Wheat Procurement In Full Swing, States Compete With Centre

(ForexPros)– Wheat trading range for the day is 1177-1231. The market is looking to take support at 1188.3, a break below could see a test of 1176.7 and where as resistance is now likely to be seen at 1215.3, a move above could see prices testing 1230.7.Wheat yesterday traded with the positive node and settled 1.27% up at 1200 due to short covering tracking firm spot market demand. Wheat output in India, the world’s second-biggest producer, is seen at a record 90.23 million tonnes in 2012.

NCDEX accredited warehouses wheat stocks gained by 349 tonnes to 8548 tonnes. In Delhi, wheat prices dropped -2.65 rupees to end at 1243.35 rupees per 10 kg.

Madhya Pradesh, one of the key producers of wheat, has raised its wheat procurement target to a record of 8 million tonnes (mt) in the current rabi marketing season, up from the earlier 6.5 million tonnes. Such an ambitious procurement target is driven by higher wheat output in the state and the rush by farmers to sell their produce to government agencies.

Madhya Pradesh is offering a bonus of Rs 100 over the minimum support price of Rs 1,285 fixed by the Centre, attracting farmers’ interest. Arrivals are over 16 mt. The Food Corporation of India has, so far, procured 1.8 mt, while the State Government’s procurement has crossed 6 mt.

Sugar Fails To Find Fundamentals To Drive Prices

Sugar prices are expected to remain sideways in the intra-day with no clear fundamentals to drive the prices. In the long-term, price trend would depend on planting figures of 2012-13 crop and decision with respect to further exports.

Sugar witnessed mixed trades throughout the week with no clear fundamentals to drive the prices and settled 0.08% higher w-o-w. Also, expectation of probable approval of further exports shortly amidst demand from the local stockists might provide support to the prices.

Brazil’s sugar output will rise about 5 percent in the 2012/13 season that is now starting, the government forecast in mid-April, as better weather and replacement of old cane plants have the crop on a recovery path after output dipped last season. Also, it is necessary to keep close watch on Brazilian sugar harvest.

Sugarcane acreage this season is expected to decline in Maharashtra and Karnataka. The government last month changed the release mechanism of non-levy quota from a monthly to quarterly basis wef from April 2012. For April-Jun 2012, non-levy quota is fixed at 45 lakh tonnes, excluding 1 lakh tn of carry over from last month, 12% lower compared to the same period last year.

Raw sugar futures remained bearish owing to ample supplies in the global market and are near 11 month low. Prices settled 0.5% lower on Friday. Also, reports of possible approval of further exports of sugar from India and ample supplies of sugar in the global markets will support bears in the market.

With Bumper Potato Crop Expected, Prices May Subdue

Potato prices may trade sideways in the intra-day due to comfortable supplies in the domestic markets and improved buying by local stockists on the other. In the medium-term, potato prices may take cues from the final estimates from the horticulture department which may show some downward revision in the output owing to reports of late blight disease.

NCDEX potato futures traded range-bound throughout the week owing to ample supplies in the domestic market on one hand and demand from the local stockists on the other. Prices settled 0.39% and 0.43% higher w-o-w.

However, markets are expecting further decline in output due to late blight disease by 20%.The output in UP and West Bengal, the two biggest potato growing states is expected to be lower at 12.8 mn tn (13.6 mn tn in 2011) and 10-15% (13.3 mn tn in 2011) respectively.

According to the initial estimates of National Horticultural Research and Development Foundation (NHRDF), potato output in the season 2011-12, is estimated higher at 43.6 mn tn compared to 40 mn tn last year.