Wheat is the most widely grown cereal grain in the world. The document provides details about wheat, including the main varieties grown in India, uses of wheat, production and trade figures, factors that influence wheat prices, the wheat value chain, and India's role in wheat production and trade. It also discusses futures trading in wheat on the MCX exchange and describes the main participants in wheat futures markets, including hedgers, speculators, and arbitragers.

1. Wheat

2. Basics – Wheat (Triticum)
• Also called Gehun, Kanak, Gandham in Hindi, Gehun, Gahang in Marathi, Godhumalu
in Telugu Godhi in Kannada Godumai in Tamil & Godamba in malayalam.
Telugu, Kannada, malayalam
• Most widely grown cereal grain in the world.
• Mild, nutty flavour and gluten (a sticky protein) makes it very popular for use in
baked products
products.
• As many as 25 species recognised in the world, only 3 species namely,
T.aestivum/vulgare (Bread wheat), T.durum (Macroni wheat) & T. dicoccum (Emmer
wheat) commercially grown in India.
) yg
• Soil & Climate – Fertile soil & temperate climate
• Grading - Based on Protein content (9-14%), based on Kernel texture (hard, semi
hard, soft), based on Colour (white, amber, red)
, ), ( , , )
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3. Uses
Food Products:
Atta (Whole Meal), Maida (White Flour), Chapatis,
Suji (Coarse Semolina), Rawa (Fine Semolina),
Pasta, Bread, Biscuits, Cookies,Cracks, Noodles,
Dalia, Vermicelli etc.
Industrial Uses:
Milling, Bread & Bakery,
Adhesives, Coatings,
Uses of Wheat Polymers & Resins,
y ,
Cosmetic, Paper &
Pharmaceuticals.
Other Uses:
Oth U
Straw & Bran as
Cattle Feed etc.
In India, wheat consumption is manly in the form of homemade chapatis or rotis using custom milled atta,
although usage of branded packaged atta is increasing in cities.
Protein content - < 10% - used for cakes & cookies, 9 - 12% - used for chapatis & noodles, >12% used for macroni
P i df k ki df h i dl 12% df i
& white bread
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4. World Area, Production of Wheat
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5. World Crop Calendar
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6. Global Balance Sheet
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7. Major Exporters
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8. Major Exchanges
Budapest Commodity Exchange
Chicago Board of Trade (CBOT)
China Zhengzhou Commodity Exchange (CZCE)
Kansas City Board of Trade (KCBT)
London International Financial Futures Exchange (LIFFE)
Minneapolis Grian Exchange (MGEX)
Multi Commodity Exchange of India Ltd. (MCX)
South African Futures Exchange (SAFEX)
Sofia Commodity Exchange, Bulgaria
Sydney Futures Exchange (SFE)
Winnipeg Commodity Exchange
Zimbabwe Agricultural Commodity Exchange (ZIMACE)
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9. Facts About Wheat
• India is the third largest wheat producer in the world after European Union
– 27 & China
China.
• Wheat is grown in Rabi season starting from October and continues till
December end.
• Weather conditions in Haryana & Punjab plays a very vital role in
ascertaining the final output.
h l
• Area under wheat cultivation hovers in the range of 25 – 29 million
hectares.
• Production from the last few years has been continuously good due to
favorable weather conditions and increasing acreage.
• USDA’s prediction for India’s wheat production for 2008-09 year is 77.5
million tonnes.
• L
Last years production was around 78 6 Milli tonnes.
d i d 78.6 Million
• The minimum support price this year was hiked to Rs1080 per quintal as
compared to Rs 1000 previously.
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10. Indian Government Role in Wheat Trade
Indian Government plays a key role in deciding domestic wheat market
sentiments.
sentiments It is mainly involved in food management with three basic
objectives.
• Procurement of food grains (mainly wheat and rice) from farmers at
remunerative prices
• Distribution of food grains to the consumers particularly to the vulnerable
b d h l l h l bl
section of the society at affordable prices
• Maintenance of food buffers for food security and price stability.
The instruments for food management are the Minimum Support Price (MSP)
and Central Issue Price (CIP). The nodal agency which undertakes the
procurement and distribution and storage of food grains is the Food
Corporation of India (FCI). Punjab, Haryana, UP and MP are the major
states which contribute to the central pool
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11. Government Procurement Data
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12. Minimum Support Price
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13. Wheat Spot Prices - Delhi
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14. Price Affecting Factors
• Role of weather (temperature, rainfall) in
crop production is immense key months
being January & February.
• Price tends to be lower as harvesting
progresses and produce starts coming into
the market. At the time of sowing and Weather
Sowing
Price
before harvesting price tends to rise in view OMSS
of tight supply situation. Rates Central
Logistics Pool
Stock
• Changes in the minimum support prices
(MSP). Harvesting
MSP
• Release of central pool stock and OMSS
rates.
t
• Changes in logistics prices (transportation, Performance
storage, etc) affects prices at major trading
ce te s.
centers.
