Wheat prices to remain stable on open market sale, zero-duty

Flour millers today said that wheat prices will remain stable in the retail market owing to government's decision to sell five million tonnes of foodgrain from its reserves.

They also hailed deferment of imposing import duty on wheat, saying this would help flour millers to source high protein variety from overseas as there is a shortfall in the domestic market. 

"This will definitely not allow prices to go up," Roller Flour Millers Federation Past President M K Dattaraj said when asked about the impact of government's decision to sell wheat in the open market.

Wheat is available at Rs 1,207 per quintal in Delhi. In futures market, wheat for August delivery is ruling at Rs 1,247 per quintal, down from Rs 1,310 on June 12. Dattaraj noted that the decision to defer imposition of import duty on wheat is also a welcome step.

"Flour mills require high-protein variety, which they used to buy from Rajasthan, Gujarat and Madhya Pradesh for blending. This year there is a shortfall of this variety in these states because of poor crop in Gujarat and Rajasthan, higher government procurement in MP," he pointed out.

Dattaraj said that duty-free import provides a "window" to flour mills to source wheat from Australia. India imported 1.58 lakh tonnes of wheat in 2009-10 fiscal. "We are importing because its not available in the country and not because of price factor, he added.

Presently, the delivered price of Australian wheat is Rs 1,570 a quintal in Bangalore, while in MP, wheat will cost Rs 1,600 a quintal.

An empowered group of ministers, headed by Finance Minister, had last week approved a new open market sale scheme (OMSS) to offload wheat aiming to control inflation and clear surplus stocks in the central pool.

It deferred a decision on imposing import duty on wheat.

"The government has done a right thing by maintaining the duty on wheat import at zero as well as deciding to sell wheat from its reserves. This will ensure adequate availability of wheat in the open market and also prices will remain stable," the federation's Secretary Veena Sharma said.