Wheat firms up on global rally, export hopes.

AHMEDABAD: Wheat prices have firmed up on futures and spot markets after export prospects have improved. Prices have rallied globally with hot weather scorching American grain belts.

The International Grains Council has slashed its estimate for world grain stocks at the close of 2012-13 to a five-year low, citing reduced expectations for wheat production.

"Prospects of exports have improved owing to above-average temperatures in most of the major maize growing regions of the US. Till date, 1.4 million tonne wheat has been exported and another 0.5 million tonne will be done by private traders," said an official of a multinational company.

Indian traders were quoting milling wheat at $250 to $255 per tonne freight on board (FOB). The old stock, to be sold as animal feed, was being quoted at $230 to $235 a tonne FOB. The Black Sea countries were quoting wheat at $280 per tonne FOB.

"The Indian government and exporters should take advantage of this rally," said Anil Monga, MD of Emmsons International. The company has exported 0.5 million tonne wheat since September 7, 2011.

"The government should extend the Open Market Sales Scheme to exporters which will further boost exports," he said. To ease the storage crisis, the government will sell 1.3 million tonne of wheat to bulk consumers like flour millers at subsidised rates at Rs 1,170 per quintal.

As of July 1, a record 50 million tonne of wheat was stocked in public godowns against the buffer norm of 20 million tonne. The stocks have risen due to a record production and procurement in the last few years. Wheat production was a record 252.56 million tonne in 2011-12, up from 241.56 mt in the previous year.

Wheat for September delivery on the National Commodity and Derivatives Exchange (NCDEX) was 0.16% higher at 1,249 per quintal. In Delhi spot market, prices were steady at 1,220 per quintal.

"Exporters such as Glencore, Louis Dreyfus and Emmsons are making purchases from Madhya Pradesh, Rajasthan and Uttar Pradesh," said a grain trader in Delhi's Naya Bazaar market.

Source : economictimes.indiatimes.com