Wheat rises on supply pinch, heavy buying

Wheat prices surged by Rs 100 per quintal across the board in the last one month and prices of the premium-quality wheat are expected to jump another Rs 200-300 per quintal in the months ahead, as companies such as Cargill have bought enough quantity directly from Mandis.

Currently, Sarabati (Sihor) is quoting in the range of Rs 1,300-1,700 per quintal and Lokwan in the range of Rs 950-1,150 per quintal. Price of the mill-quality wheat is hovering around Rs 780 per quintal and is expected to touch the Rs 850 per quintal level by the second half of November.

"Generally, Food Corporation of India (FCI) does heavy buying, but this time Cargill, too, bought a huge quantity. Apart from this, we are passing through a lean period currently - a period of supply tightness - owing to seeding in the wheat growing regions. These are the factors contributing to rising prices in the domestic market," said Sharad Maru, president, Grain Merchants Association.

Although, Maru estimates India to import around 2,00,000 tonne wheat, for the first time in the last six years, unofficial sources felt the total imports could be in the region of 1.0-1.5 million tonne.

"In wheat mandis, soyabean arrivals have started coming in, and caught attention being paid to wheat now. Therefore, regular supply has also been hit drastically," he said.

"The current price rise is attributed mainly to lower production this year, which is 72 million tonne as against the target of 78 million tonne, of which FCI procured only 15 million tonne as against the target of 17 million tonne this year," an analyst said. Demand has been on an uninterrupted rise due to stock-building by the optimist traders, who were anticipating another price hike.

"This is the time the government starts examining and tightening supplies in public distribution systems. Hence, wheat prices widen up in this period. Wheat sowing season is not far away. So, there are chances that farmers may be building their stocks for smooth sowing, resulting in the current price hike," Maru said.