7 Nov 2013
Wheat futures in India, the world’s second-largest producer, are likely to climb next week on hopes for a rise in export demand after Ukraine, a major seller, announced a ban on shipments, pushing up global prices. Wheat prices in the local markets are also getting support from strong consumer demand in the ongoing festival season, although they dipped on Friday as traders shifted positions with the expiry of near-month contract, which expires on October 19.
“The overall trend is positive. Demand in the local market is strong and the rise in global wheat prices is beneficial for India, which is sitting on huge stocks,” said Anil Agrawal, a Delhi-based wheat exporter. Indian wheat futures have risen over 6.5 percent since the beginning of this month, ahead of the Dussehra or Durga Puja festival later in October and Diwali or the festival of lights in November.
Demand for wheat products rises in festivals as families prepare special dishes and sweets for get-togethers. Traders added that demand for Indian wheat could get a boost after Ukraine decided to ban exports. India is currently offering wheat for export from government stocks, which are overflowing after several bumper harvests. Wheat stocks with state-run Indian agencies on October 1 stood at 43.15 million tonnes, nearly four times the usual 11 million tonnes. On Friday, two tenders for export of wheat from government warehouses were awarded at around $310 per tonne. That compares with US soft wheat, quoted at about $380 in Asian markets, and Australian prime wheat at about $385 per tonne.
Wheat shipments from India usually fetch lower prices due to quality concerns such as pest infestation and other bacterial infections, which can spoil some of the production. At 1201 GMT, the key December international contract was trading up 1.5 percent at $8.81-1/2 per bushel. The most-traded domestic contract for November on the National Commodity and Derivatives Exchange marginally down at 1,546 Indian rupee per 100 kg. Courtesy Reuters