Rice, wheat prices decline on new arrivals

MARKET ROUND-UP

The spot prices of rice and wheat dropped in the Delhi market on fresh arrivals of the crops for the new season. However, their futures prices remained bullish, owing to heavy procurement by government agencies and multinational companies.

The spot prices of normal rice in Delhi could not sustain the upward trend and declined by 0.27 per cent on account of fresh arrivals.

The prices on Friday closed at around Rs 1,095 a quintal from Rs 1,098 a quintal a week ago. Similarly, the spot wheat prices also declined by 2.13 per cent in Delhi to close the week at around Rs 1,114.30 a quintal from Rs 1,138.50 a quintal last week.

However, the price of basmati rice for the near-month contract on MCX jumped by 7 per cent to close the week at Rs 3,820 a quintal as against Rs 3,568 in the beginning of the week. The price of basmati rice for December delivery witnessed a surge of 3.69 per cent on Saturday.

The current jump in prices is because of the uncertainty over the final output for the season, despite estimates having been released much earlier.

Meanwhile, the futures market for foodgrains remains bullish owing to enormous stockpiling by traders, coupled with heavy procurement by government agencies and multinationals.

Traders believe the ongoing season for paddy procurement would get over in a month.

The stockists are, meanwhile, building paddy stocks to convert them into rice and sell husk and hull for co-generation and animal feed respectively.

Stockists are set to sell rice at higher prices once the current season ends, opined traders, attributing this as the reason for the bullishness in the futures market.

Despite, the government's claim to take all measures to bring down wheat prices to affordable levels, bullish sentiment prevailed in the futures market.

Wheat prices for almost all contracts are still quoting high.

A Rs 50 increase in minimum support price (MSP) of wheat to Rs 750 a quintal this year from Rs 700 a quintal last year is set to raise the wheat procurement prices in the forthcoming season, thereby boosting up its futures prices.

The restrictive profit-booking helped control the weekly loss at 4 per cent for the December delivery wheat contract on the Ncdex.

The contract closed at Rs 1,085.40 a quintal on Friday from Rs 1,131.40 a quintal a week ago. The price of wheat contract for January delivery fell by almost 3 per cent to close the week on Friday at Rs 1,107.80 a quintal from Rs 1,139.60 a quintal a week ago.

The decline in wheat prices is partly attributed to higher acreage this year, which stood at 113.74 lakh hectare as on November 24 "� a rise of nearly 17 per cent over the 96.93 lakh hectare in the same period last year.

Meanwhile, the International Grain Council (IGC) has raised the global grain consumption by 2 million tonne.

The recent report of the IGC has pegged the total global grain output in 2006-07 (July-June) at 1,557 million tonne against the consumption of 1,623 million tonne.

The report said the current carry-over stocks at 242 million tonne is at a 10-year low.

According to the IGC's projections, the world wheat output will go slightly up by 2 million tonne to 587 million tonne from October "� still 31 million tonne short from the actual output of 2005-06.