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OUTLOOK-India corn futures likely to fall on supplies, low export demand
MUMBAI, Sept 24 |
MUMBAI, Sept 24 (Reuters) - Indian corn futures are likely to fall this week on higher supplies and fears that softening overseas prices and a stronger rupee could cut export demand, traders and analysts said, although short-covering pushed prices higher on Monday.
Some farmers, who had planted corn earlier in the season, have already started harvesting the crop and are bringing it to spot markets, which is weighing on sentiment, traders said.
Quality also remains low, keeping demand muted, they added.
"Corn prices are likely to fall this week as weakness in U.S corn prices and the strong rupee could adversely impact overseas demand for Indian corn," said Faiyaz Hudani, analyst with Kotak Commodity Services.
The Indian rupee hit a new four-month high on Monday, coming close to breaching 53 to the dollar, on hopes the government will continue its recent reforms blitz to improve its finances and boost the economy.
In Chicago, the December corn contract on the CBOT fell 3.7 percent in the week ended Sept. 21, its biggest weekly decline in three months, as supplies improved with the harvesting of the new season crop.
At 1205 GMT on Monday, the contract was down 0.3 percent at $7.46 per bushel.
India's corn output during the summer-sown or kharif season of 2012 is likely to fall by nearly 9 percent to 15 million tonnes, the government said on Monday.
But traders are hopeful that heavy rains in September could prompt farmers to plant corn in more areas during the winter sowing season and this is also weighing on sentiment, Hudani said.
The October contract on the National Commodity and Derivatives Exchange (NCDEX) closed up 0.96 percent at 1,353 Indian rupees ($25.28) per 100 kg (around $6.6 per bushel).
The contract hit 1,315 rupees -- its lowest level since July 5 -- earlier in the day.
In the Nizamabad spot market in Andhra Pradesh, corn fell 9 rupees to 1,457 Indian rupees ($27.23) per 100 kg (around $7.2 per bushel).
Indian cottonseed oilcake, or kapashkhali, futures are likely to fall later this week, extending last week's losses, on weak demand and higher availability of seeds for crushing, traders said, even though short-covering supported levels on Monday.
Rising cotton supplies from the new season crop could also depress prices, they added. India's cotton crop is likely to be down 5.4 percent in 2012/13, the farm minister said, but the previous year was a record 35.3 million bales.
Kapashkhali is a by-product of cottonseed and is used as cattle feed, mostly for dairy animals in northern India.
"With improvement in rains and availability of grass as alternative fodder, the demand for kapashkhali is falling in spot markets. Prices are likely to fall further," said Manjit Singh, a trader based in Ludhiana, Punjab.
The key December contract on the NCDEX closed up 1.65 percent at percent at 1,349 rupees per 100 kg after hitting 1,307 rupees, its lowest level since June 26.
In the Akola spot market in Maharashtra, Kapashkhali prices fell by 53 rupees to 1,385 rupees per 100 kg.
The NCDEX does not have October or November expiry contracts in cottonseed oilcake because these are months of lean supply.
Farmers with irrigation facilities in Punjab, Haryana and Rajasthan start cotton planting in May-June and harvest after mid-September.
($1 = 53.5150 Indian rupees) (Reporting by Deepak Sharma; Editing by Anupama Dwivedi)
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