Wheat

Food Corp of India sold 95,150 tn of wheat in the fourth round of auctions under the open market sales scheme for 2018-19 (Apr-Mar). At the auction, which ended on Thursday, the agency had offered 2.4 mln tn of the food grain. Response to wheat auction has been good mainly from West Bengal, Madhya Pradesh, Punjab and Haryana. The agency had sold 102,950 tn of wheat in the third round, held on Aug 2. For Jul-Sep, the government has fixed the base price for selling wheat under the open market sales scheme at 1,900 rupees per 100 kg.

The tax expenditure on procurement of wheat and rice by the government has come down “significantly” after implementation of the goods and services tax. The total tax expenditure on procurement under the GST regime is estimated at 65.3 bln rupees, down from an estimated 153.6 bln rupees before GST was implemented. However, state governments are imposing various cesses/fees like Rural Development Fee, Market Fee, Nirashrit shulk etc on foodgrains procured within the states even after implementation of GST. The rates of such cesses levied by the state governments vary from state to state.

Sharp short-term rise in wheat prices is burdening manufacturers of products like atta and biscuits, who, in turn, pass on the increased cost to the customer. Britannia is considering price hike while ITC, another big procurer of wheat, is also mulling similar move in Aashirvaad Atta and its variants. Smaller manufacturers of wheat and other products like bread etc may also be forced to pass on the increased burden. The prices rose due to lower acreage and crop damage in some areas. Also, the government procurement has been higher than estimated.

Grain export in 2018-2019 agricultural year is expected at the level of 44-45 mln tonnes. Russia has started supplying wheat to Brazil for the first time in eight years. The first lot of Russian wheat amounting to 26.2 thousand tonnes was shipped to Brazil from the Kaliningrad Region for the first time in eight years.

Ukraine has exported 3.4 million tonnes of grain since the start of the 2018/19 season on July 1, down from 3.5 mln tonnes last year.

Indias maize acreage was 1.6% higher at 7.3 mln ha as of Thursday from the year-ago period. Acreage in the country was also 1.4% higher as compared with the normal area of 7.14 mln ha, which is based on the average of the past five years. Higher planting in Madhya Pradesh, Karnataka and Rajasthan has offset the decline in other key growing states of Maharashtra, Bihar and Telangana. Announcement of higher minimum support price for maize by the government in July also encouraged farmers to bring more area under the crop. The Centre hiked the minimum support price for maize to 1,700 rupees per 100 kg for kharif marketing year (Oct-Sep) from 1,425 rupees in the previous year. Acreage was still down in some states because of subdued monsoon rains. India received 457.3 mm of rainfall during Jun-Jul, 10% below the normal weighted average of 508.5 mm for the period.

Wheat prices slipped by Rs 15 per quintal at the wholesale grains market today on the back of adequate stocks position against reduced offtake by flour mills. However, other grains held steady in thin trade. Besides reduced offtake by flour mills, sufficient stocks position on increased arrivals from producing belts, led to decline in wheat prices. In the national capital, Wheat dara (for mills) fell by Rs 15 to Rs 1,985-1,990 per quintal. Atta chakki delivery followed suit and traded lower by a similar margin to Rs 1,990-2,000 per 90 kg.

Egypt’s state grain buyer, the General Authority for Supply Commodities (GASC), had bought 240,000 tonnes of wheat in an international tender. 60,000 tonnes Russian from Aston at $235.50 FOB plus $16.46 shipping costs equating to $251.96 a tonne c&f. 60,000 tonnes Romanian from Ameropa at $238.22 FOB plus $15.34 shipping costs equating to $253.56 a tonne c&f. 60,000 tonnes Russian from GTCS at $238.00 FOB plus $16.46 shipping costs equating to $254.46 c&f. 60,000 tonnes Russian from Posco Daewoo at $238.25 FOB plus $15.00 shipping costs equating to $253.25 a tonne c&f. The tender had sought shipment between Sept. 11 and 20. The lowest price in the previous Egyptian tender on July 24 was $217.95 a tonne FOB for 60,000 tonnes of Russian wheat.

Iraq’s state grains board had purchased about 50,000 tonnes of Australian wheat in a tender which closed this week. It was believed to have been purchased at $335 a tonne CIF free out.

