However, strong overseas demand for Indian wheat is seen supporting the prices and could limit the downtrend. A nearly 2 percent rise in wheat planting area at 18.3 million hectares puts additional pressure on prices. Farmers in India harvested a record 94 million tonnes in the 2011/12 crop year ended June and conditions are favourable for another bumper crop this year, traders said. "Wheat futures are moving in a very narrow range and are expected to decline gradually in the next 15 days.
Overall sentiment is weak though strong export demand is supporting the prices," said Prasoon Mathur, a senior analyst with Religare Commodities. Demand for Indian wheat, particularly from south-east Asian countries, has risen sharply after adverse weather conditions in key exporting countries raised concerns over supplies and pushed the global prices up.
And, this is supporting the local prices. In Chicago, the key March contract on CBOT has risen around 24 percent since the beginning of the year. Traders expect wheat shipments from India to rise further this year on a potent combination of dry weather in the United States and drought in the Black Sea region.
Last week, two state-run trading companies - unlisted PEC Ltd and MMTC - got the highest bids at $324.15 a tonne and $323.11 a tonne, respectively, in their latest export tenders. India grows one wheat crop, which is planted in November-December and harvested in April-May.