One Minute Manager: Wheat

00:00 Global prices peak to $8 a bushel

The international wheat market is getting firm due to poor weather conditions in the Russian federation and speculation by hedge funds. Wheat futures on CBOT recently peaked over $8 a bushel and are currently trading at over $7 a bushel. The Russian drought, production loss in Canada, decreased exportable surplus in Australia and the cancellation of export contracts from Ukraine due to non-clearance from customs are driving wheat prices up in the overseas market.

00:15 Prices unlikely to go up in India

With India having adequate wheat stocks, prices are unlikely to see a steep rise. NCDEX wheat August futures closed at 1,241.8 per quintal up by Rs 4.6, which is currently trading near 1,235 per quintal. The mill-quality prices in Delhi (Lawrence Road) were in the range of 1,228-1 ,232 per quintal.

00:30 India has a record output in 2009-10

India has had a record 80.71 million tonne production in 2009-10 , marginally surpassing the previous year’s output of 80.68 million tonne and wheat stocks are at a comfortable position after four consecutive bumper harvests , say analysts. Consumption in India is expected to touch 76 million tonne supported by a rising population.

00:45 FAO says supply sufficient for now

The Food and Agriculture Organization cut its 2010 global wheat production forecast to 651 million tonne on August 4 but said it considers supplies of the critical food source to be adequate . The forecast shows a 3.7% production loss from 676 million tonne in 2009. With two consecutive years of record crops, world inventories have been replenished sufficiently to cover the current anticipated production shortfall. Even more importantly, stocks held by traditional wheat exporters, the main buffer against unexpected events, remain ample.

01:00 Import prices less than OMSS prices

India is likely to import about two lakh tonne of wheat, mainly from Australia, this fiscal as against 1.58 lakh tonne in 2009. Flour millers from the coastal and southern belt have been importing wheat from Russia, CIS countries and Australia as these nations offer a better price. The government’s open market sale scheme has received a poor response from traders who say prices are higher than the prevailing wholesale prices at major centers across the country. If the government slashes the OMSS prices down to prevailing market prices, traders say they may offer better response. India allowed export of 2 lakh tonne of FCI wheat to Bangladesh.