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OUTLOOK-India wheat likely to fall on supplies, drop in global prices
MUMBAI, Sept 25 |
MUMBAI, Sept 25 (Reuters) - Wheat futures in India, the world's second-largest producer, are likely to slip further, after extending losses on Tuesday to hit their lowest level since Aug. 22, due to an expected rise in supplies, softening global prices and a stronger rupee.
"Traders are expecting a higher allocation of wheat from government warehouses during the October-November period, and this is weighing on prices," said Ranjit Mankharia, a trader based in Bikaner, Rajasthan.
Wheat prices are also falling on fears that softening overseas prices and the surge in the rupee against the dollar could cut demand for exports from India.
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 to improve finances and boost the economy.
In Chicago, the key December wheat contract closed down 7-1/2 cents at $ 8.89-3/4 per bushel, slipping below its 50-day and 40-day moving averages.
At 0655 GMT, the contract was down 0.17 percent at $ 8.90-1/2 per bushel on CBOT.
Heavy rains in September in northern India have raised the prospects of more sowing for the winter season and conditions are favourable for a bumper wheat crop for the third straight year, Mankharia said.
Indian farm minister Sharad Pawar urged farmers to take advantage of the late rains and plant their crops early.
Sowing of wheat begins in October and the crop is harvested during March-April.
India's estimated total grain output for the year may fall by 3.3 percent to 249 million tonnes, but the production of rice, wheat, corn and other cereals would still be more than the demand, Pawar said.
The October wheat contract on the National Commodity and Derivatives Exchange was down 2.28 percent to 1,459 rupees ($27.27) per 100 kg. (around $6 per bushel)
($1 = 53.5100 Indian rupees) (Reporting by Deepak Sharma; Editing by Anupama Dwivedi)
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