Wheat

Despite a good production at home, the IGC has raised its forecast for India wheat imports in 2017-18 to 3.0 million tonne from 2.0 million tonne projected a month ago. The IGC has pegged global wheat output in 2017-18 at 735.9 million tonne, marginally down from 736.3 million tonne estimated earlier. The reduction in wheat output estimate may be attributed to cuts for the wheat crop in the US and the EU. The council has pegged global wheat consumption in 2017-18 at 737.8 million tonne, marginally higher than 737.6 million tonne estimated earlier. A higher consumption is likely to drag world wheat closing stocks to 238.6 million tonne in 2017-18 from 239.0 million tonne estimated a month ago.

The food ministry has proposed to offer 4.8-4.9 million tonne wheat under the open market sale scheme during 2017-18 (Apr-Mar) marketing year. The ministry has proposed selling the grain at a base price of 1,791 rupees per 100 kg, including a minimum support price of 1,625 rupees, 125 rupees for incidentals, 41 rupees for loading and unloading. The sale is expected to begin by mid-June. In 2016-17, government sold 4.6 million tonne wheat at a base price of 1,640 rupees per 100 kg, against the initial plan to sell 6.5-7.5 million tonne. The Food Corp of India releases wheat and rice in the open market to boost supply of grains during the lean season and keep a check on market prices.

June wheat contract ended up 0.6% from the previous close, as traders covered their short positions after prices fell in last four sessions. Demand from states in the southern part of the country is weak, as these states have huge stocks of imported wheat at ports. Prices, however, remained unchanged in the wholesale markets.

Russia wheat exports are likely to touch a record high of 27 million tonne in 2016-17 (Jul-Jun). Wheat exports from Russia have already beaten last year record high of 25 million tonne. The USDA has also forecast Russia to be the world second-largest wheat exporter in 2017, with total overseas sales of 28.0 million tonne. Russia wheat exports are higher than last year as the government has scrapped the 50% export duty on the grain. Exports were supported by a weak rouble which makes Russian grain cheaper for foreign buyers, and by poor output in Germany and France.

Agriculture and Agri-Food Canada, a government agency, has raised its estimates for Canada wheat supply in 2017-18 (Aug-Jul) to 36.51 million tonne in its May forecast, up 1% from its April view. the country total wheat exports, including durum quality, are seen at 20.9 million tonne in 2017-18, down nearly 1% from its earlier forecast due to lower-than-expected demand for the grain.

Egypt has procured 2.9 million tonnes of wheat from local farmers since the harvest began in mid-April. The local procurement season runs until July and targeting between 3.5 million to 4 million tonnes of local wheat this year. Egypt consumes 9.5 million tonnes of wheat to make its subsidised bread, 4 million tonnes from the local harvest and 5.5 million tonnes from imports.

European wheat futures rose as a weaker euro and gains in Chicago futures lent support to prices. December milling wheat on the Paris-based Euronext exchange was up 0.25 euro or 0.15 percent at 171.50 euros a tonne. Trade was thin due to a public holiday in parts of Europe. The International Grains Council lowered its forecast for European Union production in the 2017/18 season by 0.4 million tonnes to 149.9 million tonnes. The revision was mostly due to a 1 million tonne cut in output for Spain, although higher production in France, Germany, Romania and Britain helped offset the bulk of the decline.

Japan Ministry of Agriculture bought a total of 117,800 tonnes of food quality wheat from the United States and Australia in a regular tender that closed late on Thursday.

June contract of wheat ended down 0.3% from the previous close, due to high supplies in wholesale markets and weak demand from stockists and bulk buyers. Most of the bulk buyers have already built their stocks, so demand for wheat is weak while supplies across the country are high. Delhi price unchanged and daily arrivals in Delhi are at about 50,000-60,000 bags (1bag=100kg), a large share of which is from Uttar Pradesh and Haryana. Market in Indore was shut because Amavasya.

