Wheat

India wheat production in the current crop year to June is expected to rise to a record high of 97.44 million tonne, against 96.64 million tonne estimated earlier, backed by good monsoon rains and higher acreage, as per the third advance estimate released by the agriculture ministry. Bumper harvest of wheat may push the country total food grain production to record 273.38 million tonne in 2016-17, higher by 8.7% than last year 251.57 million tonne, and surpassing the previous record of 265.04 million tonne hit in 2013-14 by a wide margin.

Wheat futures on the National Commodity and Derivatives Exchange ended down as the government raised its estimate for the country wheat output in the current crop year ending June. The most-active June contract on the NCDEX ended down 0.6% from the previous close. The rise in output may be attributable to higher acreage, good soil moisture and favourable weather conditions. Arrivals in Rajasthan Kota market also fell due to rainy weather and lifted prices of mill quality wheat up 5-10 rupees from previous day. In benchmark Indore market, mill quality wheat sold up 5-10 rupees from previous close.

The most active July wheat contract on the CBOT fell 1% due to better weather conditions in the US. The July wheat contract was at $4.3750 a bushel, down 1.1% from the previous close. Weather conditions in the wheat growing areas in the US are easing now after heavy rains and storms during the last week. The demand for wheat contracts is also weak due to sharp rise in prices following the crop damage concerns.

The government has procured 26.4 million tonne wheat so far in the 2017-18 marketing year ending march, up 20.2% on year. The purchases are highest in Punjab where the government has procured, 11.4 million tonne wheat, slightly lower than its target of 11.5 million tonne. The government total wheat procurement across the country is still short of its target of 33 million tonne for the current fiscal. The government has so far purchased 5.6 million tonne wheat in Madhya Pradesh up 48% from a year ago but lower than the target of 8.5 million tonne for the current year.

Wholesale prices of wheat in the benchmark market of Indore, Madhya Pradesh, were unchanged because a fall in arrivals of the grain was offset by weak demand from flour mills. In Indore, mill-quality wheat was sold at largely unchanged from Saturday. Arrivals in Indore were at about 8,000 bags, each carrying 100 kg of the grain, down from 10,000 bags on Saturday. On the NCDEX, the most active June contract of wheat was up as investors continued to buy at lower prices for the second consecutive session after prices fell earlier. On NCDEX, the most active June wheat contract was up 0.3% from the previous close.

Prices of wheat rose in the key market of Delhi due to good demand from private buyers and a fall in supplies. Mill quality wheat was sold up 25-30 rupees from Saturday. Prices were unchanged in Madhya Pradesh. Demand from companies like ITC and other bulk buyers is good while arrivals are falling now as most farmers are stocking their crop. The most active June wheat contract on the NCDEX ended up 0.4% from previous close while the current month contract ended up 0.7% from previous close.

The government wheat procurement rose to 25.8 million tonne up 19.6% on year. Procurement is up nearly one-fifth on year, its progress is slower than expected, and reaching the initial procurement estimate of 33 million tonne seems difficult, Procurement may be closer to 30 million tonne this year. The government had bought 23.0 million tonne wheat from farmers last year. The government has bought 5.4 million tonne wheat in Madhya Pradesh so far, an increase of 45% on year. Last year, procurement in the state had taken a big hit as the crop size was smaller. The government has bought 11.2 million tonne wheat so far in Punjab, up 10.0% on year, and 7.2 million tonne so far in Haryana, up 9.5%.

Prices of wheat rose marginally in the market of Indore, Madhya Pradesh, due to lower arrivals. Arrivals were around 7,000 bags (1bag=100kg), down nearly 1,000 bags from the previous day. In Delhi, wholesale market, prices of wheat fell because of a rise in supplies from Uttar Pradesh. The most active June contract of wheat ended down 0.1% from the previous close. The May contract also ended 0.5% lower at 1,577 rupees.

Despite a decline in arrivals in the benchmark market of Indore, Madhya Pradesh, prices of wheat fell due to subdued demand from Stuckists and flour mills Mill quality grain was sold down from 1,550 rupees on previous close. Arrivals were around 6,000 bags (1bag=100kg), down nearly 1,000 bags from the previous day. Prices also fell in Delhi, as supplies from Uttar Pradesh rose Arrivals were around 50,000 tonne, up 5,000 tonne. The most active June contract of wheat ended up 0.3%.

USDA Foreign Agricultural Services has raised the estimate for India wheat output this year to a record 96.5 million tonne from 95 million tonne. The agency wheat output estimate for India is close to the government projection of 96.64 million tonne. The production estimate for the crop has been raised on hopes of better yields due to conducive weather conditions. Cool temperatures and adequate rainfall during Jan-Mar helped in better yield of the crop. Despite record production of the food grain, the agency expects wheat imports to continue, as domestic price is likely to remain higher compared with international prices. India is likely to import 4 million tonne wheat this year, as against 6 million tonne last year. Imports are likely to remain attractive for flour mills nearer the coast despite the 10% import duty on the food grain imposed in March.

Wholesale prices of wheat in the benchmark market of Indore, Madhya Pradesh, fell due to weak demand from flour mills. In Indore, mill quality wheat was sold down 25-30 rupees from Tuesday. Low demand for flour has hit demand for wheat from flour mills. Arrivals were low in Indore at 7,000 bags, each carrying 100 kg of the grain, down from 10,000 bags on previous close. This prevented further fall in prices. Supplies have dwindled as farmers are not willing to sell the produce at low prices. Futures of wheat too were down, tracking weakness in spot markets. On NCDEX, the most active June wheat contract was down 1% from the previous close.

