Wheat prices edged higher by over 15% in one month due to uncertainties in stockists’ demands ahead of rabi sowing. Stockists does not rule out a further price hike, which reached up to 25% till the next harvest arrives in mandis.
At present, the fair average quality of wheat in the Delhi mandi is quoted at about Rs 2,250 a quintal, up 16.2% from a month ago, while wheat in the Kanpur and Kota markets is sold at Rs 2,033 a quintal and Rs 2,048 a quintal, up 16.6% and 15% from a month ago.
Ahead of the spot market move, wheat December delivery stood at Rs 2,125 a quintal, up 15% from a month ago. Experts do not rule out the price increase being an outcome of a demonetization, before farmers were interested about rabi sowing, driven by the adequate soil moisture.
Subsequently, the winter crops for this year was anticipated to be the best in several years.
“Traders are building inventory more than required. Controlled release of wheat by the Food Corporation of India (FCI) is also feeding the price rise. Some traders forecast wheat prices will rise 25% in the next couple of months,” proprietor of Amritsar-based wheat trading firm Vimal Sethi said.
Government to Sell 14,000 Tonnes of Wheat
To monitor the wheat’s price movement, the government has decided to double the quantity of wheat to 14,000 tonnes and be sold under auction in the market at the national capital on November 24.
Evidently, about 10 lakh tonnes of wheat were released by the Centre through the Open Market Sale Scheme (OMSS) addressed for flour miller and other bulk users.
"The wholesale and retail price wheat flour in Delhi has shown an increase recently. However, the wheat prices in Delhi have started coming down now. On November 21, 2016, wholesale price is Rs 22.75/kg and retail is Rs 24/kg," an official statement said.
Meanwhile, the Food Corporation of India has also provided approximately 29,000 tonnes of wheat through the OMSS in Delhi, along with its neighborhood areas in November.
U.S. wheat rallied on Monday, hitting an 11-day high as anticipations for reduced plantings and growing concerns of a dry weather had fueled the grain to its longest unbroken surge in three weeks.
“There is the expectation that U.S. farmers will plant less wheat, while there is continued dry weather in some parts of southern Plains (states)," agribusiness economist at National Australia Bank Phin Ziebell said.
Current Stance of Wheat
The chart below illustrates the price movement of wheat ahead of heightened anticipations over the reduction of some plantations and the continued drought weather.
Given a consolidating tone of the wheat’s price movement, market participants are recommended to open Buy positions on the commodity as it is expected to rally in the next session.
As wheat’s price movements are currently consolidating, we conclude that market players could now indulge in buying the commodity as the chart suggest the next candle to rally.
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