OUTLOOK-India wheat seen stable after rising on Monday

MUMBAI Oct 8 (Reuters) - Wheat futures in India rose for a third straight session on Monday to a near three-week high on lower supplies in spot markets and are likely to remain stable this weak as traders hold onto positions, expecting additional supplies from government warehouses.

"Lower supplies are pushing prices higher, but we don't expect prices to rise further as the government could release additional wheat to control food prices," said Vinod Mittal, a trader based in Khanna, Punjab.

Traders were expecting that the government might offer 5 million tonnes of wheat from its warehouses, in addition to the 3 million tonnes offered in June, to ease shortages in the spot market. But it didn't happen.

Most 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, higher buying by government agencies left little wheat for others, and after the end of the arrival season mills were scrambling to secure supplies, thus sending the prices higher in local markets.

Wheat prices also got support from the removal of the additional 10 percent margin imposed on long side wheat contracts by the National Commodity and Derivatives Exchange (NCDEX) on Thursday.

Profit-taking by some following the sharp rise in three straight sessions could weigh on prices, though most traders believe wheat futures are unlikely to fall due to lower supplies, Mittal said.

In Chicago, the key December contract fell around 5 percent last week, its biggest weekly decline in three months.

At 1239 GMT, the key wheat contract on CBOT was up 0.23 percent at $8.59-1/2 per bushel.

The key November contract on the NCDEX was up 2.18 percent at 1,545 rupees ($29.78) or $7.16 per bushel, after hitting a high of 1,554 rupees, a level last seen on Sept .18, earlier in the day.

($1 = 51.8850 Indian rupees) (Reporting by Deepak Sharma; Editing by Subhranshu Sahu)