June 20, 2012

India's low wheat prices may remain unchanged

The wheat futures of India may remain steady at lower levels this week and may not further drop despite weak demand and higher stocks from a record crop for the second year running.

"Wheat prices are moving in a range for last two weeks, and we expect prices to consolidate at this level only," said Prasoon Mathur, senior analyst with Religare Commodities.

On Monday (June 18), the key July contract on the National Commodity and Derivatives Exchange (NCDEX) was trading down 0.17% at INR1,167 (US$20.85) per 100 kg at 1010 GMT.

The contract hit a fresh low INR1,150 (US$20.54) per 100 kg in the previous week and is unlikely to break this level in the current week, Mathur said.

India is expected to produce a record 90.23 million tonnes of wheat in 2012, according to farm ministry data. The estimated output is higher than the 86.87 million tonnes produced in the previous year.

The country consumes about 76 million tonnes of wheat a year. It grows one wheat crop, which is planted in November-December and harvested in March-April.

Last year, the government said it would pay 10% more to farmers for wheat in 2012 and raised the minimum support price to INR1,285 (US$22.96) per 100 kg.