Navigating Weekly Wheat Market Fluctuation And Current Scenario

Last week, the wheat market witnessed a price decline as poor demand resulted in a drop of 20 rupees per quintal. Despite the government’s efforts to impose stock limits, the results were not fruitful. The upcoming tender sale on 28 June 2023 is expected to shed light on wheat quality and determine if it can surpass last year’s levels or not. Traders are advised to engage in trading with caution, carrying less wheat at lower levels and selling at higher levels for now. 

Current Situation

Let’s explore the current market situation and its implications.

• Declining Demand Impacts Wheat Prices- During the previous week, wheat prices in Delhi opened at 2470 rupees per quintal and closed at 2450 rupees per quintal. The decrease of 20 rupees per quintal was primarily due to weak wheat demand.

• Tender Sale & Quality Assessment- The market prices are expected to remain subdued until the tender sale on 28 June 2023. We can ascertain if wheat will surpass last year’s level, only after the tender goods reach consumers’ homes and the quality is determined. 

• Government Measures & Stock Declaration- For market regulation, the Indian government has made it mandatory for traders and mill owners in several states to declare their wheat stocks with the government every Friday. The government estimates that wheat production in India is 10% lower than the official estimate, and some experts suggest this figure could be even higher.

• Export Market & Stable Prices- Despite the domestic market fluctuations, wheat export to Nepal remains steady. Domestic prices have remained stable throughout the week:
  Kanpur– Starting at 2400, mandis ended at the same level.
  Mathura- Mandis experienced a similar situation, with prices initially strengthening but ultimately ending the week at the same level they started.

Market Outlook 

While there may be a temporary price decline, it is unlikely to enter a negative trend unless the Delhi line drops below 2430. If it remains above 2360, there is no immediate cause for concern regarding the wheat price decline. However, if the market continues its current path, the government’s efforts to curb inflation may prove unsuccessful. Increasing arrivals in the market have the potential to slow down price increase.

OFB’s Insight

Last week, the wheat market faced a demand-related price fall. The government’s attempts to impose stock limits did not yield the desired results. The upcoming tender sale will shed light on the wheat quality and its potential to surpass 2022 levels. Compliance with government regulations is essential for government wheat buyers. While uncertainties exist, in the export market stable prices provide some optimism.

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