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OUTLOOK-Indian wheat likely to stay lower on arrivals

Source : REUTERS
Last Updated: Thu, Apr 25, 2013 12:30 hrs

NEW DELHI, April 25 (Reuters) - Indian wheat futures are expected to stay lower next week after a brief spell of buoyancy, as arrivals rise in the market due to the new season harvest.

Wheat got some support earlier this week, on talks that the northern state of Punjab was thinking of raising prices at which it buys wheat from local growers.

"There was some upside on talks that the state government (of Punjab) was thinking of raising the price, as asked by farmers in the state, but arrivals will keep prices lower," said Chowda Reddy, a senior analyst at JRG Wealth Management.

India's wheat output is likely to reach 92.3 million tonnes, the government forecast, 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 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 fell 2.45 percent to 1,475 rupees per 100 kg on the National Commodity and Derivatives Exchange. (Reporting by Mayank Bhardwaj; Editing by Subhranshu Sahu)



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