Wheat Futures To Witness Further Weakness In The Near Term (05-Dec-2011)
Selling is likely to continue in wheat futures in the near term in the wake of sturdy sowing progress in major producing states along with weak export demand. The NCDEX futures plunged by almost Rs. 27 per quintal in the last week.
According to information received from the Ministry of Agriculture, wheat has been shown in 171.2 lakh hectare against 169.47 lakh hectare last year on this date. Area coverage of wheat compared to last year is higher by 1.73 lakh hectare. Traders suggested that wheat sowing acreage has gained momentum in major producing areas such as Uttar Pradesh and Madhya Pradesh after the delay of more than two or three weeks. Moreover, sluggish export demand of wheat due to higher prices of wheat in domestic market also discouraged the exporters demand at current levels.
However, some production decline in international market might provide some support to the wheat prices at lower levels. As per latest release by International Grain Council on Thursday stated that world's wheat production is slightly down by 1 million tonnes from the last month to 673 million tonnes in 2011-12. This was due to slight downward revision in the US, where the spring wheat crop was even smaller than expected. Stronger than previously projected feed use adds another 2 million tonnes to the global consumption forecast, at 679 million tonnes, boosting the annual percentage increase to about three times the longer-term trend. Due to increased demand figure, the forecast of global carryover stocks is 2 million tonnes lower than last month, at 200 million tonnes, but these would still be the largest since 2001/02.
Consequently, the future prices of Wheat NCDEX December Benchmark contract wilted Rs. 27 per quintal, to settle at Rs. 1164 per quintal in the last week. Technically, prices are likely to trade in the range of Rs. 1145-1200 per quintal in the near term.
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