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OUTLOOK-Indian wheat likely to gain after bearish spell

Source : REUTERS
Last Updated: Thu, Apr 18, 2013 13:10 hrs

NEW DELHI, April 18 (Reuters) - Indian wheat futures are expected to stay higher due to some correction after a long bearish spell, but gains will be capped by arrivals of the new season wheat.

"There is some course correction as wheat has been lower for a long time now and the contract could start falling again as harvests and arrivals swell supplies in the days to come," said Chowda Reddy, a senior analyst at JRG Wealth Management.

India is expected to produce 92.3 million tonnes, the sixth straight year of output surpassing domestic demand of about 76 million tonnes.

The higher output will exacerbate storage problems as the government has run out of space and grain bins are overflowing, due to bumper harvests since 2007.

India managed only a marginal cut in bulging wheat stockpiles during March despite efforts to step up exports, increasing pressure on the world's No. 2 producer of the grain to find ways to boost shipments and make room for a new harvest.

As part of its efforts to cut down unmanageable stocks, the government earlier this month allowed private traders to export up to 5 million tonnes of wheat from its overflowing warehouses, doubling the quantity of shipments first permitted in July 2012.

The state-run Food Corp of India is soon expected to start selling wheat to private exporters.

On Thursday, the most-active wheat contract for May delivery on the National Commodity and Derivatives Exchange fell 0.55 percent to 1,442 rupees per 100 kg. (Reporting by Mayank Bhardwaj; Editing by Anand Basu)



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