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OUTLOOK-Indian wheat seen rising on lower supplies
MUMBAI Aug 27 (Reuters) - Wheat futures in India, the world's second-largest producer after China, rose on Monday and are likely to rise more this week on shortages in the spot markets as fresh supplies have dried up and the government, sitting on huge stocks, declines to release additional grain.
Indian wheat futures have risen over 30 percent since July 1, the beginning of the 2012/13 crop year, on buying by millers as supplies from new crop dried up.
In order to curb rising prices, the exchange raised the deposit needed to buy the wheat contract by 10 percent on Saturday, but it was soon discounted as wheat futures rose on Monday after falling 1.6 percent in the previous session.
Millers stayed away from the market during the arrival season, expecting a fall in prices after the end of the government's buying programme. However, a recent surge in global prices boosted demand for Indian wheat and helped the government trim bulging stocks by selling overseas.
Wheat futures on the Chicago Board of Trade (CBOT) have risen over 15 percent since July 1 on concerns about crops in the Black Sea region and a strengthening corn market.
"The government is more interested in exporting wheat and is regularly issuing tenders but has done nothing to increase availability in the local market," said Manjit Singh, a trader from the northern state of Punjab.
State-run firms such as the Food Corporation of India, procured around 39 million tonnes or nearly 42 percent of the total 93 million tonnes wheat harvested in the year ended in June, according to food ministry data.
"Higher buying by government agencies this year has left little wheat for others... wheat futures are expected to rise this week as mills scramble to meet supplies," said Ajay Goyal, managing director of Shivaji Flour Mills in Mumbai.
Millers also made a representation to the government seeking additional supplies from government warehouses, but their requests were turned down, Goyal said .
At 1112 GMT, the September wheat contract on the National Commodity & Derivatives Exchange (NCDEX) was trading up 1.92 percent at 1,592 rupees per 100 kg.
India's wheat stocks at government warehouses on Aug. 1 were 47.5 million tonnes, over three times the official target of 17.1 million tonnes for the quarter ending September. (Reporting by Deepak Sharma; Editing by Prateek Chatterjee)
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