Wheat

Wheat prices rise in Indore, Delhi as arrivals fall.

France wheat production update.

CBOT wheat up over 2% on tornado forecast in US.

Wheat prices rise in Delhi, Kota as stocks decline.

French soft wheat exports to India.

EU wheat prices climb as U.S. crop woes boost demand.

Prices of wheat rose 20 rupees in the key wholesale market of Delhi owing to falling supplies and firm demand. About 600-700 tonne of wheat arrived into the market, down 100 tonne from previous close. NCDEX August wheat contract on the NCDEX ended up 0.4% from the previous close.

The Food and Agricultural Organization has cut its estimate for global wheat production for 2017-18 to 739.9 million tonne from 743.2 million tonne projected earlier. The decline in output is primarily on account of lower production in Ukraine and European Union due to dry weather conditions prevailing there. The estimate for overall supply has been cut to 987.0 million tonne from 990.6 million tonne. The estimate for global wheat stocks has been lowered to 255.8 million tonne, down from record high of 257.4 million tonne projected earlier. The FAO has slightly raised its estimate for global wheat trade in 2017-18 to 171.8 million tonne from 171.0 million tonne forecast earlier. The agency has forecast global coarse grain production in 2017-18 to be slightly higher at 1.35 billion tonne.

Wheat futures fell nearly 3% on the CBOT as traders booked profits after prices rose in the last six sessions. The most active September contract had hit a two-year high of $5.60 a bushel. September wheat contract was at $5.4275 a bushel, down 3.1% from previous close. Wheat prices had risen earlier due to concerns over crop damage following drought like conditions in the mid-east US Prices were further supported by lower wheat acreage in the country as farmers are switching to soybean.

Paris wheat futures fell, pressured by a sharp pullback in U.S. prices after a weather-fuelled surge, while European traders continued to assess harvest prospects. December milling wheat, the most active contract on the Paris-based Euronext exchange, settled 2.75 euros, or 1.5 percent, lower at 184.25 euros a tonne. It earlier touched its lowest in almost a week at 183.50 euros, as it moved away from an 18-month high of 189.00 euros hit during the previous session. But Euronext held up better than U.S. futures which shed more than 3 percent in a retreat from two-year highs on previous close.

China wheat output larger than previously expected in 2017. It forecast output of 129.9 million tonnes, up 0.8 percent from a year earlier and up slightly from last month’s estimate of 129.2 million.

Demand for wheat in the major wholesale markets of Delhi, which had stalled before the implementation of goods and services tax, picked up, as clarity regarding the new tax regime improved. Unbranded wheat has been kept under the 0% tax slab under the new tax regime, while packaged and branded wheat is at 5%. In Delhi, mill quality wheat was sold up 30-40 rupees from previous close.

The government wheat procurement for 2017-18 marketing year (Apr-Mar) has ended at 30.8 million tonne, 34.1% higher than 22.9 million tonne procured in the previous year. The procurement is in line with expectations as wheat output in 2016-17 (Jul-Jun) was at a record high of 97.4 million tonne.

Wheat futures on the National Commodity and Derivatives market ended higher due to low supplies in spot markets. The August wheat contract on the NCDEX ended up 0.3% from the previous close. Supplies in spot markets are down, as most farmers have sold their crop to traders and the government. At the spot market in Delhi, prices of mill-quality wheat rose by 5-10 rupees. In Indore, however, prices were unchanged.

Only two trading houses submitted offers in the tender from Iraq state grains board to buy at least 50,000 tonnes of hard wheat. The lowest offer was $318.77 a tonne c&f free out for wheat sourced from Australia. Only Australian and US wheat was offered in the tender. The single offer for Australian wheat was made for 50,000 tonnes.

A United Nations aid agency recently purchased about 40,000 tonnes of Ukrainian-origin wheat to be shipped to east Africa. The purchase was for shipment in early August to Djibouti/Berbera.

Higher on strength in Minneapolis Grain Exchange (MGEX) spring wheat futures tied to forecasts for more stressful weather in the northern U.S. Plains. Front-month CBOT wheat touched its highest level since November 2015 in early moves. MGEX wheat set across-the-board contract highs, with most-active September reaching $8.12-3/4 a bushel before paring gains.

Prices of wheat were down in spot markets ahead of the rollout of goods and services tax. Wheat buyers are waiting for the implementation of the tax reform as it would do away with state taxes. Prices in Delhi have fallen by 30-40 rupees in last 10-15 days. NCDEX the most-active August wheat contract ended down 0.1% from previous close.

International Grains Council has cut its estimate for global wheat output in 2017-18 to 735.1 million tonne from 735.9 million tonne forecast a month ago. The downgrade may be attributed to fall in output in the US, European Union and Australia, the report showed. The losses were, however, limited by higher production in Russia. The council has pegged global wheat consumption in 2017-18 at 735.5 million tonne, sharply down from 737.8 million tonne estimated earlier. Global ending stocks of wheat in 2017-18 are estimated at 241.2 million tonne, up from 238.6 million tonne forecast in May.

The recent rally in prices of wheat in the global market has caught the Indian market by surprise. Market players, who were banking on cheaper imports to meet demand in the lean arrival season, would now have to turn to the domestic market to source wheat and that could effectively push up wheat prices by about 200 rupees per 100 kg over the next couple of months. Wheat prices usually start ascending by Jul-Aug as arrivals come to a grinding halt and government winds up procurement operations. The government offer price under the open market sale scheme usually acts as a benchmark for wheat prices during the lean season.