Wheat prices surged in the domestic market last week on speculation that the Centre may slap customs duty on imports, reported “Kazakh-Zerno” IA with reference to the “Hindu Business Line“.
Not just the rise but the Centre’s move itself has left the user industry, particularly the roller flour mills, worried since it feels it is not the right time to impose the duty that was revoked in 2006.
“Currently, wheat from Uttar Pradesh delivered at railway shed in Tamil Nadu is quoted at Rs 1,390 a quintal. This is Re 1 higher than the price fixed by the Food Corporation of India under the open sale scheme,” said a South India-based miller.
On Thursday, wheat prices jumped Rs 20 a quintal on speculation.
According to industry sources, the issue of import duty is feared to come up at a meeting of empowered group of Ministers on Monday.
On the National Commodities and Derivatives Exchange, wheat for August delivery ended at Rs 1,251.40 a quintal on Saturday, while September contracts closed at Rs 1,270.60.
“The point is not imposition of import duty but the global market scenario. International prices of wheat are ruling firm now and any duty at this stage is not advisable,” the sources said.
Wheat futures on the Chicago Board of Trade gained 1.5 per cent last week. The prices have increased 28 per cent so far this month.
Wheat production in Russia, the largest global exporter, has been affected due to drought. The five million tonnes drop in the Russian production has pushed up the prices higher. Besides Russia, wheat production in Ukraine, another major exporter, has been projected 15 per cent lower.
Milling wheat in Europe was quoted at $234.40 (Rs 11,000) a tonne during the week-end.
“Imports into the country are meagre. Less than two lakh tonnes of wheat have been imported since April. No bulk imports are taking place in view of the stringent phyto-sanitary norms. Imports are done mainly through containers,” said a miller in Tamil Nadu.
Until last week, Australian wheat import in containers through Tuticorin cost $280 a tonne (Rs 13,150). Now, it costs $302 (Rs 14,175). Besides, flour mills will have foot an additional Rs 1,800 a tonne to get it to their gates.
“We are importing Australian wheat to blend it with our wheat for biscuits and breads. It helps us to get quality produce. If the duty is re-imposed, the cost of wheat-based product will surely rise,” said another South India-based miller.
The Centre had toyed with the idea of re-imposing the import duty in April but put it off till this month.
With monsoon playing truant, the general view is that the Government might not think of imposing import duty now.
It won’t be a wise move as it will aid further food inflation, said industry sources.
According to sources, the talk of import duty gained momentum after two vessels were sighted on seas carrying wheat in bulk.
One was sighted near Mumbai carrying wheat from the Black Sea region and the other near Tuticorin with Australian wheat.
Bulk import of wheat could land the importer in problems if the quarantine authorities reject the consignments for not meeting the phyto-sanitary requirements.
In 2006-07, the Centre amended the phyto-sanitary norms to facilitate imports and overcome supply shortage.
The amendment expired in March 2009, forcing the users to physically clean the imported wheat before bringing it into the country.