The government has procured 25.07 million tonne of wheat so far in the marketing year that started April. The procurement is 18.8% higher than a year ago. The purchases are higher on year largely because wheat output in 2016-17 (Jul-Jun) is seen at a record high of 96.6 million tonne. Government procurement is highest in Punjab at 11.04 million tonne, up 10.4% on year, followed by Haryana at 7.12 million tonne, up 9.2%. In Uttar Pradesh, government agencies have bought 978,206 tn of the food grain, up 141.8% from a year ago. The Uttar Pradesh government aims to procure 8 million tonne of wheat this year. In Madhya Pradesh, the government has bought 5.17 million tonne of the grain so far, up 41.3% on year. In the benchmark market of Indore, the grain sold down 25-30 rupees. The central government aims to target of 33.0 million tonne wheat to be procured in the current marketing season, up from 22.9 million tonne on year.

The government has procured 24.66 million tonne of wheat across the country so far, this marketing year started April. The procurement is 18.3% higher than in the year-ago period, as production in 2016-17 (Jul-Jun) is seen at a record high. Procurement by the government was the highest in Punjab at 10.92 million tonne, up 10.4% from a year ago. Haryana was the second, at 7.06 million tonne, up 9.2% on year. In Uttar Pradesh, where the state government expects to procure a whopping 8 million tonne of wheat this year, 904,704 tonne has already been procured. The purchase is 152.8% higher on year. In Madhya Pradesh, another major producer, the government has bought 5.06 million tonne of the grain so far, up 39.1% from the year-ago period. In Indore, the grain was sold up 10-20 rupees from Saturday. Overall, the central government has set a target to procure 33.0 million tonne of wheat in the current marketing season, up from 22.9 million tonne on year.

Wheat prices in the benchmark market of Indore rose due to a decline in supplies. In Indore, the grain was sold up 10-20 rupees from the previous day. Around 5,000 bags (1bag=100kg) of wheat were brought to Indore markets down from 7,000-8,000 bags. Wheat prices in the key wholesale market of Delhi fell because supplies from Uttar Pradesh and Punjab are on a rise. Wheat was quoted down 15 rupees from the previous day. Arrivals were at around 50,000 tonne up from 40,000 tn. The most active May wheat contract on NCDEX had hit a two-month low down 0.9% from previous close. The July wheat contract on CBOT was at $4.58 a bushel, up 0.6% from previous close.

Until 01st May over 69 lakh tonne of wheat have arrived in Haryana compared to 64.59 lakh tonne for the same period last year. Traders and government agencies have purchased 5874 tonne and 69.27 lakh tonne of wheat respectively. Of the total quantity procured by government agencies around 17.02 lakh tonnes has been procured by food, civil supplies and consumer affairs department, 24.72 lakh tonne by HAFED, 8.23 lakh tonne by FCI, 6.36 lakh tonne by Haryana Agro Industries corporation and 12.91 lakh tonne by Haryana warehousing corporation. Sirsa is the leading district with 9.69 lakh metric tonne of arrival

Export prices for Russian milling wheat decreased by $1 per tonne on weekly basis. Russian wheat with a protein content of 12.5% and 11.5% for April- May delivery settled at $186-188/tonne FoB and $181-183/tonne FoB respectively. Milling wheat prices kept on falling in Russia due to strengthening of Rouble and sufficient market supply. Furthermore, millers have enough stocks to keep prices down.

Tunisia has bought around 75000 tonne of soft milling wheat in three consignments of 25000 tonne each. The first consignment was bought at $173.85/T C&F, second at $186.73/T C&F and third at $189.58/T C&F. The sellers were Europemarkets, Bunge and Nidera.

All contracts of wheat on the CBOT were trading nearly 1% higher with the most active July contract hitting a two-month high due to crop damage in the US. The July wheat contract was at $4.6075 a bushel, up 1.1% from the previous close. Snowfall in parts of Kansas and Oklahoma over the weekend damaged the wheat crop. Heavy rains and elevated temperatures also delayed wheat sowing in some parts of the country.

International Grains Council has raised its estimate for global wheat output in 2017-18 to 736 million tonne from 735 million tonne estimated a month ago. The projected output is 2.3% lower than 753 million tonne produced a year ago, Wheat output is likely to fall in major producing countries such as Australia, Canada, US, Ukraine, and Kazakhstan. Production of the grain is, however, seen higher in the European Union, Weak prices of wheat in global markets led to reduced plantings, and probability of a lower crop in 2017-18, global carryover stocks of wheat are likely to be at 239 million tonne in 2017-18, down from 240 million tonne a year ago but higher than 234 million tonne estimated in March, The global trade of wheat is estimated at 166 million tonne in 2017-18, unchanged from previous estimate but down from 171 million tonne a year ago, Global exports of wheat are likely to fall due to lower import demand from India as the country is looking forward to a record output this year.

Ukraine exported 1053 KMT of wheat in March 2017, or almost as much as in the same month last year (1070 KMT was in March 2016). the key end market for Ukrainian wheat was Egypt. Ukraine supplied a season-record 347.5 KMT of wheat to Egypt that month. This represented 33% of total exports at the time, The European Union also revived imports of Ukrainian wheat in March. That month the EU absorbed over 26% of all the supplies – 278 KMT. In addition, in view of the heightened tension between Russia and Turkey, shipments to the Turkish market became more active in March. 46 KMT of wheat was supplied to Turkey that month – the largest volume since the season beginning (a total 73.4 KMT in MY 2016/17). Ukraine exported a total 14.615 MMT of wheat in the nine months of MY 2016/17, or 13% more than at the same time last season (12.912 MMT went abroad in July-March 2015/16Г).