Wheat

The government has procured 20.5 million tonne wheat in 2017-18 (Apr-Mar) up 13% from a year ago. Procurement was highest in Punjab where 8.8 million tonne of wheat has been bought so far, up 5.8% from a year ago. Centre has set a target of procuring 11.5 million tonne wheat from Punjab. The second-largest contributor was Haryana where the government has procured 6.4 million tonne wheat so far and is close to achieving its target of 7.5 million tonne for the 2017-18 marketing year. In Madhya Pradesh, another major producer of wheat, 4.2 million tonne has been procured so far, up 24.1% from a year ago. The government has set an 8.5- million tonne target for wheat procurement in Madhya Pradesh. Overall, the central government has set a target to procure 33.0 million tonne of wheat in the current marketing season that started April, up from 22.9 million tonne a year ago.

Prices of wheat rose in key wholesale markets of Kota and Indore due to lower supplies. In Rajasthan Kota market, prices rose by 20-25 rupees per 100 kg. Demand for wheat also increased as markets are going to be closed for weekend and on Monday for a local festival. Wheat prices also rose in Madhya Pradesh benchmark Indore market as harvesting has almost ended now and supplies are falling. Mill quality wheat was selling in Indore, up 10 rupees from the previous day. In key consuming Delhi market, wheat prices fell as arrivals from Uttar Pradesh, Punjab and Haryana are rising. Mill quality wheat was selling in Delhi, down 5 rupees from the previous close. The June contract ended down 0.2% from the previous close.

Wholesale prices of wheat rose due to firm demand. In market of Delhi, prices of wheat rose due to firm demand from godowns. The grain was quoted up 5 rupees from previous close. Demand from godowns and Stuckists was high, that from mills was weak. Arrivals of wheat in Delhi unchanged at around 40,000 tonne. Futures of wheat however were trading lower on the National Commodities and Derivatives Exchange on hope of rise in supplies as the arrival season peaks up. The most-active May wheat contract on the NCDEX ended down 0.7% from the previous close.

India wheat output, which has risen 40% over the last decade due to improved yield, could come under threat over the next 5-15 years because of global warming. For wheat, high night temperatures have a significant impact on yields, referring to in Africa where higher-than-usual night temperatures cut the wheat crop cycle by 19 days, resulting in a 30-50% fall in yields. Every 1 degree Celsius rise in average daily maximum and minimum temperatures tends to pull down the average wheat yield by 2-4%. Not just the (wheat) yield, but the nutritional value would also come down due to the gradual increase in the carbon dioxide in the atmosphere. Indian farmers are likely to harvest a record 96.6 million tonne wheat in 2016-17 (Jul-Jun), as against the 69.5 million tonne output in 2005-06.

CBOT wheat prices slumped (-6.23%). Price reduction in Chicago was triggered by the weather factor. Rains in winter wheat producing regions improved crop conditions. At the beginning of the week, 54% of crops were in good and excellent conditions (53% the previous week and 57% last year). This week meteorologists also forecast precipitation, which contribute to further crop conditions improvement. During April 06-13, contracting of the old-crop US wheat equaled 413.9 KMT (-11.2% compared to the same week last season).

India wheat output exceed the government official estimate of 96.6 million tonne and rise to 98-99 million tonne in the ongoing season that ends June. In 2015-16 (Jul-Jun), the country had produced 92.3 million tonne of wheat.

Prices of wheat were unchanged in wholesale markets of Indore. Arrival of the grain in Indore was at 10,000 bags (1bag=100kg), also unchanged from previous close. The government procured 3.6 million tonne wheat in Madhya Pradesh, up nearly 15% on year. In Delhi, wholesale market, prices remained unchanged in a thin trade because of steady demand and arrivals. Nearly 40,000 tonne wheat has been arriving daily in the Delhi market. At Kota in Rajasthan, prices of the grain fell. The mill quality wheat was sold down 20 rupees from previous close. On an average, 30,000-40,000 bags of wheat arrive in Kota daily. The most active May contract of wheat on the NCDEX ended down 0.2% from the previous close.

