July 10, 2012

India's wheat may hit new contract high on anticipated shipment rise

Following a surge in global prices of the commodity, Indian wheat futures are likely to hit new contract high this week on expected rise in shipments.

The US benchmark wheat futures on Chicago Board Of Trade(CBOT) rose about 3% on Monday (July 9), following the lead of corn, which has soared after sweltering weather across the US Midwest threatened yields.

"India has surplus wheat and was struggling to export as prices in the overseas markets were not attractive. Now prices have risen globally, and India could trim its bulging stocks by selling in the global market," said Faiyaz Hudani, analyst with Kotak Commodity Services.

On Monday (July 9), the key August contract on the National Commodity and Derivatives Exchange (NCDEX) closed up 2.1% at INR1,307 (US$23) per 100 kilogrammes.

Faiyaz expects the contract to touch a new high of INR1,370 (US$25) per 100 kilogrammes this week.

Agribusiness giant Cargill Inc has sold about 32,000 tonnes of Indian wheat to Indonesia in the first large shipment of the grain to Asia in at least seven years.

India lifted a ban on wheat exports in September but shipments from the South Asian nation have picked up in recent weeks as a rally in global prices and a weaker currency made Indian wheat competitive in the world market, traders said.

India, the world's second-biggest wheat producer, is struggling to trim bulging stockpile that have filled up its storage facilities after the bumper harvests of recent years. Grain stocks in Indian government warehouses stood at a record 82.4 million tonnes on June 1 although there was storage space only for 63 million tonnes, forcing authorities to store the surplus in the open.