Wheat Prices Continue To Rise And Hit 8-Month High
Indian wheat prices surged to an eight-month high on Tuesday, thanks to strong demand in the festival season, limited supplies and as a 40% import duty makes imports from overseas unviable for domestic flour mill
Our Top Reports For Today
- [00:00] Stories Of The Day
- [01:10] Markets hold their breath as President Joe Biden Slated To Reach Tel Aviv Today
- [03:03] India’s Rs 143 Lakh Crore infra spend in next 7 years is double of previous 7 years.
- [04:54] Wheat prices continue to rise, hit 8 month high, trade wants import duty cuts.
- [11:07] Bajaj FInance raises provisions for bad loans on heels of RBI warning of growth in personal loans.
- [13:19] Artificial Intelligence will see a cold shower in 2024, says leading internet research agency.
- [16:20] Funflation, when prices of concerts you want to attend become unaffordable.
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
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OIL, MARKETS
The bet obviously is that if the US President is landing up in your country, things will be calm, at least for some time.
Oil prices steadied on Tuesday after sliding more than $1 on Monday even as the United States stepped up efforts to prevent an escalation of the war between Israel and Hamas. Brent crude futures were holding below $90 a barrel at $89.94 a barrel.
President Joe Biden is slated to reach Israel today in what clearly is an all-out diplomatic effort to rein in the Israel-Hamas war.
Yields on the US 10-year benchmark climbed beyond 4.7% on Monday overnight and the dollar strengthened.
Secretary of State Antony Blinken also returned to Israel to meet Prime Minister Benjamin Netanyahu, after talks with Arab governments.
“The presence of President Biden in the region potentially lowers the odds of such an offensive in the coming days, providing markets with some breathing room, if only for a small window,” analysts told Bloomberg.
Back home, Indian equities snapped a three-day losing run with the the BSE Sensex surged 261 points to settle at 66,428. The Nifty50 was 80 points higher at 19,812.
The rupee recovered after closing at a record low on Monday at 83.27, to close on Tuesday at 83.24. The dollar, just to remind everyone, shows no signs of easing up and continues to stay strong putting pressure on currencies across the board, including the rupee.
Gold prices are now bottoming out for now around and closer to Rs 60,000 per 10 gms in India as its status as a safe haven diminished somewhat. One, because the Middle East tensions have eased, if only for now. And second, because US treasury yields are more attractive than gold.
INDIA’s Rs 143 lakh Crore Spend On INFRA
India will spend nearly Rs 143 lakh crore on infrastructure in the next seven years through 2030, more than twice the Rs 67 lakh crore spent in the previous seven starting fiscal 2017, rating agency CRISIL has said.
Interestingly, of the total around Rs 37 lakh crore will be in the nature of green investments, marking a 5x rise compared with fiscals 2017-2023.
CRISIL expects India’s gross domestic product to grow at an average 6.7% through fiscal 2031 to be the fastest-expanding large economy.
Per capita income is seen rising from ~$2,500 now to ~$4,500 by fiscal 2031, creating a middle-income country.
Crisil also projected that the next phase of infrastructure development will be marked by growth in the average ticket size of projects and a significant number of mega-scale projects.
Crisil has also projected that prominent sectors such as roads and power are expected to remain major contributors, while relatively nascent ones such as EVs, solar, wind, and hydrogen will pick up pace.
The share of EVs in India’s overall automobile sales is likely to reach ~30% by 2030. Two-wheeler EV sales are expected to outpace other segments up to 2028, while demand for EV buses will be driven by state transport undertakings.
The share of renewable energy in total capacity is estimated to grow 4x between fiscals 2023 and 2030. Solar will account for half of the incremental non-fossil generation.
WHEAT PRICES 8 MONTH HIGH
Indian wheat prices surged to an eight-month high on Tuesday, thanks to strong demand in the festival season, limited supplies and as a 40% import duty makes imports from overseas unviable for domestic flour mills.
