Foreign traders are likely to buy and sell wheat in India this year, the world's second-biggest producer, as a strong harvest and surplus stocks generate good prospects for inter-state trade in the grain.

 

This year's wheat crop in India is well past threats of adverse weather\ or pests, raising hopes the harvest could swell to a record of 81-82 million tonnes.

 

A hefty harvest would leave more grain for investors to deal in the private market for customers such as bakeries and other large buyers as the government would easily have enough supplies needed for public welfare programmes.

 

Farmers in Punjab, Haryana, and Uttar Pradesh, the top producing states located in the north, start selling wheat either to private buyers or the government from April 1, while sales have already begun in other states such as central Madhya Pradesh, which grows high-protein wheat.

 

State-run Food Corp of India (FCI), the main official agency that buys grain for welfare programmes, is likely to reduce purchases to about 20 million tonnes from 25.4 million tonnes last year, according to reports.

 

This spells good news for trading firms such as Cargill Inc, Louis Dreyfus Commodities, Bunge and Noble Resources which could be buying wheat from surplus states and sell it to millers in other parts of the country instead of exporting it as global prices have dipped on strong supplies.

 

Benchmark Chicago futures fell to US$4.62 a bushel on Tuesday (Mar 30), the lowest in nearly six months, while Indian wheat prices have been propped up by state agencies.