Zimbabwes winter wheat output is expected to reach 400 000 metric tonnes up from 158 000 tonnes achieved in the past seasons due to an increase in hectarage under command agriculture and introduction of support initiatives.

Wheat prices leapt to multiyear highs on fears of curtailed exports from the Black Sea after heat and drought damaged crops across Europe. Milling wheat in Paris settled up 2.7 per cent at €212.75 per tonne. In Chicago, soft winter wheat closed 0.4 per cent higher at $5.60½ a bushel.

The US Department of Agricultures Foreign Agricultural Services has estimated Kazakhstans wheat production in 2018-19 (Sep-Aug) at 14 mln tn, down 800,000 tn from a year ago due to a fall in acreage. Kazakhstans government policy on crop diversification, and the unusually cold weather in June weighed on sowing of wheat crop in the country. The weather was mostly cold and windy in early June, which had hit sowing of wheat and germination of seed. The agency has pegged Kazakhstans wheat exports in 2018-19 at 8.0 mln tn, 500,000 tn down from last year because of lower output projection. The countrys consumption of wheat for food, seed and industrial purpose is expected to remain unchanged at 4.8 mln tn in 2018-19. As on May 1, Kazakhstan had 7.9 mln tn stock of wheat, 2% higher from the same period last year.

Wheat prices slipped by 0.55 per cent to Rs 1,980 per quintal in futures trade as speculators cut down holdings, triggered by higher supplies in the spot market against low demand. Wheat for delivery in September fell by Rs 11, or 0.55 per cent, to Rs 1,980 per quintal.

Russian FOB deep sea port 12.5% protein wheat surged to a 41-month high at $228.25/mt as assessed by S&P Global Platts Tuesday despite demand faltering from regular Russian wheat importers. Russian wheat has now risen by $11.75 on the week as farmers continue to sit on higher quality protein wheat on an expected shortage due to months of drought and hot weather. However, demand from big buyers has been absent, due to the higher prices, leaving some in the market to question how long the firm rally can continue.

The South Australian government has forecast the state’s winter crop at a below-average 6.9 million tonnes, including 3.95 million tonnes of wheat, which is close to one million tonnes below the five-year wheat average.

Japan will import 18,465 tonnes of feed-quality wheat, and 46,060 tonnes of barley for livestock use, via a simultaneous buy and sell (SBS) auction. The ministry had sought 120,000 tonnes of feed wheat and 200,000 tonnes of feed barley to be loaded by Nov. 30 and arrive in Japan by Jan. 31, 2019 in the tender that is usually conducted weekly. It is seeking the same amounts for each grain to be loaded and shipped during the same period in a similar tender that will be held on Aug, 08.

China sells 2,000 tonnes of imported 2013 wheat at auction of state reserves at average price of 2,405 yuan ($352.28) per tonne. Sale represents 0.11 percent of total wheat available at the auction.

World wheat production is set to fall to a five-year low following significant downgrades to crop prospects in the European Union and Russia. The inter-governmental body cut its forecast for world wheat production in 2018/19 by 16 million tonnes to 721 million, the lowest total since the 2013/14 season. The EU wheat crop was seen at 139.9 million tonnes, down from a previous projection of 147.3 million, with forecasts for the top four producers in the trading bloc, France, Germany, Britain and Poland, all revised down. Russias wheat crop was forecast to fall to 66 million tonnes, down from a previous projection of 70.9 million and far below the prior seasons 84.9 million. Global wheat stocks were forecast to fall to a two-year low of 247 million tonnes with production set to fail to keep pace with consumption in 2018/19 which was seen at 739 million.

Prices of select bold grains advanced by up to Rs 30 per quintal at the wholesale grains market due to increased offtake by consuming industries. Increased offtake by consuming industries amid pause in arrivals from producing regions, mainly attributed the rise in select bold grain prices. In the national capital, barley rose by Rs 10 to rs 1590-1600 per quital.

The relevant authorities of Russia and Kuwait held talks about the possibility of supplying Russian wheat to the State of Kuwait. Russia has just occasionally exported wheat to Kuwait by now: 9.8 KMT in July 2015/16. Russia supplies barley to the Kuwaiti market. Barley shipments totaled 157.9 KMT in July-May 2017/18.