India is looking to get seemingly out-of-control wheat prices in order with a potential import tax cut or even by abolishing the tax altogether.
The news comes via Reuters. The news outlet reported that wheat prices in New Delhi “have jumped 12% in the past four months to 25,174 rupees ($303.85) a metric ton, the highest in nearly six months, as trade and industry officials say production was hit by erratic weather.” Agricultural commodities around the globe have been hit by harsher weather, relating to warmer temperatures from El Niño, which is causing drought spells that are affecting crop growth.
India has already tried to quell wheat prices by imposing a limit on the amount of wheat stock that traders can hold. Apparently, it wasn’t quite enough, which puts cutting or abolishing the wheat import tax on the negotiation table.
“We have options like lowering or abolishing the wheat import duty and tweaking the stock holding limits to control prices,” Sanjeev Chopra, the most senior civil servant at the federal food ministry, told reporters.
“The options are under consideration. The government is committed to controlling prices,” Chopra said.
In the meantime, traders can look to opportunities on wheat prices via the Teucrium Wheat Fund (WEAT). The fund provides investors with an easy way to gain dynamic exposure to the price fluctuations in wheat. It does so through the convenience of an exchange traded fund (ETF).
Commodities Bull Market Brewing?
Wheat could be a beneficiary of a potential bull market brewing in commodities. Big tech equities have spearheaded many of 2023’s gains. However, for the long haul, commodities are a sensible option.
“It’s really difficult to find a place in the financial ecosystem that’s calm and centered, where you can actually make some sensible decisions about long-term capital,” said Grant Williams, author and host of the “Grant Williams Podcast,” via a Kitco News report. “Except commodities — right now, commodities are just about the one place where you can put capital to work.”
The Bloomberg Commodity Index has fallen 6% for the year. However, it has started to rise the past three months with a 4% gain. Whether this is the start of an upward trend is anybody’s guess. Regardless, the potential gain derived from a commodities bull market will require investors’ patience. Williams claimed that this commodity is lacking these days.
“People’s investment time horizons have become increasingly shorter over the last 30 years,” noted Williams. “No one cares about commodities, but at some point, they will. There’s no bull market like the commodity bull market.”
For more news, information, and analysis, visit the Commodities Channel.