Meanwhile, it is still uncertain if the government will go ahead with the import of the grain at such high rates.

Domestic wheat prices have jumped by nearly 7.5 per cent since the last week, apparently trying to match the international rates. Since last Monday, prices have gone up from Rs 9,400 to Rs 10,100 a tonne in the domestic market.

In the last tender for import of 1 million tonnes, the suppliers quoted a rate between $317 and $370 a tonne. In the Indian rupee, the rate translates to Rs 12,838-14,985 a tonne. This excludes the port handling and transportation charges, which will be about Rs 500 a tonne. In comparison, the government paid Rs 8,500 a tonne to farmers for their wheat, including a bonus of Rs 1,000. Last year, India imported 5.5 million tonnes at an average cost of about $205 a tonne, after procurement fell to 9.2 million tonnes.

"Last year, farmers who did not sell wheat in the peak procurement period (April-May), were able to sell it at a high price of Rs 11,000 a tonne during October-November, coinciding with the festive demand. This year too a number of farmers have held back stocks. Already, prices are up from Rs 8,500 (in the peak procurement period) to Rs 9,400 a tonne (ex-mandi) and growers are anticipating a further rise. The newspaper reports mentioning higher rates quoted for imports have also induced bullishness in the commodity," said Varinder Garg, a commission agent in Khanna. Khanna in Punjab is Asia's largest grain mandi.

The government has managed to purchase about 11 million tonnes of wheat from farmers, 1.77 million tonnes higher than the last year. However, this is lower than the target of 15 million tonnes. Therefore, the government has decided to import wheat.

It has already cancelled a wheat import tender this year, where the suppliers were ready to offer 3 lakh tonnes at $263 (about 10,650) a tonne, thinking it to be high.