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OUTLOOK-Indian wheat futures likely to fall on higher supplies
MUMBAI Oct 1 (Reuters) - Wheat futures in India, the world's second-largest producer, are likely to drop further, after falling to a six-week low on Monday, as traders expect the government to release additional wheat from its warehouses to cool local prices.
The Indian government is likely to offer 5 million tonnes of wheat from its warehouses, in addition to the 3 million tonnes offered in June, to bulk users such as flour millers at lower-than-market rates to control rising food prices.
Buoyant export demand for Indian wheat, triggered by a severe drought in the world's top exporter, the United States, pushed up local prices more than 30 percent since June.
In June, the government freed 3 million tonnes of wheat for sale to bulk consumers. In the following month, it allowed 2 million tonnes of wheat exports to trim its bulging stocks.
Wheat stocks in government warehouses on Sept. 1 were 46.2 million tonnes, nearly three times the official target of 17.1 million tonnes.
"The overall fundamentals for wheat are weak. Additional supplies from government warehouses could further depress local prices which have been falling for the last two weeks," said Badruddin Khan, an associate vice president of research at Indiabulls Commodities.
Indian wheat futures have been falling for the last two weeks due to fears that softening overseas prices could cut demand for exports.
In Chicago, the key December contract jumped 5.5 percent on Friday after the quarterly wheat stock data released by the U.S. Department of Agriculture came in below expectations. It had fallen over 5 percent from its year-high touched on July 23.
At 1115 GMT, the key wheat contract on CBOT was down 1.11 percent at $8.92-1/2 per bushel.
The key November contract on the National Commodity and Derivatives Exchange (NCDEX) ended down 2.27 percent at 1,420 rupees per 100 kg or $7 per bushel, after falling to 1,412 rupees, its lowest since Aug. 16, earlier in the day. ($1 = 52.7450 Indian rupees) (Reporting by Deepak Sharma; Editing by Anupama Dwivedi)
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