Wheat prices likely to fall from April

May fall by Rs 200/qtl if record production estimates come true.

Wheat prices in the country may fall by around Rs 200 a quintal from April if estimates of a record production in the rabi season come true, said the Wheat Products Promotion Society (WPPS) today. It is the body of wheat-based industry products.

Prices in Delhi have already softened by 10 per cent to Rs 1,360 a quintal on the government’s open market releases and anticipation of a bumper crop. “We agree with the projection of 80-82 million tonnes of wheat production this year. If that happens, prices will come down from April, after the arrival of the new crop,” said WPPS Chairman Adi Narayan Gupta.

Though the government hasn’t issued the production estimates for this year, officials are hopeful of 80-82 mt. Wheat prices in Delhi may further come down to about Rs 1,150 a qtl, taking into account the minimum support price (MSP) and transport cost, Gupta said.

The government has declared an MSP of Rs 1,100 a quintal for the 2010-11 marketing season beginning April. Gupta said the cost of wheat in Delhi will be lower as there is no tax here, while it may be about Rs 1,250 a qtl in Uttar Pradesh, where local levies and value added tax are high. Wheat has a weight of 1.38 per cent in the wholesale price index.

Gupta said the country may not need to buy wheat from other countries, unlike 2009. “Only about 15,000 tonnes was imported last year, even though the government has made import duty-free,” he said.

He added that some mills in the south had contracted to import, but might have cancelled when the government brought down prices by Rs 200 a quintal under the open market sale scheme (OMSS). Flour millers and others bought more than 500,000 tonnes under the scheme from the Food Corporation of India in January after the price cut.

Wheat output seen up at 82 mt in 2009-10
The wheat production in India, the second largest producer in the world, is likely to increase to 82 million tonnes (mt) due to higher acreage and favourable weather condition in northern states of India.

"India's wheat production in 2008-09 was at 80.85 mt and we are looking at 82 mt in 2009-10," Ramavtar Agarwal, former president, Roller Flour Millers' Federation of India (RFMFI) said today while announcing 5th international seminar on wheat, which will be held in Ahmedabad during February 19-20.

According to the data available with the Union agriculture ministry, the area brought under wheat cultivation has increased to 27.75 million hectares in 2009-10 from 27.58 million hectares in the corresponding year.

In addition to higher acreage, favourable weather condition is likely to improve wheat yield in 2009-10. "Cold weather in many wheat growing states such as Punjab and Haryana will increase the yield and quality of the crop," he added.

However, India will have to wait a little longer for new crop arrivals. Gujarat has already seen late arrival of wheat crop. "In Madhya Pradesh, Punjab and Haryana, arrivals would be delayed by around 15 days following late sowing of the crop due to unfavourable climatic conditions in October-November," Agarwal said.