Indian wheat futures likely to fall
January 03, 2013
Wheat futures in India, the world’s second-largest producer, are likely to extend losses this week, after falling on Wednesday, due to conducive weather conditions in key growing areas and on an expected improvement in supplies to spot markets. Wheat planting in India has been trailing marginally in the current season at 27.3 million hectares as against 27.7 million hectares in the previous season.
However, a recent drop in temperature in key growing areas has raised hopes of better yields and is weighing on sentiment, traders said. India grows one wheat crop, which is planted in November-December and harvested in April-May. Low temperatures in December and January are good for the growth of wheat plants.
Additional pressure on wheat prices is expected to come from bulging stocks in government warehouses which were at a whopping 37.6 million tonnes on December 1, more than three times the target of 11 million tonnes. Key January wheat futures on the National Commodity and Derivatives Exchange (NCDEX) fell more than 1 percent in December on a drop in demand with the end of the festive season and as supplies improved after the government ordered selling of an additional 6.5 million tonnes from state-run companies’ warehouses to curb rising food prices. Reddy expects wheat futures to fall further this week on a potent combination of higher supplies in spot markets and softening global prices which could cut demand for Indian wheat in overseas markets.