FMC goes on defensive as wheat prices fall

The forward market regulator has also revised the price limit on wheat contracts from 6 to 4, beyond which the prices can8217;t rise in a day. Recently, the government preferred to import wheat at the landing cost of over Rs 1,000 per tonne. Of the total 38.3 lakh tonne contracted import wheat, about 7.24 lakh tonnes has arrived at Chennai, Cochin, Vizag and Mundra ports. The wheat prices on the spot market have already started facing downward pressure.

Ruling out the fear of imported wheat being hoarded and delivered in the futures market, Sanvali Kaushik, VP, Products, NCDEX said, 8220;Given the high import cost, it will definitely not be profitable for traders to venture in such deals. With wheat consumption set to peak during October to December, the only option to keep the prices under check is to increase liquidity8221;.

Analysts have raised concerns over the curbs on wheat futures. 8220;By lowering the price limits, the regulator is dictating the prices instead of allowing the market discover the prices. Interestingly, even in the present price limit of 6, the wheat contracts have very rarely hit the upper limit,8221; said an analysts.

Though wheat futures prices have undergone corrections of late, the long-term trend still remains bullish as the government tenders to import wheat finds few takers amidst global shortage of production.