Note - Wheat has a weightage of 1 % in the wholesale price index
f 1.38%
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15. Wheat Value Chain
Countries End
Consumer
Exports
Wheat Starch
Total End
Production Food/ Milling Flour Consumer
Industrial
Domestic Wheat Gluten
Use
Feed/ End
Residual Consumer
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16. Indian Wheat Classification
• Indian Wheat is largely soft / medium hard, medium protein (9 - 12.5%), bread wheat
• Three species of Wheat namely (i) T. aestivum, (ii) T durum and (iii) T dicoccum
namely, T aestivum T. T.
are being cultivated in the country, as per details given as under :
S.No. Species % Share of Production Major Growing Areas
i T. aestivum 95% Uttar Pradesh, Punjab, Haryana,
Rajasthan, Bihar, West Bengal,
Assam, Parts of Madhya Pradesh,
Himachal Pradesh Jammu & Kashmir
Pradesh,
ii T. durum 4% Madhya Pradesh, Maharastra,
Gujarat, Southern Rajasthan and few
locations in Punjab.
iii T. dicoccum 1% Karnataka, Maharastra & Tamil Nadu
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17. Major Crop Growing States & Trading Hubs of India
Shahjahanpur,
Khanna, Ludhiana, Agra, Kanpur,
Malout, Abohar,
M l t Ab h Bareily,
Bareily
Jalandhar, Batala, Lucknow, Hapur
Nabha
Karnal, Sirsa, Hisar,
Panipat, Dabavalli,
Sonipat, Kurukshetra
Ganganagar,
Hanumangarh, Kota
Kolkata
Ahmedabad, Kandla
Indore,
Indore
Hyderabad
Moraina,Ujjain,
Sihor, Itarsi,
Nagpur, Sholapur, Hoshangabad,
Bangalore
Dhule, Khamgaon, Chatarpur
Aurangabad
Chennai
UP, Punjab, Haryana, MP, Rajasthan, Bihar, Maharashtra, Gujarat, Karnataka, WB,
Uttaranchal, HP & J & K - 99.5% of total Wheat production.
Jharkhand, Assam, Chhattisgarh, Delhi and other NE States - only about 0.5 % of
the total Wheat production. Source: Joint Agricultural Weather facility USDA / NOAA
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18. Marketing Season & Policy in India
• Marketing season - begins from April (Baisakhi) every year
• Major Policies
- Minimum Support Price (MSP)
- Central Pool Stock
- Open Market Sale Scheme (OMSS) – Wheat for sale in open market
by FCI - Government Agency.
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19. Marketing Channel in India
Producer (Farmer)
Marketable Surplus
Shopkeepers / Moneylenders /
Primary Wholesale Market
y
Itinerant Traders
Buyer’s Commission Agent Seller’s Commission Agent
(Pucca Arhatia) (Kutcha Arhatia)
Terminal Market Wholesaler Government
Millers / Retailers
Fair Price Shops
Consumers
Source:- http://www.agmarknet.nic.in
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20. Interstate Movement of Wheat
Despatches of Wheat from One State to Other States
Sl. No. Feeder State Receiving States
1 Punjab & Haryana Andhra Pradesh, Bihar, Delhi, Gujarat, Karnataka, Kerela,
Maharashtra, Orissa, Rajasthan, TN, WB
h h h
2 UP Andhra Pradesh, Gujarat, Karnataka, Kerela, Maharashtra,
Orissa, Punjab, Rajasthan, TN, WB, NE Region
3 WB Bihar, Gujarat, Orissa, UP, Punjab, Delhi, NE Region
4 Delhi Andhra Pradesh, Karnataka, Gujarat, Kerela, Maharashtra,
Orissa, TN, NE region
5 MP Andhra Pradesh, Bihar, Kerela, TN, Delhi
Source:- DGCIS, Kolkata
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21. Why Futures in Wheat
• Wheat spot market is well developed in India that is a precondition for
any commodity to be successful in Future trading.
• Market has well developed breadth and depth with the presence of
general consumer to wheat based industries that includes Wheat
flourmills, Biscuits manufacturers etc.
• Price Volatility is poised to increase in view of increasing consumption
and consumption pattern for wheat.
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22. Wheat Futures @ MCX – Some Facts
• Wheat, shows stable price movement, making it perfect for low risk
stable return among commodities portfolio.
• Trading Unit: 10 MTs
• Price Quotation: Rs. per Qtl.
• Tick Size: 10 Paise
• Profit/Loss with change in one tick size: Rs. 10/-
• Profit/Loss with change in price/unit by Re. 1: Rs. 100
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23. Wheat Futures – The Participants - Hedgers
• Hedgers – Can use futures as protection or insurance, against unfavourable price
moves. Hedgers can protect themselves by taking an opposite position in the
futures market to their exposed position in cash commodity.
• Benefits of MCX futures are –
• Establish purchase and/or sales prices in advance of physical transactions
• Offer fixed forward pricing to customers
• Lock-in profit margins
• Establish a minimum selling price while maintaining the ability to participate in
increasing prices
prices.
• Establish a maximum purchase price while maintaining the ability to
participate in decreasing prices.
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24. Wheat Futures – The Participants - Speculators
• Speculators – Speculators trade to capitalise on potential profit
opportunities generated by a fluctuating market and by doing so so,
accept risk that hedgers wish to avoid. Speculators play a vital role in
futures trading by providing market liquidity, which allows hedgers to
buy and sell the contracts they desire at current market prices.
Speculators attempt to buy low and sell high, or sell high and buy low.
Reasons for Reasons for SELLING
BUYING futures futures contracts
contracts
Hedgers To lock in a price To lock in a price
and thereby and thereby obtain
obtain p
protection against
g
protection declining prices
against rising
prices
Speculators To profit from To profit from
rising prices declining prices
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25. Wheat Futures – The Participants – Arbitragers
• Arbitrage take advantage of price discrepancies between similar
commodities in different markets.
• Carrying charge + cost of receiving delivery + storage charges + cost of
making d li
ki delivery + price of wheat i th cash market i l
i f h t in the h k t is lower th
than th
the
price of a futures contract, then an arbitrage opportunity exists for
company ABC to purchase wheat in the cash market and sell wheat in the
p y C p
futures market.Instead of buying an offsetting contract to fulfill its futures
obligation, company ABC will make delivery of the actual wheat.
• Arbitragers in the consumable commodity markets ensure the price
discrepancy between the cash market and the futures market, or the
basis, tends to
b i t d t narrow.
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26. Thank You