Wheat harvest begins to arrive

Bumper crop, price fall expected; agencies gear for procurement.

With the wheat crop having begun arriving in states like Gujarat and expectations of a bumper crop through the country, market players see possibilities of prices falling 10 per cent in April-May.

Harvesting of the crop has commenced in central and eastern India. Punjab and Haryana should start harvesting by April 10, said S S Singh, Director of the Wheat Research Institute (WRI), Karnal.

Wheat prices are Rs 1,285-1,300 per quintal in Delhi and may fall to Rs 1,175 in the next one or two months. Prices have already come below the Minimum Support Price (MSP) of Rs 1,120 per quintal in some of the mandis in Gujarat.

Trends in the futures market indicate likewise. May futures were quoted at Rs 1,185 on Thursday, against a spot price of Rs 1,300 for Delhi delivery. “This time, government agencies will also be vigilant for averting an onion-like crisis in any agri commodity. In wheat, the private trade is not interested in buying, with arrivals indicating prices won’t remain high,” said Manish Monga, a trader in the Bhatinda Mandi.

While announcing its second advance estimate for the current year, the Union agriculture ministry had said last month that the wheat crop could be the largest ever, at 81.5 million tonnes, against 80.7 mt last year. S S Singh of the WRI, Karnal, says with the excellent weather conditions this year, the crop may touch 84 mt.

A higher crop will result in prices coming down, as exports are not allowed and even if allowed, current international prices will make exports viable only from the Gujarat ports.

Devendra Vora of Navi Mumbai-based Friendship Traders said: “Gujarat wheat, considered better in quality, had started coming in the market and prices in mandis in the Saurashtra region have fallen to Rs 1,025 to 1,100 for mill-quality wheat, now below the MSP.” Gujarat is expected to produce 3.25 mt against 1.9 mt last year.

According to prices on the National Commodities and Derivatives Exchange (NCDEX), wheat is quoted at around Rs 1,300 a qtl in the Delhi market, while in Indore it is only Rs 1,229, slightly higher than the MSP plus Rs 100 bonus paid by the state government.

If the temperature remains favourable till March 25, Punjab and Haryana are expected to procure approximately 18 mt (11 mt by Punjab and 7 mt by Haryana). This would be about 70 per cent of the Union government’s total procurement target of 25 mt of wheat for the current year, for the ration shop system.

The highest procurement earlier done in Punjab was 10.9 mt in 2008-9. It dipped to 10.2 mt in 2009-10 due to scanty rain in the region but the projections for this year are bright.

The storage capacity, according to sources in the Food Corporation of India, is 9.6 mt of covered space and 10.5 mt of open space in Punjab and 4.3 mt of covered and 5.7 mt of open plinth in Haryana. The opening stock of wheat with all agencies on April 1 is projected to be five mt in Punjab and three mt in Haryana.

State procurement agencies expect smooth sailing on storage, having planned to hire additional space if the need arises. Besides higher rent, additional staff is being hired in the procuring states.