Wheat output in India, the world's second-biggest producer, is seen at a record 90.23 million tonnes in 2012, Farm Minister Sharad Pawar said, boosting chances of additional shipments and immediately weighing on local prices. The estimated output is higher than the 86.87 million tonnes the country produced in the previous year.
"The record wheat production will keep local prices down, making the window of overseas sale attractive," said Prasoon Mathur, a senior analyst with Religare Commodities. The most-traded wheat for May delivery on the National Commodity and Derivatives Exchange (NCDEX) shed 1.82 percent to its contract low of 1,186 rupees per 100 kg after the announcement. At 0759 GMT, it was trading at 1,188 rupees. India consumes about 76 million tonnes of wheat a year. It grows one wheat crop, which is planted in November-December and harvested in March-April.
The bumper stocks might spur Indian state-owned firms and private companies towards exports of wheat to Iran, which could help to partially settle New Delhi's bill for oil imports with Western sanctions-hit Tehran. India has allowed exports of 2 million tonnes of the grain, easing an early 2007 ban on overseas sales. Indian wheat exports will have to compete with cheaper Black Sea origin supplies.