To Check If There Is Feasibility of Arbitrage Advantages for Wheat in Khanna and Tarapur Market
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AGRIBUSINESS ASSIGNMENTBy: Gaurav Jaiswal (P36029)To check if there is feasibility of Arbitrage Advantages for wheat in Khanna and Tarapur market Market PlacePrice of Wheat per QuintalKhanna Mandi (Ludhiana)1525 Rs. (Constant )Tarapur Mandi (Gujarat)1660 – 1730 Rs. (Fluctuating) As we can see from the above table, In the month of April 2016, price of wheat in the Khanna Mandi, which is in the Ludhiana-Panjab is remain constant around 1525 Rs./quintal. While in the Tarapur Mandi of Gujarat the average price is fluctuating from 1660 to 1730 during the month of April. So the rate of the wheat is depends on the day on which we purchased the wheat from the Tarapur Mandi. If we calculate the average rate during the month it comes out to be 1688 Rs. /quintal that is 163 Rs./quintal higher than the Khanna Mandi. If we transport wheat from Panjab to Gujarat then truck freight is around 364 Rs./ quintal (V.R.L. Transport, Globe cargo Transport) and via train it is 173 Rs./Quintal this rate will raise further with calculation of labor cost for loading and unloading. Since the rate of transportation is higher than the average of arbitrage available we don’t get any advantage by buying from the Khanna Mandi and sell it to Tarapur Mandi.
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