India wheat up on talk of bigger exports after Russia ban

MUMBAI Aug 5 (Reuters) - India's wheat futures ended higher on Thursday on market talk of the country increasing exports to Asian neighbours as a drought in Russia, a mojor player, forced it to temporarily halt exports, analysts and trade said.

The futures may trade higher in the next session.

The September wheat contract NWTU0 on the National Commodity and Derivatives Exchange (NCDEX) ended 1.55 percent up at 1,270.2 rupees per 100 kg.

Three traders said there is a likelyhood of India allowing more exports to Asian buyers as Russia's absence will suddenly boost prices.

"India is sitting on stocks much of which is rotting. Global prices are soaring. India can at least sell a couple of million tonnes to neighbours like Bangladesh and earn some foreign currency," said an executive with a multinational trader.

On Wednesday India's LMJ international was the lowest bidder at $285 a tonne, including cost & freight, in a Bangladesh tender to import 50,000 tonnes of wheat that opened on Wednesday, a food official said. See [ID:nSGE6730HF]

"Recently we are exporting to Bangladesh... more significant orders can be expected from neighbouring countries," said an analyst with Agriwatch Research.

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 in the previous year.

Earlier Sharad Pawar, the farm minister, said India will sell 300,000 tonnes of wheat and rice through diplomatic channels to Bangladesh and Nepal. See [ID:nSGE66R06W]

Trade expects India to allow upto 3 million tonnes of exports by end of December to manage stocks.

India holds surplus stocks of wheat and rice, but has severely curtailed grain exports in recent years to ensure steady domestic supplies. The country, however, allows exports through the diplomatic route.

Food Corp of India had stocks of 33.58 million tonnes of wheat as on July 1, against buffer norms of 17.1 million tonnes, government data showed.

"Indian market is likely to take cues from the global market ... government is planning to lift two-year ban on export of wheat," Karvy Comtrade Ltd said in a broker note.

U.S. and European wheat futures extended heavy gains on Thursday to set contract highs as Russia's Prime Minister called for a temporary halt to grain exports due to a drought emergency that has slashed crops. See [ID:nLDE67410U]

The U.S Department of Agriculture estimated India's wheat output at 80.7 million tonnes, in a report released on Tuesday. See [ID:nN02261589], while the Indian government estimated it at 80.71 million tonnes, a record harvest. See [ID:nSGE66I0F6]

For a Q+A on India's wheat management. See [ID:nSGE66S0A4]

(Reporting by Sourav Mishra; Editing by Harish Nambiar)