Speculation on duty hits wheat import.

COIMBATORE: Wheat imports have weakened in the last one month as the domestic crop is projected to be good this year and the chances of government imposing a duty on wheat imports are getting stronger. At the Tuticorin port, where a majority of wheat from Australia and Russia are imported into India, the volumes were lower in April at 20,352 tonnes compared to the March figure of 28,911 tonnes.

February and January saw the maximum import at Tuticorin port at 38,644 tonnes and 31,993 tonnes respectively. A flour mill owner in Coimbatore told ET the decrease in wheat imports was mainly due to speculation that the government would impose a duty on wheat imports anytime now. “Unless the government gives a clear date till when the zero import duty will stay, there will not be stability in the market,” he said.

The government opened up wheat imports into India with nil duty in November 2009. As traders and analysts predicted the crops to be lower due to excessive heat this summer, the imports were in good flow in the last four months.

Millers in the South mostly prefer buying through middlemen and Singapore-based Agrocorp International. Australian Wheat Board is a major seller to Indian millers.

Till last month, imported wheat was selling at Rs 1 per kg less than the domestic wheat in south India. Mill owners were importing Russian wheat for its coarser count and it was Rs 2 per kg cheaper than the wheat from north India.

But a government announcement on Thursday about comfortable wheat position has led importers to worry about duty being imposed anytime. The wheat output this season is estimated at 82 million tonnes. Wheat is a one-season crop sown in November and harvested between March 15 and April 30.

Minister of state for agriculture KV Thomas has told the Rajya Sabha that the stock position of wheat in the central pool is comfortable this year and hence the import of wheat is not required for the central pool. The government has fixed Rs 1,100 per quintal as minimum support price (MSP) for procurement of wheat in the Rabi marketing season (RMS) 2010-11.

Source : The Economic Times