Weekly Update: Wheat Market Faced Steady Demand And Volatile Prices

The wheat market has seen an eventful week from (29 May 2023-4 June 2023), with steady demand and a notable increase in prices. The price rise was a result of the strong demand in the market. Let’s explore the factors that influenced the wheat market last week and discuss the outlook for the future.

Latest Insights

Here are the weekly wheat market insights:

• Demand & Price- On Monday, the wheat market opened at ₹2,465 per quintal in Delhi and on Saturday evening, it closed at ₹2,500 per quintal. Throughout the week, there was a consistent demand for wheat, leading to a price increase of +₹35 per quintal.

• Import Duties– If the government decides to eliminate or reduce import duties, it may temporarily push wheat prices into a negative zone. Traders in the southern region would benefit from reduced import duties as they would be able to acquire wheat at a slightly lower price. This would help meet the demand in the southern region and ensure an adequate local wheat supply in various states. However, it is unlikely that the Indian government will make any decision regarding import duties, according to the agricultural market.

• Flour Mill Prices & Reduced Demand- The current period has seen a surge in flour mill prices. Additionally, the government is considering replacing wheat with rice in the Public Distribution System (PDS). The demand for Indian wheat has decreased due to the lowest prices in the Bangladesh market, resulting in a significant price drop of over ₹200 per quintal within a week. Consequently, there is no possibility of selling wheat under the government’s open market sale scheme.

• Price Hike– Over the past 50 days, there has been an 11.5% increase in wheat prices in New Delhi. Starting from ₹2,260 per quintal in April 2023, prices have risen to ₹2,500 per quintal, reaching a high of ₹2,520 in May 2023. Despite a good wheat harvest compared to 2022, there has been a lower wheat arrival during the peak harvest season, leading to a price hike.

• Government Initiatives For Stability– To address malnutrition concerns, the government plans to distribute 3 kilograms of ragi to each family in the entire Rayalaseema region while reducing the current rice quota by 3 kilograms. Wheat distribution will also take place in northern Andhra Pradesh. These initiatives aim to stabilize the agricultural market and prevent malnutrition.

Market Outlook

The wheat market is expected to remain stable and robust in the future. The significant level of ₹2,520 in the Delhi market indicates positive prospects. If the market surpasses or maintains this level for two consecutive days, there is hope for a surge throughout the week, potentially reaching ₹2,600. Wheat futures prices are currently on the rise, suggesting a positive outlook for the market.

 OFB’s Insight

The wheat market experienced steady demand and price fluctuations during the past week. Factors such as import duties, reduced demand, and government initiatives influenced the market. Despite challenges, the market is expected to remain stable, providing opportunities for traders and ensuring sufficient wheat supply in different regions of India.

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