In September, wheat prices increased by 1.5% to 3% due to huge festive season demand. The Prime Minister Garib Kalyan Yojana (PMGKY) extension, which was announced on Wednesday, is now expected to lower prices by expanding the market's available supply of wheat.
"Wheat prices have jumped by Rs 70-80/quintal across the country over the previous fortnight reaching Rs 2430-2450/quintal," said Navneet Chitalangia, a renowned flour miller from Rajasthan. Wheat prices were controlled after the restriction on exporting wheat flour.
Trade expected a significant increase in wheat prices if the central government had not extended the PMGKY. According to a trader who asked to remain anonymous, "the rate of increase in wheat prices will be slower as distribution of grains under PMGKY will boost the total supply of wheat."
It is also expected that a slow increase in wheat prices will put more pressure on stockists to sell some of their stock.
The current market prices do not provide the stockists with a profit or loss perspective based on the carrying cost of wheat over the previous six months.
According to Chitalangia, "Those who do not have the holding capacity may prefer to exit some of their stocks at this price point."
