January 3, 2012

Following a more than 6% increase in the last five trading sessions and on favourable weather conditions, India's wheat futures are seen to drop this week on profit taking.

At 4 p.m., the most-traded January wheat contract on the National Commodity and Derivatives Exchange (NCDEX) was trading 0.24% higher at INR1,234 (US$23.18) per 100 kilogrammes.

"Recent widespread rains in Uttar Pradesh and Madhya Pradesh are very good for the crop," said Prasoon Mathur, analyst with Religare Commodities.

Wheat sowing has been completed in most of the areas and conducive weather condition could help in harvesting record output for the second straight year, Mathur said.

Wheat acreage was 27.6 million hectares until December 30, since the sowing season began on October 1, as against 27.7 million hectares in the previous year, data showed on Friday (Dec 30).

India expects a record wheat harvest of 86 million tonnes in 2012, the farm secretary said in October, raising hopes of exports for a second straight year from the world's second-biggest producer and consumer of the grain after China.

In 2012, India will pay nearly 10% more over the current year to local farmers for buying wheat to ensure better returns to growers as inflation continues around 9%, the government announced on October 25.