Wheat prices may rule firm in short-term

Wheat prices in the short-term are likely to remain firm.

Wheat prices in the short-term are likely to remain firm as the Agriculture Ministry has estimated the output to decline in 2010 to 80.28 million tonnes as against 80.68 million tonnes in the previous year,a research report said.

The Open Market Sale Scheme (OMSS) under which around 20 lakh tonnes of wheat was allocated to states for being distributed between October-March 2010 to check rising prices has evoked a poor response which would also favour the bulls in the short-term.

Prices might touch the previous high of Rs 1,390 per quintal levels (NCDEX March Contract). However,no major upside is expected in the medium-term (March onwards),as arrivals will pick up by mid-March,Angel Commodities Broking’s Research Analyst,Vedika Narvekar,said in the report.

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Thus,wheat prices will remain bearish in the medium-to-long-term and might decline by Rs 150-200 per quintal due to arrival pressure and comfortable stock position in the domestic markets.

Since the resumption of futures trading in wheat in May 2009,wheat prices have gained by more than 25 per cent till October 2009. Despite having a comfortable stock position in domestic markets,wheat prices surged because of prevailing firm sentiments among the cereals segment,mainly rice.