Ukraine boosted its grain exports to 4.54 million tonnes in March up 52 percent from 2.98 million tonnes in February. Exports of wheat rose to 1.05 million tonnes from 840,000 tonnes a month earlier. A stronger harvest would likely raise the 2017/18 grain export forecast to 39.5 million tonnes from 38.8 million tonnes. Ukraine’s agriculture ministry forecasts grain exports for the period at a record 42 million tonnes.

The government aims food grain output of 273 million tonne in 2017-18, up from a record high of 271.98 million tonne estimated for this year.

Russian wheat export prices fell due to low activity in the market ahead of the new crop arrival this summer and because of a continuing trade dispute with Turkey. Russia exported 29.8 million tonnes of grain, including 23.0 million tonnes of wheat down 0.5 percent year-on-year. Russia wheat crop is expected to fall this year, but the country stockpile remains high after a record crop in 2016, and the number of sale offers from farmers is rising. Russia grain stocks at farms and procurement and processing companies, excluding small farms, were up 19 percent from a year earlier at 28.3 million tonnes. Domestic prices for third-class wheat fell 100 roubles compared with the week earlier to 9,500 roubles ($170) a tonne in the European part of Russia on an ex-works basis. Farmers had sown spring grains on 11 percent of the planned area, or on 3.4 million hectares, compared with 4.2 million hectares a year ago.

The offtake of imported wheat from ports in south India has picked up due to good demand from millers and Stuckists in the region. Traders in south India imported wheat is cheaper than that ordered from northern part of the country. South Indian buyers do not expect prices to fall and are resorting to the imported grain. At present, there is nearly 1.3 million tonne wheat stocked at ports and it is likely to be sold in the next two-to-three months. In south India, imported wheat is available at low cost as compare to domestic wheat costs.

Prices of wheat rose in the benchmark market of Indore, Madhya Pradesh, as arrivals fell due to government procurement in the state. In Indore, arrivals had peaked around 20,000 bags (1bag=100kg). Arrivals fell sharply to 5,000 bags. The grain was sold up 20-30 rupees from previous close. The government has procured 3.6 million tonne of wheat in Madhya Pradesh since the beginning of April, up nearly 15% on year. The most active May contract of wheat on the NCDEX ended down 0.9% from the previous close.

The government today said it has procured 16.5 million tonne wheat since the start of the fiscal year this month, up 12.8% from a year ago. The procurement was the highest in Punjab, where the government has purchased 6.4 million tonne wheat so far, up 12% from the year-ago period. In Haryana, another major producer of wheat, the government has bought 5.7 million tonne of the grain, up 5.6% from a year ago. The government has purchased 3.6 million tonne wheat in Madhya Pradesh, up nearly 15% on year, while in Uttar Pradesh, it has bought 321,105 tonne so far, sharply higher than 105,246 tonne in the year-ago period. The Uttar Pradesh government has set a target to procure 8 million tonne wheat this year, much above the central government’s 3-mln-tn target for the state. The central government has set a target to procure 33.0 million tonne of wheat for the current marketing season, up from 22.9 million tonne a year ago.

Exports of wheat from Australia in 2017-18 (Oct-Sep) are likely to fall by 18.2% on year to 18 million tonne due to transportation problems. Strong exports of pulses and canola due to higher demand for these commodities may lead to a hassle in transportation facilities and is likely to hit wheat exports. The port and logistical problems due to a shortfall in shipping containers may hamper wheat exports. Australia caters to a significant part of India wheat imports. India is also expected to import lesser wheat this year due to a bumper crop at home.

Bangladesh wheat imports go up to 57 lakh tonnes in 2016-17 due to record low prices in the international market and comparatively high prices in the local market. The country imported 43.66 lakh tonnes of wheat in fiscal 2015-16. The forecast came after import of the grain rose 45 percent year-on-year to 44.75 lakh tonnes in July-March of fiscal 2016-17. The private sector accounted for 94 percent of the total wheat imports during the period. Bangladesh meets 75 percent of its wheat consumption needs through imports, sourcing lower quality wheat from Russia and Ukraine, and higher quality wheat from Canada, Australia and the US. 40 percent of wheat imported was sourced from Russia and 30 percent from Ukraine during 2016-17. The USDA, however, cut its estimate on wheat production to 12.75 lakh tonnes for fiscal 2016-17 because of a decline in plantation last winter. Wheat production was 13.48 lakh tonnes in fiscal 2015-16, posting marginal gain. The cereal import has been rising fast since fiscal 2012-13 spurred by increased consumption. The country imported 37.84 lakh tonnes of wheat in fiscal 2014-15.

