Wheat prices to firm up further

MARKET OUTLOOK

Slowdown in arrivals, import cancellation to add pressure.

The slowdown in wheat arrivals and the government's decision to cancel the wheat import tender have led to a 4.3 per cent rise in the price of the commodity this week.

Prices went up from Rs 920 a quintal at the beginning of the week to Rs 960 now and are expected to go up further.

"Wheat arrival has slowed down and therefore prices have started firming up. Prices are likely to move up further and some correction will come only when the government decides to import wheat. Even the arrival is low keeping in view the bumper crop as farmers are holding back stocks in anticipation of better prices later, " said Veena Sharma, joint secretary of Rollers Flour Millers Federation of India, a body of flour millers.

The food ministry had scrapped the 1 million tonne wheat import tender floated by the State Tender Corporation (STC) on April 30 as rates ranged between $265 and $302 a tonne. This was a sharp rise over the $205 a tonne average price that the government paid last year while importing 5.5 million tonnes of the commodity.

STC has been directed to come out with a fresh tender after studying the international prices.

Union Food and Agriculture Minister Sharad Pawar said on the sidelines of a meeting last week that the country would need to import 5 million tonnes of wheat this year so that it could start procurement in the next season with a comfortable buffer stock.

As on June 8, government agencies (the Food Corporation of India and the National Agricultural Cooperative Marketing Federation) had procured 10.77 million tonnes wheat, 16.8 per cent higher over last year's corresponding purchase of 9.22 million tonnes and 16.6 per cent over last year's total purchase of 9.23 million tonnes.

It has also been decided to extend the bonus of Rs 100 a quintal on wheat to June 15 in Punjab and Haryana, which was originally scheduled to lapse on May 31. The bonus will continue till June 30 in Uttar Pradesh and Rajasthan and till July 15 in Bihar. The government is hopeful of procuring about 11 million tonnes of wheat this year.

According to the ministry of agriculture, the country is likely to produce 73.7 million tonnes wheat in the 2006-07 rabi season against last year's 69.35 million tonnes owing to a better acreage.