Domestic wheat prices have escalated by around 10 per cent
Domestic wheat prices have escalated by around 10 per cent amid concerns of adverse monsoon and flood in Karnataka and Andhra Pradesh, which has raised concern over kharif food grain production particularly rice and maize.
Although there is still some upside left as far as wheat prices are concerned.
The prices will face strong resistance at higher level as supply situation in India and in rest of the world is in healthy shape.
Ample availability of stock at domestic level
At domestic level, wheat inventories have increased after two back to back record crops in the country.
Due to better carry over stock and record purchase government stocks reached to second highest level in the history at 32.29 million tonnes almost double than buffer stock requirement of 17 million tonne.
According to the Agriculture ministry’s fourth advance estimates, India produced a record crop of 80.58 million tonnes in 2008-09, while production was at 78.57 million tonnes in 2007- 08.
With bumper production and steep hike in minimum support price, government made record purchase of 25.3 million tonnes this year, 13 percent more as compared to last year.
Prospects of next year crop
Despite having comfortable supply currently, weak monsoon, flood in Andhra Pradesh and Karnataka and consequent Shortfall in kharif paddy output prospects has started fueling prices in the market.
A smaller paddy and maize crop will lift demand for their substitutes, primarily wheat.
As per crop weather watch report, acreage of kharif paddy this year remained at 324.28 million hectare till October 09, 2009 which is 16.2 percent or 6.26 million hectare lower than same period last year.
However kharif maize acreage remained higher this year but recent flood in Andhra Pradesh and Karnataka has aggravated the concerns of lower output.
As per Agriculture department report, kharif maize acreage was at 71.08 lakh hectares, 0.8 percent or 0.5 lakh hectares higher than last year.
Besides, flood in Karnataka and Andhra Pradesh and weak monsoon also raised concern over prospect of next wheat Crop.
Due to weak monsoon in northern part of India mainly in Punjab, Haryana and Uttar Pradesh, soil moisture condition is not sufficiently good for next wheat sowing.
Water storage in this region has also declined. As per Central Water Commission’s latest data in 81 important water reservoirs monitored by CWC in different parts of the country, total live storage has increased from 90.48 BCM on 01.102009 to 91.75 BCM on 08.10.2009.
But still is far from a satisfactory level.
Stay Tuned for More on this topic.
We would see demand and supply scenario in coming months, price trend and on Export Ban.
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