Delhi wheat down on low demand from coastal states. Mill-quality wheat was sold down 20 rupees in Delhi from previous close. Coastal states of Maharashtra, West Bengal, and south Indian states have already imported wheat for their stocks lower than the prevalent prices in north India. This has led to lower demand from these states. Arrivals in Delhi were around 35,000 bags (1bag=100kg). Prices have fallen as demand for wheat from Mumbai, West Bengal, and southern states is weak as there is a lot of imported wheat stocked at ports. India wheat imports in 2016-17 (Apr-Mar) are estimated at a record high 5.5 million tonne of the total imported wheat, nearly 2 million tonne is still unsold.

The government has procured 15 million tonne wheat in 2017-18 (Apr-Mar) up 12.1% from a year ago. Punjab has surpassed Haryana to become the highest contributor to the government’s procurement drive. The government has so far purchased 5.5 million tonne wheat from farmers in the state, up 13.5% from the year-ago period. In Haryana, the government has bought 5.4 million tonne wheat, up 3.4% from a year ago. The government has purchased 3.4 million tonne wheat in Madhya Pradesh, up 12.9% on year, while in Uttar Pradesh, it has bought 267,995 tonne so far, sharply higher than 77,807 tonne in the year-ago period. The Uttar Pradesh government has set a target to procure 8 million tonne wheat this year, much above the central government’s 3- million tonne target for the state. The state government has also offered an incentive of 10 rupees per 100 kg for loading and transportation of the crop, Overall, the central government has set a target to procure 33.0 million tonne of wheat for the current marketing season, up from 22.9 million tonne a year ago.

Wheat prices in key wholesale markets of the country remained unchanged as government procurement offset high supplies the government has procured 15 million tonne wheat for the 2017-18 (Apr-Mar) marketing season, up 12.1% from a year ago. Taking cues from spot markets, the most active May wheat contract on the National Commodity and Derivatives Exchange closed flat. The contract ended down 0.1% from the previous close. The most active July wheat contract on the CBOT was at $4.36 a bushel, up 0.4% from the previous close.

Turkey is a key country-importer of wheat bran from Ukraine. In the current season the country started gradually increasing the purchasing volumes. July-February of 2016/17 market year Turkey imported almost 352 thousand tonnes of Ukrainian wheat bran, an increase of 14% compared with the same period in 2015/16 market year (309.9 thousand tonnes), and up 4% compared with July-February of 2014/15 market year (337.8 thousand tonnes). Generally, in 2015/16 market year Ukraine supplied 475.8 thousand tonnes of wheat bran to Turkey, up 2% compared with 2014/15 market year (467.8 thousand tonnes). Turkey increased its share among foreign buyers of wheat bran from Ukraine. Thus, in 2014/15 market year the share of Turkey totaled 91% in the export structure, and in 2015/16 MY – 86%, but in the current market year the figures will grow to 98%.

U.S. grain futures edged higher on previous close, boosted partly by a weaker dollar, although the scope for a significant rebound in prices appeared to be capped by ample supplies. Chicago Board of Trade wheat for May delivery was up 0.5 percent at $4.21-1/4 a bushel at 1034 GMT. The most active contract had dipped to a low of $4.17-1/2 on Wednesday, the lowest since March 31.the market remained weighed by abundant global supplies although the prospect of lower crops in the Black Sea region helped to underpin prices. Wheat crop in Russia was forecast to fall by 9 percent from last year to 66 million tonnes while a decline in production was also anticipated in Ukraine. Lower exports from Russia and Ukraine are likely to help reduce the supply glut witnessed in global grains market. May milling wheat was down by one euro or 0.6 percent at 163.50 euros a tonne.