Wheat futures in India, the world's second-largest producer, are likely to remain stable for the rest of the week, after falling on Monday on global cues, as lower stocks with traders in spot markets could support falling prices. The key December wheat contract on CBOT fell over 5 percent or 44-1/2 cents on Monday on long liquidation and the prospect of better yields after rains in dry wheat-growing areas of Australia.
There were concerns that wheat output in Australia, the world's No 2 exporter, could decline by as much as 25 percent as dry weather curbs yields, analysts said. A sharp fall in US wheat prices weighed on grain prices across the globe and its impact was felt in India as it could cut export demand for Indian wheat," said Faiyaz Hudani, a senior analyst with Kotak Commodity Services.
Wheat prices are likely to remain stable this week on shortages in the spot markets as fresh supplies have dried up, which could prevent a steep fall in prices despite worries over export demand, Hudani said. European wheat futures eased on Monday in step with US prices in a pause after a broad market rally on Friday and with some spillover pressure from the advancing corn harvest in the United States.
Millers stayed away from the market during the arrival season, hoping for a fall in prices after the end of the government's buying programme. However, a recent surge in global prices boosted demand for Indian wheat and helped the government trim bulging stocks by selling overseas. Earlier this month, India decided to make available 1.3 million tonnes of additional wheat for open sale in September and October to ease shortages in spot markets. Heavy rains in September could help farmers increase the area under wheat cultivation, which is also weighing on prices, said Manjit Singh, a trader in Punjab.
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