Wheat Hits New Contract Highs...
...in India. Yes, despite Chicago wheat falling out of bed this past few sessions, wheat futures in India are setting fresh contract highs this morning.
Why? Well it maybe won't surprise you to hear that the government STILL aren't releasing any of their state-owned stocks.
Wheat futures hit Rs 1,376/100kg today, that's the equivalent of around USD290/tonne, considerably higher than milling wheat prices on the international market.
Last week a report in the Hindu Business Line said that the government had finally agreed to set the minimum tender price for wheat from it's reserves at Rs 1,379.70 - Rs 1,728.23/100kg (USD292-USD365/tonne).
Needless to say, local millers are baulking at paying the government such inflated levels with world prices substantially cheaper. So why don't the millers just get on with it and start buying on the international market? The answer is the strict government-imposed quality restrictions.
"As a first step, the private trade should be allowed to import wheat...to ensure orderly arrivals, phyto-sanitary restrictions in place will have to be suspended for some time," says the Hindu Business Line.
"In what currently seems to be an unlikely event of the (2010) Indian wheat crop turning out to be normal or even near normal, the commercial risk of wheat imports is on the private trade. Import of 2-3 million tonnes during the next six months will prove beneficial from the point of view of additional supplies and reining in open market prices," the report concludes.
It may be that the Indian government are waiting to see how winter wheat planting progresses in November following the harvest of the late summer rice crop.
Wheat consumption in India is seen at a record 77 million tonnes in 2009/10, following a 15-16 million tonnes drop in summer rice production. It will be interesting to see if the government are prepared to relax the rules to allow millers to import wheat, or continue to hold a gun to their heads forcing them to buy state-owned stocks at prices well above the global market.
Certainly the latter would do little to help the government achieve their publicly-stated aim of curbing food price inflation.
Why? Well it maybe won't surprise you to hear that the government STILL aren't releasing any of their state-owned stocks.
Wheat futures hit Rs 1,376/100kg today, that's the equivalent of around USD290/tonne, considerably higher than milling wheat prices on the international market.
Last week a report in the Hindu Business Line said that the government had finally agreed to set the minimum tender price for wheat from it's reserves at Rs 1,379.70 - Rs 1,728.23/100kg (USD292-USD365/tonne).
Needless to say, local millers are baulking at paying the government such inflated levels with world prices substantially cheaper. So why don't the millers just get on with it and start buying on the international market? The answer is the strict government-imposed quality restrictions.
"As a first step, the private trade should be allowed to import wheat...to ensure orderly arrivals, phyto-sanitary restrictions in place will have to be suspended for some time," says the Hindu Business Line.
"In what currently seems to be an unlikely event of the (2010) Indian wheat crop turning out to be normal or even near normal, the commercial risk of wheat imports is on the private trade. Import of 2-3 million tonnes during the next six months will prove beneficial from the point of view of additional supplies and reining in open market prices," the report concludes.
It may be that the Indian government are waiting to see how winter wheat planting progresses in November following the harvest of the late summer rice crop.
Wheat consumption in India is seen at a record 77 million tonnes in 2009/10, following a 15-16 million tonnes drop in summer rice production. It will be interesting to see if the government are prepared to relax the rules to allow millers to import wheat, or continue to hold a gun to their heads forcing them to buy state-owned stocks at prices well above the global market.
Certainly the latter would do little to help the government achieve their publicly-stated aim of curbing food price inflation.
