September Week 2: Resilient Wheat Prices And Promising Prospects

The Wheat market in Delhi commenced the week at Rs. 2540 per quintal on 4 September 2023 and ended the week at Rs. 2535 per quintal on 9 September 2023. Although prices remained relatively stable, there was a minor decrease of Rs. 5 per quintal last week. 

Let’s embark on a journey to understand the intricate web of events that unfolded in the Wheat market during week 2 of September 2023, shedding light on the reasons behind these price fluctuations and offering a glimpse into what the future might hold.

Key Updates

Let’s have a look at the latest market updates:

• Arrival: The total arrival of Wheat in the Delhi market during the last week stood at 26,500 quintals, which marked a decrease of 5,500 quintals compared to the previous week. This reduction in supply played a role in keeping prices stable.
• Price: Market analysts suggest that the Wheat market is likely to weaken if prices fall below Rs. 2480 per quintal. On the other hand, as long as Wheat prices remain above this threshold, the market can be considered strong.
• Market Closed: During the entire last week, several Mandis in Madhya Pradesh as well as Delhi remained closed. A similar trend was observed in most Mandis in Gujarat, resulting in a subdued market atmosphere.
• Market Activity: Wherever the markets remained open, there was a lack of significant activity. Mandi prices remained stable, while mill prices continued to rise, showcasing a divergence between the two segments of the market.
• Temporary Halt: Due to the G20 summit, large vehicle movement in Delhi was temporarily halted, leading to a decrease in Wheat arrivals in the Delhi market. These disruptions have affected price stability, but normal operations are expected to resume.
• E-auction: On 6 September 2023, the 11^th e-auction of the 2023-24 season took place offering 2.0 LMT Wheat from 500 depots across the country. During the auction, 1.66 LMT Wheat was sold. FAQ Wheat was sold at a weighted average price of Rs. 2169.65 per quintal while URS Wheat averaged Rs. 2150.86 per quintal.

Future Price Determinants

The future trajectory of Wheat prices hinges significantly on the demand for Wheat Flour. As demand surges in the market, we can anticipate prices gaining strength and heading upward.

The government is actively monitoring Wheat prices to control inflation. Their commitment is clear and efforts are being made to prevent a significant increase in Wheat prices. The Mandi prices remained stable, but retail prices continued to rise. Officials suggest that the MSP for the upcoming season should be increased by more than 8% compared to the previous year to encourage farmers to sell sufficient quantities of grains to increase stocks.

Market Outlook

The next Wheat tender is scheduled for 13 September 2023, and current market conditions indicate continued strength in the Wheat market. The future direction of Wheat prices hinges on the demand for Wheat Flour. As soon as market demand picks up, prices are expected to strengthen.

OFB’s Insight

Wheat prices stability during the last week in Delhi, with only a minor dip attributed to a lack of demand, highlights the resilience of the Wheat market. The reduction in Wheat supply played a role in maintaining this stability, indicating the market’s sensitivity to factors like arrivals and demand. Increasing the MSP to encourage farmers to sell their grains and boost stocks is a step in the right direction, ensuring food security and price stability.