India wheat down on profit-taking; outlook firm

MUMBAI May 25 (Reuters) - Indian wheat futures fell on Tuesday on supply hopes and profit-taking after rising for the past five sessions, but a drop in a key state's output limited losses, analysts said.

Analysts said the futures may trade higher in next session.

The most-active June wheat contract NWTM0 ended at 1,222.6 rupees per 100 kg, down 0.86 percent after rising over 5 percent since the beginning of last week.

"There is a short-term prices rise expected because of the UP production drop news but government stocks are sufficient...there will be an open market sale if prices go up further, "said an analyst with Religare Commodities Ltd.

Wheat output in Uttar Pradesh, India's biggest producing state, is likely to drop by up to 1.5 million tonnes from initial estimates of 29.1 million tonnes, a senior state farm department official said earlier this month. See [ID:nSGE6490RQ]

"Wheat arrivals in the benchmark markets like Hardoi, Kanpur and Bareilly plunged substantially, as farmers have been holding on to their stocks for past a fortnight waiting for the price to soar above 1,200 rupees," Bipin Gupta, a wheat trader from Hardoi.

Wheat prices have risen about 10 percent at Hardoi, Uttar Pradesh, a trading centre, in the past two weeks, traders said.

Uttar Pradesh has seen significant interest from private buyers as well, which supported prices.

"Flour mills are actively buying wheat to meet the ongoing marriage season demand," said Karvy Comtrade Ltd in a broker note.

The federal government last week said India's wheat output is likely to be 80.98 million tonnes. See [ID:nSGE64B0AP]

The Indian government will provide 3 million tonnes of subsidised grain in aid for states in the next six months, Farm Minister Sharad Pawar said earlier this month.

India's wheat stocks on May 1 were at 30.8 million tonnes against the target of 4.0 million tonnes. see [ID:nSGE6450AN]

Pawar last week said government-run agencies have procured 21.2 million tonnes of wheat from local farmers compared with 27.7 million tonnes a year ago. See [ID:nDEL002968]

CORN:

India's corn futures ended higher on a drop in output and demand from poultry feed makers for the winter crop, but profit-taking at higher levels limited gains, analysts said.

The futures may trade higher in the next session.

The June corn contract NMZM0 ended at 954.5 rupees per 100 kg, up 0.58 percent.

The contract has risen over four percent since the beginning of the last week.

India's corn output is estimated 17.28 percent lower at 16.32 million tonnes for the 2009/10 marketing year ending September.

(Reporting by Sourav Mishra in MUMBAI & Pramod Bhardwaj in LUCKNOW; Editing by Ramya Venugopal)