Wheat prices in the spot market are expected to remain steady for the next one month before gradually declining in February on forecast of a good crop and huge carryover stock.
According to traders, wheat harvesting will begin in Madhya Pradesh, Gujarat and Rajasthan from the middle of February, which will put pressure on the market.
On Wednesday, wheat futures for February contract fell on the NCDEX by 3 per cent to Rs 2,032 per quintal. “From February, when the new crop starts arriving, wheat prices will weaken. However, we have to see if state governments announce bonus owing to general election in 2019, and if government procurement is higher,” said an executive of a global trading company, adding that the current prices are higher.
Analysts said that looking at the higher wheat acreage and good weather condition, they expect production to be more than the previous year, which will not support current prices.
“Wheat crop is expected to increase in India by 10 per cent this year from last year’s production of 99.7 million tonnes. Wheat prices in February contract and in spot market are likely to correct due to the favourable weather and expected bumper crop,” said Anuj Gupta, deputy vice-president of commodity research at Angel Commodity.
With Food Corporation of India, a government agency, estimated to be holding the bulk of the grain in the country at close to 25 million tonnes, prices were expected to remain steady in the short term.
In July, the government had offloaded its wheat stock under the Open Market Sale Scheme at Rs 1,875 a quintal and currently it is at Rs 1,950 a quintal.