Wheat traders expect subdued margin

MARKET OUTLOOK

Wheat arrivals from the Saurashtra region have started and will continue till April as sowing went on till early-January.

As per the latest figures available with the agriculture ministry, wheat has already been sown in 281.13 lakh hectares thus far compared with 263.47 lakh hectares in the corresponding period last year. Wheat covered 266.47 lakh hectares in the entire rabi 2005-06 season.

Daily arrivals in the Saurashtra market yards are of 200-220 tonne.

The quality of the new arrivals is, however, not good as there is a lot of moisture content and farmers have started early harvest to reap the benefit of prices which are still maintaining an upward trend.

A trader said prices might come down near the support price level if weather remains cold in the growing areas. Traders do not see scope for high margins this season as crop volume is expected to be much higher this year.

Dinesh Tanna of Tirupati Brokers from Rajkot, says, "Wheat harvest is likely to go up as a majority of the farmers, who had cultivated cumin seeds last year, have diverted towards wheat which saw better price last season."

Of the 560-580 million tonne of average wheat production globally, India accounts for 65-75 million tonne. The major wheat producing states of India are Uttar Pradesh, Punjab, Haryana, Madhya Pradesh, Rajasthan, Bihar and Gujarat, which together account for around 93 per cent of the total production.

"Till now approximately 2,200-2,300 bags each weighing 100 kg have been dumped at Rajkot, Veraval and Junagadh," said Tanna.

Early arrival of wheat has also compelled a majority of multinational commodity trading giants, including Australian Wheat Board, Kargill and Glencore to take godowns on rent here. ITC and Olum Exports are also expected to enter the Saurashtra wheat market.

Meanwhile, the US Department of Agriculture has again revised its global wheat production estimates. The wheat outlook of USDA announced during the week has put the world wheat crop in 2006-07 at 590.8 million tonne.