Private wheat traders are rueing a missed opportunity on exports as global prices continue to soar on tight supplies. So far, the Government has procured about 96 per cent of this year’s market arrivals in Punjab, Haryana, Madhya Pradesh and Rajasthan, leaving only Uttar Pradesh for the trade to source grain from.
Till about June-end, the Government was virtually the lone buyer in the market, with private traders unable to match the minimum support price of Rs 1,285 a quintal offered by the Food Corporation of India and the state agencies. Nor did the trade see any point in buying, especially in the context of a record 93.9 million tonne harvest that provided little reason for stocking up in anticipation of prices firming up in the months ahead.
But the market has, indeed, turned around — and for completely unanticipated reasons. The trigger has come from drought in the US’ Midwest grain bowl that has sent global wheat futures prices at the Chicago Board of Trade soaring from $6 a bushel (27.215 kg) in May to as high as on $9.4 a bushel (Rs 19,150 a tonne) on Friday. Coupled with the weak rupee, Indian wheat has all of a sudden become competitive in the international market. Exports from the western ports of Kandla and Mundra are being contracted at around $275 a tonne free-on-board.
“Prices have improved by Rs 150-200 a quintal across various
The Government agencies have so far procured 38.08 million tonnes of the 40.39 million tonnes that arrived in the markets.
“There is no physical wheat in the system. Only exporters are buying at the moment from UP,” said Mr S. Pramod Kumar, Executive Director of Bangalore-based Sunil Agro Foods Ltd. Mr Kumar, who buys wheat from Shahajanpur and Hardoi in UP, said millers had not fully covered their positions, anticipating a fall in prices on record harvest.
“Nobody has stocked this year,” said Mr Raj Sud, a trader from Khanna in Punjab, Such a trend reflects in numbers, as Government agencies have procured 12.83 mt of the 12.93 mt that arrived in Punjab markets. “The sudden export demand that has cropped up in recent weeks has come as a surprise,” Mr Sud said, regretting that traders had no stocks to cash in on this. Exporters such as ITC and Emmsons International are active in the market, procuring from Uttar Pradesh, where the arrivals are still trickling in markets such as Shajahanpur and Hardoi. But some exporters, such the Adani Group, said they would prefer to wait and watch, anticipating a further rise in global prices.
“We will become active once the Government tenders are opened. There’s too much volatility in prices. We are waiting to see how things pan out,” said Mr Atul Chaturvedi, CEO of agribusiness division at the Adani Group.
The Government has invited tenders for export of 2.4 lakh tonnes from its stocks. The price discovered by the three state-run agencies — STC, MMTC and PEC Ltd — from the tenders on August 3 would set the trend, exporters said.