July wheat contract on CBOT was at $4.3375 a bushel, up 0.3% from the previous close, due to concern about the quality of the crop in the growing regions in the US. Rains in the US over the last few weeks have triggered concerns of lower yield and high moisture content in the crop.

Wheat futures on the NCDEX, on the other hand, traded lower taking cues from spot markets. June wheat contract ended down 0.4% from the previous close. In Delhi, prices fell by 5-10 rupees per 100 kg because of poor demand from states in south India. Demand from states in the South was poor this year, as these states had huge stocks of imported wheat.

The government has procured 29 million tonne of wheat so far in the 2017-18 marketing year that started April, up 27% from a year ago. With wheat supplies coming to an end in most states, the government is likely to miss its procurement target of 33.0 million tonne and may end up buying around 29.5 million tonne. Procurement has already ended in Haryana 7.4 million tonne. In Madhya Pradesh 6.5 million tonne has been bought. In Uttar Pradesh 2.3 million tonne of the grain has been purchased.

Market underpinned by excessive rains in the southern Plains and Midwest that threaten winter wheat yields and production. U.S. spring wheat crop was 90 percent planted. CBOT July soft red winter wheat was last down 1/2 cent at $4.33-3/4 per bushel, K.C. July hard red winter wheat last down 3 cents at $4.33 and MGEX July spring wheat last down 2-1/2 cents at $5.56-3/4.

Heavy rains in U.S. Plains, which damage crop in key production areas, supporting prices. CBOT July soft red winter wheat was last up 3 cents at $4.38-1/4 per bushel. K.C. July hard red winter wheat last up 3 cents at $4.41 and MGEX July spring wheat last up 2-3/4 cents at $5.58-1/2.

New Delhi Wheat prices softened; by Rs 8 or 0.49 per cent to Rs 1,637 per quintal in futures trade on weak cues from spot markets.

Egypt, the world largest importer of wheat, has procured 2.33 tonnes of wheat from local farmers since its harvest began in mid-April. Egypt consumes 9.5 million tonnes of wheat to make its subsidised bread – 4 million tonnes from the local harvest and 5.5 million tonnes from imported wheat.

Egypt state grain buyer GASC bought 295,000 tonnes of wheat in last week tender, including 60,000 tonnes of Russian wheat at $198 a tonne free on board (FOB) and $10.49 freight.

Futures contracts of wheat fell nearly 1% on the NCDEX as investors continued to book profits for the second straight day after prices rose in six trading days. June contract of wheat on the NCDEX was down 0.7% from the previous close. July contract also traded 1.0% lower at 1,643 rupees. Prices had risen earlier due to lower supplies in spot markets and firm demand from stockists and millers. Arrivals in benchmark market of Indore, Madhya Pradesh, were at 10,000 bags (1bag=100kg) down from 12,000 bags on previous close. Arrivals fell in Delhi as well, to 4,000 bags from 5,000 bags on previous close.

Wheat prices are likely to fall in at least eight states–Punjab, Haryana, Uttar Pradesh, Madhya Pradesh,Kerala, Andhra Pradesh, Telangana and Tamil Nadu as the food grain has been kept in the 0% rate under the Goods and Services Tax regime. which will subsume most indirect taxes from July. Punjab and Haryana levy 2% sales tax and 4% value added tax on wheat. While a 5% tax has been imposed under GST on branded flour, this won’t lead to rise in prices as organised players benefit from input tax credit on packaging material. Unbranded wheat flour has been kept at 0% tax slab under GST, and this may pull down its prices in states that levy a tax on the commodity now.

Research bureau Strategie Grains has cut its forecast for wheat harvest in the European Union this year to frost in key growing areas. The agency cut its estimate for the wheat crop in EU this year by 1.1 million tonne to 142.7 million tonne. That figure could change because the impact of the drought and cold spells the crops were subjected to is still difficult to assess accurately.