Desperate efforts of the government to control the price of wheat

- Commodity Current - Jayavadan Gandhi

The commodity sector was in turmoil last week due to significant volatility. Heavy cracks have been observed in the most sensitive gold-silver. The gold market, which was around Rs 59,000/- a month ago, fell by seven per cent to Rs 56,000 per 10 grams and the silver market fell by 13 per cent from the high of Rs 73,000 per kg to close at around Rs 65,000, a two-and-a-half-month low. There was a significant correction in gold and silver due to rising interest rates in the US and signs of strength in the dollar. However, if the situation remains like this, there is a possibility that gold prices will collapse and stay around 54000. Even in crude oil, due to the possibility of increased production and supply from America, the prices on MCX have remained around 6400 rupees per barrel. The market has been stuck between mutually opposing trends in production increases and decreases between OPEC and non-OPEC oil producers. However, despite the possibility of demand for crude oil from China, there is a strong possibility that the price of crude oil will still crash and remain around six thousand due to the possibility of more supply against demand.

On the other hand, the issue of rising food prices in the country has also become a headache for the government. Nowadays, the pressure on the government is increasing due to the daily increasing prices of coconut oil. This year, the demand for groundnut and groundnut oil has been high against the expected less than expected harvest. Especially with the trade of 250 containers in Singoil from China, the market has seen a bullish trend. Instead of the estimates of 300 lakh tonnes of groundnut production, there is a boom in foreign trade against the possibility of 22 to 25 lakh tonnes of groundnut goods. Farmers now face limited stock of groundnut due to pressure on farmers to sell profitably due to high prices. Business class has more possibilities of goods. Currently the market is in the range of 1400 to 1500. Parallel to the export of groundnut, the export of soymeal is also likely to rise significantly to five lakh tonnes in the month of February-March. Due to the drought in countries like Argentina and low prices, soybean exports are increasing.

Meanwhile, in order to control the rising inflation in wheat, last week, the reserve quantity of wheat has been cut in the open market and the price has been cut to 2150 per quintal. Relaxation has been announced for states to pick up goods even without auction. Due to expectations of increased supply of wheat, prices in local markets have come down by Rs 5 per kg due to price controls.

At present, rising heat is likely to reduce the expected wheat production target. The government is also likely to continue the ban on wheat exports till the end of 2023-24. The government declared in wheat Rs. Preparations have been made to start buying new wheat from April at a support price of 2125 per quintal. An exercise is underway to remove old stock from government godowns and fill with new goods. It is estimated that wheat has been sown in about 343 lakh hectares in the country in the rabi season this year. Which is more than last year. As the demand for Indian wheat has increased at the global level as well, there are chances that the price level will remain high this year as well.

The next rally is based on how the production of cumin now remains as the effect of heat is likely to affect the production of spice crop cumin as well. Last week, the market was in turmoil with cumin futures fluctuating by around Rs 20 to Rs 25 per kg.