Wheat prices in New Delhi jumped by 1.6% on Tuesday to 27,390 rupees ($329) per metric ton, the highest since Feb. 10. Prices have surged by nearly 22% over the past six months, Reuters reported.
The Government has said as recently as last month it has no plans to abolish a 40% import tax on wheat.
As of Oct. 1, wheat stocks in government warehouses stood at 24 million metric tons, sharply down compared with a five-year average of 37.6 million tons.
India managed to procure 26.2 million tons of wheat from farmers in 2023 against a target of 34.15 million tons, said Reuters.
The government estimates wheat output went up to a record 113 million metric tons in 2023, but the general belief is that the harvest was at least 10% lower than the farm ministry's estimate, which is usually the case apparently.
Food inflation is down along with overall inflation levels now down to 5% for the last month but cereals inflation is still running close to 11%
I reached out to Pramod Kumar S, president of the Roller Flour Millers' Federation in Bangalore and began by asking him why prices were shooting up as they are right now and how he was seeing the next few months ?
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Bajaj Finance Raises Provisions For Bad Loans
Non-bank lender Bajaj Finance reported a lower-than-expected rise in second-quarter profit on Tuesday, as provisions for bad loans increased.
Loan losses and provisions grew nearly 47 per cent year-on-year in the quarter to Rs 1,077 crore, up from Rs 734 crore a year ago. It also rose sequentially from Rs 995 crore in April-June.
A little more than a week ago, the Reserve Bank cautioned lenders about fast-growing personal loan categories for signs of early stress, urging them to adopt stronger risk management practices.
This was the first time RBI had publicly voiced concerns about the sharp growth in personal loans.
The latest RBI data showed that personal loans grew by 30.8% in August compared to 19.4% a year ago. Total credit to the segment stood at ₹47.7 trillion in August, from ₹36.47 trillion the year earlier.
Bajaj Finance’s consolidated profit after tax meanwhile rose nearly 28 per cent to Rs 3,551 crore in the three months ended September 2023.
Consolidated numbers include the businesses of the lender's subsidiaries, Bajaj Housing Finance and Bajaj Financial Securities.
Bajaj Finance, in an update earlier this month, reported its new loan bookings climbed 26 per cent year-on-year in the quarter, while its deposits book jumped 39 per cent.
MORE GST NOTICES
More GST or Goods and services tax notices are being served. Casino company Delta is now looking at notices worth over Rs 22,000 crore.
The latest to be served is Dabur, the multinational consumer goods company, has received a goods and service tax (GST) notice demanding Rs 321 crore, according to a regulatory filing by the company on BSE.
The filing stated that the claim was being reviewed by Dabur and it would be challenged.
The company has been advised to pay the amount with applicable interest and penalty.
COLD SHOWER ON AI
CCS Insight, a provider of research on technology markets, has said that generative AI will have a cold shower in 2024 as the reality of cost, risk and complexity replaces the hype of 2023.
This forms part of some 85 predictions CCS has put out for the coming year.
CCS Insight says the hype of 2023 has ignored several obstacles that will slow progress in the short term.
The cost of deployment is a prohibitive factor for many organisations and developers. Additionally, future regulation and the social and commercial risks of deploying generative AI in certain scenarios result in a period of evaluation prior to roll-out.
Moving on from AI, CCS has made another interesting prediction. That by the end of 2023, more than half of iPhones in use are second-hand devices.
Pre-owned devices as well as hand-me-downs make up more than 50% of the 1.3 billion iPhones in use by the end of 2023. From 2024, the average life of an iPhone is eight years. In contrast, used Android smartphones represent less than 25% of Android’s installed base.
Of course we mostly throw away or replace our phones before their life really ends but nevertheless it's good to know. I can easily see people spending 3-4 years at the minimum now on phones, the average I mean.
