Indian wheat seen higher as arrivals fall
Indian wheat futures are likely to stay higher this week as arrivals of the new season wheat are gradually winding down, with the government buying up the bulk of the grain brought to wholesale markets by farmers.
n Wednesday, the most-active wheat contract for June delivery ended 0.57 percent up at 1,593 rupees per 100 kg on the National Commodity and Derivatives Exchange.
India is set to produce 93.62 million tonnes of wheat in 2013, the farm ministry said in a forecast earlier this month. State-run Food Corporation of India, the main grain procurement agency, will buy about 30 million tonnes of the total output, government officials said.
"Arrivals are slowly falling and the FCI will buy at least 30 million tonnes of wheat so the open market will have only the rest of the total production," said Chowda Reddy, a senior analyst at JRG Wealth Management.
The latest output estimate after the harvest season is lower than last year's record 94.88 million tonnes, but more than the annual consumption of about 76 million tonnes.
India has offered a total of 9.5 million tonnes of wheat for export as it tries to cut stocks. The government needs some stockpiles to supply its programme of subsidised food for the poor but incentives to farmers have boosted outputs.
This is the sixth straight year when wheat production is seen exceeding demand.
India grows wheat once a year with planting in October and harvesting in March-April.
India's May 1 wheat stocks at government warehouses surged more than 76 percent to 42.7 million tonnes from April, increasing pressure on the world's No. 2 producer to boost exports and cut down huge stocks. (Reporting by Pankaj Katba)