Wheat prices may drop on high crop estimates

Wheat prices may see 15-20 per cent decline during this yearon higher crop estimates and a possible export ban extension. The rates have been ruling over Rs 1,000 a quintal mark since the first week of October.

The country is expecting a total production of 74 million tonne this season. However, a section of the market expects production to go up to 78-80 million tonne on favourable weather.

"Prices could see a range of Rs 800 to Rs 1,000 a quintal throughout the year," said Rajesh Sharma, analyst with Angel Commodities.

Weather condition, though thus far has proved good, is of concern as because of it only (temperatures rising) the crop had got the hit last year. And this period of 2-3 weeks begins in January only.

"Between last week of January and February, which is a crucial period for wheat, if temperature remains low the estimated output will not be affected," said Sandip Das, commodity analyst with Agriwatch Commodities.

The optimum temperature required for better grains should be between 15 and 18 degree Celsius.

Wheat price in spot market in Delhi on Thursday was ruling at Rs 1,080 a quintal. "In Delhi, prices may reach Rs 900 a quintal once the new crop arrives," added Das.

The harvesting will start by the end of February and March will see the fresh arrival. Analysts do not see the crop to be a bumper one, but said it will be sufficient enough to satisfy the domestic demand. The country consumes around 72-73 million tonne of wheat annually. Last year, the production was 69.5 million tonne (below demand) which ultimately made country to go for imports.

Exports, according to analysts, is not feasible and would probably be an unwelcome step by the government. Though there is an overall shortage of 31 million tonne in the world market, opening exports is very unlikely to happen, they added. In case it happens, "Prices will shoot up above the prevailing prices," said Sharma.

Wheat acreage in the country, as on 29 December, was 26.3 million hectare, up by 7 per cent from 24.7 million hectare during the same period in 2005.

On the National Commodity and Derivatives Exchange (Ncdex), the near-month wheat contract fell by Rs 12 to Rs 1,006 a quintal on Thursday.