July 11, 2012

India's wheat futures on uptrend over firm domestic demand

After India has allowed two million tonnes of wheat exports, wheat futures in India continued uptrend on firm domestic demand.

India has allowed two million tonnes of wheat exports from government warehouses as part of a strategy to trim bulging stocks to avoid the grains getting rotten.

India the world's second biggest wheat producer has been struggling to manage huge stocks due to record harvests in recent years. On June 1 wheat stocks at government warehouses surged to a record 50.2 million tonnes well above the official target of four million tonnes for the quarter ending June 30.

The International Grains Council (IGC) has reduced global wheat production forecast by six million tonnes from last month to 665 million, down by 4% from the 2011-12 record. The outlook for world wheat production in 2012-13 continued to be affected by unfavourable conditions in some countries including a further deterioration in crop expectations in Russia.

In global markets also, wheat futures extended uptrend on the back of concerns over crops due to dry weather in the major producing regions.