Wheat flour prices may stabilise on open mkt sale programme

The Union government?s proposal to sell wheat in the open market from the government stocks after meeting PDS and buffer stocks requirement might result in stabilisation of prices of atta (flour) over the next four to six months.

Although the fine points of open market sale programme is not yet clear and flour millers are awaiting the price at which the government plans to sell the surplus stock, but they feel flour prices are bound to come down in the coming months as more supply will cool product prices.

According to Veena Sharma, secretary, Roller Flower Millers Federation of India (RFMFI), ?Due to better supply of wheat, the prices of flour has been stable for the last four months and we expect the trend to continue over the next six months,? Sharma told FE.

The raw atta price has been ranging between Rs 13-15 per kg in the Delhi market. For branded atta, the prices have been in the range of Rs 16 – Rs 18 a kg.

Sharma however said, ?There is a rare possibility of prices of atta going down in the near future because of hike in procurement prices of wheat by government agencies.? During the current rabi procuring session, the government had hiked the prices of wheat from Rs 850 per quintal to Rs 1,000 per quintal.

She said that due to hike in procuring prices by the government, there has been increase in cost of procuring wheat in the open market. ?Although the prices of atta have stabilised in the last few months but we do not necessarily expect lowering of prices,? Sharma said. Wheat output is estimated at record 76.78 million tonne during 2007-08 season against 75.81 million tonne achieved in the previous year.

?We are already anticipating the prices of wheat which would be fixed by the government for open market sale,? Vinod Kapoor, managing director of Chandigarh-based Kapoor Brothers Rollers Flour Mills, said. He said that in an election year, the government might sell wheat in the open market through some sort of subsidy.

The Roller Flour millers have been anticipating that due to the government intervention along with sufficient supply due to bumper crop, the prices would be stable over the next few months. However once the all the wheat is procured from the market by the government and private players, there might be rise in the prices of atta for a short duration.