According to a recent report by Rabobank, the average Wheat prices raised nearly 15% from US$ 6.51 per bushel in the third quarter of 2010 to US$ 7.48 per bushel in the second quarter of the current calendar year.
Similarly, Corn price shot up to US cents 732 per bushel from US$ 4.21 per bushel in the period under consideration. Sugar firmed up to US $0.24 per pound from US$ 0.20 per pound.
India had been experiencing bumper harvests in the agri sector and was able to store about 64 million tons against a mandatory buffer of 27.14 million tons.
The storage facility in is poor and this has Lead to marginal fall of 3.72 million tons to 61.28 million tons.
In 2008, India had imposed ban on export of rice, wheat, sugar etc to meet domestic needs and to keep the inflation in control. Now, seeing the huge demand in the global market and country’s surplus production, India government has lifted the ban, but only limited amount of export of the commodity were allowed.
The allowed marginal quantity of exports cereals could not make any significant impact either on domestic prices or the storage conditions.
Allowing more exports by the government will boost the economy and also will reduce the load over Food cooperation of India on storing agri-commodities.
“The strong price support in agri commodities markets is expected to continue due to supportive fundamentals and on-going investor interest. The agri markets have greatly outperformed the equity and energy markets in August, as recession concerns and the possibility of increasing inflation, along with tight balance sheets encouraged both speculative and commercial buying in agri complex,” said the Rabobank report.
As per an Economist, The price rise and demand in the global agri-commodity section is considered as rare opportunity and India should exploit it at the most.