The Hindu Business Line : Domestic wheat steady despite rise in global price

Fact file
Virtually no takers for Russian wheat.
Australian variety is the preferred one.
PEC has unloaded wheat in Kochi and looking for buyers.

Chennai , Oct. 11

Though wheat prices in the global market have zoomed to a 10-year high this week, domestic prices are more or less ruling steady. Wheat futures on Chicago Board of Trade have gained eight per cent and were ruling at $5.015 a bushel ($184.31 a tonne) for delivery in December. Prices are on the boil this week on speculation that drought will affect production.

"Wheat prices in the domestic market have been more or less steady during the past one month. That is because we have about four months to go for the new crop and the mills' requirements are almost covered," said trading sources.

December contracts

Wheat (dara) prices in New Delhi have been hovering between Rs 1,000 and Rs 1,010 a quintal in the last four weeks. On Wednesday, wheat contracts for December delivery were quoted at Rs 1,013 a quintal on NCDEX and Rs 1,008 on MCX.

Though initially prices increased on India's plans to import with the Food Corporation of India alone buying 55 lakh tonnes and the private trade buying over 12 lakh tonnes, no new deals have been signed in the recent past.

No storage space

"In fact, ports such as Tuticorin are flooded with wheat that there is lack of warehouses for storage. In some cases, the sellers are bringing wheat to the ports and looking for buyers," the sources said.

A couple of multi-national firms are reported to be bringing French and Russian wheat to the South without any firm offers to buy.

`No takers'

"There are virtually no takers for Russian wheat. We are not sure how some of them who are bringing 50,000 tonnes from Black Sea ports will sell," the sources said.

According to Mr P.K. Ahmed Kutty of Kerala Roller Flour Mills' Association, organisations such as PEC had unloaded wheat in Kochi and were looking for buyers. "Even MMTC floated tenders for the wheat it has bought for India," he said, adding that millers' reluctance to buy was due to poor quality.

However, there are takers for Australian wheat. "It is the preferred one now," said Mr Pramod Kumar of Belgaum Flour Mills. "Two ships carrying Australian wheat will arrive this month and next month. Two more will also come and all these will be carrying 40,000-50,000 tonnes," he said.

Scheduled consignments

The wheat consignment in the first vessel that will arrive later this month has been sold to a group of mills at a price ranging between $229 and $231. "There are people offering Australian wheat even now at around $250 a tonne," trade sources said.

According to millers in Tamil Nadu, the consignment arriving in the second well has also been sold, while AWB Ltd, which is bringing the consignment, is on the look out for buyers for the next two vessels.

Trade sources said some of the millers, especially in the South, were getting domestic wheat itself procured by multinationals and trading firms. "We have to pay them interest, warehouse storage fee and service charge for this," they said.

Trade sources said Punjab wheat had been sold out, while demand seemed to be emerging now from Bihar and West Bengal. "But the situation is not clear. However, with indications that most of the mills have covered their needs, the prices could be around current levels only," they said.