Wheat futures in India, the world's second-largest producer, are likely to fall this week on an expected rise in production amid signs of improvement in supplies in spot markets. The government is sitting over huge stocks, more than four times the target of 8.2 million tonnes, and traders expect it to offload some of the stocks in the open market and allow additional exports to create space for the new season crop.
The government also needs to make way for the record 40 million tonnes of wheat it is expected to buy from local farmers. Those purchases will start arriving in less than two months. Traders expect the government to sell wheat in higher quantities in the open market, which could weigh on prices. "There is nothing in the market to support prices. Wheat production is likely to rise, and stocks in warehouses are very high, all these factors could drag prices down," said Manjit Singh, a trader based in Ludhiana, Punjab.
After lifting a 4-year-old ban on wheat exports by private traders in 2011, last year the government approved 4.5 million tonnes of exports from its overflowing warehouses, and more than 2 million tonnes of this total has yet to be shipped. India grows one wheat crop, which is planted in November-December and harvested in April-May.
At 1058 GMT, in Chicago, the key March contract on CBOT was trading up 0.07 percent at $7.63-1/2 per bushel. The most-active wheat contract for March delivery on the National Commodity and Derivatives Exchange was trading up 0.48 percent at 1,464 rupees per 100 kg. The contract fell more than 1.75 percent in the previous 10 sessions, before rising in today's session.
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