Wheat futures slightly lower on crop, stocks

MUMBAI: Wheat futures were slightly lower on Tuesday afternoon on a bumper output and stocks, but market talk of more exports to Asian neighbours after drought forced Russia to temporarily halt shipments, limited losses, analysts and trade said. The September wheat contract on the National Commodity and Derivatives Exchange (NCDEX) was down 0.35 percent to 1,264 rupees per 100 kg at 1:19 p.m.

India may allow more exports to Asian buyers as Russia's absence from the overseas markets will boost prices, three dealers said. Russia is the world's third biggest exporter of wheat. U.S. wheat futures gained about 25 percent in the previous week as Russia's move to temporarily halt grain shipments sparked a buying frenzy.

"There are hopes that India may allow more exports to neighbouring countries and may ultimately allow private exports," said an analyst with Agriwatch Research. India has allowed the export of 300,000 tonnes of non-basmati rice and 200,000 tonnes of wheat to Bangladesh, a government statement said on Friday, as good rainfall and higher planting have boosted crop prospects.

India, which curbed grain exports in recent years to head off domestic price rises, made the announcement after two global suppliers cancelled deals to ship some 65,000 tonnes of Black Sea wheat to Bangladesh after Russia curbed grain exports.

Bangladesh, the world's fifth-biggest wheat importer, is expected to buy more than 3 million tonnes of the grain this year against 2.2 million tonnes the previous year. Trade expects India to allow upto 3 million tonnes of exports by end of December to manage stocks. "Even if India increases exports the price may not rally sharply as we have massive stocks and expect a record production," said the Agriwatch analyst. India's wheat stocks on Aug. 1 were at 32.0 million tonnes against a target of 17.1 million tonnes, government sources said on Monday.

The U.S Department of Agriculture estimated India's wheat output at 80.7 million tonnes, in a report released on Tuesday, while the Indian government estimated it at 80.71 million tonnes, a record harvest.