CCS also says that EU legislation could be delayed and redrawn multiple times owing to the speed of AI advancement. The EU is in the process of regulating AI with the AI Act.
However, the speed at which AI is advancing makes the construction of a robust and workable regulatory framework extremely difficult. There are differences of opinion between the US, EU and market participants, with Europe taking a far more structured and robust approach to regulation. Legislation is not finalised until late 2024, leaving the industry to take the initial steps at self-regulation.
The deteriorating health of the Android ecosystem sees Google doubling down on its own hardware. With little evidence to suggest a slowdown in iOS growth at the expense of Android, Google responds by making bigger investments in its own hardware, software and distribution, including second-hand products. The move risks disillusionment among other Android manufacturers, but Google decides it needs to control its own destiny.
And back to iPhones, In 2024, Apple will move to take greater control of the second-hand iPhone market. The popularity of refurbished iPhones starts to dent sales of new models.
To address this, Apple takes more direct control of the secondary market in Europe and the US. It introduces a “Verified” grading system to give consumers and distributors confidence in the devices they buy and the prices they pay.
Interestingly, 15% of smartphone users will have satellite-enabled devices by 2027. As major players like Apple, Qualcomm, MediaTek and Samsung collaborate with satellite providers such as Globalstar, Iridium and Inmarsat, satellite connectivity becomes an essential feature, enabling SOS capabilities and two-way messaging, and contributing to the wider adoption of satellite-enabled smartphones. Sounds cool does it not. And precisely the kind of thing which will give regulators in India sleepless nights.
AI oversight committees will become commonplace in large organisations by 2024. Companies establish diverse oversight committees composed of AI ethics experts, legal advisors, data scientists and representatives to review applications of AI in the business, set guidelines, conduct audits and address ethical and legal concerns.
A wave of AI-generated web articles with minimal scrutiny will prompt search engines to add content health warnings to its results. The proliferation of generative AI creates a flood of AI-written spam articles.
You can catch more or all of them at: https://www.ccsinsight.com/predictions
FUNFLATION
And before I go, The rising cost of fun is becoming a drag.
Ticket prices for live entertainment events, from Taylor Swift concerts to National Football League games and high-season Disney theme-park visits, rose at a startling rate this year, triggering a phenomenon that analysts have dubbed “funflation.” The WSJ is reporting.
Nearly 60% of Americans say they have had to cut back on spending on live entertainment this year because of rising costs, according to a Wall Street Journal/Credit Karma survey of about 1,000 U.S. consumers conducted at the start of September.
Some 37% of respondents said they can’t keep up with the rising price of events they want to attend, while more than 20% of Americans say they are willing to take on debt to continue to be able to afford their favourite entertainment activities, said the WSJ.
Live music has seen massive ticket-price spikes thanks to strong demand from consumers who are willing to pay.
Remember, cricket is seeing the same phenomenon in India. People were paying thousands of tickets and tens of thousands for a hotel room in Ahmedabad last week. And of course flying into the city in private jets and paying more parking fees for the same.
Music executives attribute this to the marketing power of social media and the globalisation of pop music thanks to streaming, says WSJ
Not surprisingly, the average ticket price for North American tours hit $120.11 this summer, a 7.4% increase over last year and up 27% from 2019, according to Pollstar.
Fans shelled out for big-ticket shows, especially as more acts toured in stadiums. For the first time, the top five touring acts globally—Taylor Swift, Bruce Springsteen, Harry Styles, Elton John and Ed Sheeran—each racked up more than $100 million in sold-ticket revenue during the first half of 2023. Over the past two decades, there were usually no more than one or two artists at that level, according to Pollstar.
Many Indians travel out of India for concerts including in the region and spend hugely for cricket as is evident in the present World Cup series and for some favoured matches like the one last week between India and Pakistan.
The demand means that prices will rise too, from hotel rooms to air fares and everything in between.
On that note, have a great day ahead.
