Last week, wheat futures moved into backwardation as demand fell with the end of festive season and as the government's announcement to sell an additional 6.5 million tonnes to bulk users dampened the sentiment in futures market. Supplies from the government warehouses will take nearly a month to reach spot markets and till then buying by exporters to meet overseas demand could support wheat prices, traders said.
Wheat shipments from India are likely to rise as potent combination of dry weather in the United States and drought in the Black Sea region has pushed benchmark global wheat prices up and boosted demand for Indian produce, traders said. India grows one wheat crop, which is planted in November-December and harvested in April-May.
Swollen inventories after five consecutive harvests ran ahead of about 76 million tonnes of annual local demand, forced India to lift a four-year old ban on exports in September 2011 and then allow 2 million tonnes from the state-run warehouses. Two state-run trading companies - unlisted PEC Ltd and State Trading Corp of India - got the highest bids at $328 a tonne and $322.22 a tonne, respectively, in their latest export tenders.