March 20, 2012 / 7:02 AM / 6 years ago

OUTLOOK-Indian wheat to remain steady for 2nd week

MUMBAI, March 20 (Reuters) - India’s wheat futures are likely to remain steady for the second straight week as hopes of the government buying more grains and a delay in harvesting could balance an expected rise in supplies from the new season crop.

India, the world’s second largest producer of wheat, is expected to harvest a record crop for the second straight year.

Prolonged winter weather and recent rainfall may delay wheat harvesting by at least a week in India’s key grain producing northern states of Punjab and Haryana.

Harvesting in Punjab and Haryana, the country’s second and third biggest producers of wheat, usually begins from April 1.

In January and February, the weather was colder than usual in northern states, data with the weather department showed.

“Farmers would prefer to sell their produce to government agencies first, which could provide some support to falling wheat prices,” said Prasoon Mathur, senior analyst with Religare Commodities.

On Tuesday, the key April wheat contract on the National Commodity and Derivatives Exchange (NCDEX) were trading down 0.08 percent at 1,256 rupees per 100 kg at 12:17 p.m.

Prices are trading in the range of 1,230 and 1,260 rupees per 100 kg for last two weeks and are likely to remain in this range for some more time, traders said.

The government usually buys wheat from farmers for its welfare schemes through its agencies at pre-agreed rates known as minimum support prices.

The government plans to buy 31.9 million tonnes of wheat in the marketing year from April 1, 12.7 percent higher than the 28.3 million tonnes bought from farmers in 2011/12, the food ministry has said.

Last year, the government said it would pay 10 percent more to farmers for wheat in 2012 and raised the minimum purchase price to 1,285 rupees per 100 kg.

India grows one wheat crop, which is planted in November-December and harvested in March-April. (Reporting by Deepak Sharma; Editing by Subhadip Sircar)

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