June 1, 2010

Indian wheat futures ended higher on Monday (May 31) as private buying picked up in many states with the most-active June wheat contract ending at INR 1,265.8 (US$26.87) per 100 kilogrammes.

"The government procurement has slowed down in most of the states and the private buyers have become active," Karvy Comtrade Ltd said. Pawar said earlier this month that government-run agencies have procured 21.2 million tonnes of wheat from local farmers compared with 27.7 million tonnes a year ago.

Lower buying by government players gives private players to enter and cut deals at attractive prices. Major private buying is happening in Uttar Pradesh where the output is likely to drop by up to 1.5 million tonnes from initial estimates of 29.1 million tonnes.

Wheat prices have risen about 12% in the past two weeks at Hardoi, a trading centre in Uttar Pradesh. The federal government said last week that India's wheat output is likely to be 80.98 million tonnes. India is planning to offload some stocks in the market to keep prices under control.

"The Indian government will provide three million tonnes of subsidised grain in aid for states in the next six months," Pawar said earlier this month. India's wheat stocks on May 1 were at 30.8 million tonnes against the target of 4.0 million tonnes.