Mumbai: Indian wheat futures hit fresh highs on Monday on hopes of higher demand driven by a drop in rice sowing due to poor monsoon rains, analysts said.
The shortfall in India’s monsoon rains since 1 June worsened to 28% on 8 August from 25% three days earlier, said two senior officials of the weather office.
As per latest data, paddy sowing area fell to 19.13 million hectares from 25.68 million hectares because of weak monsoon rains.
Lower rice acreage indicates lower output of the grain, which may increase the focus on wheat as an alternative grain resource for India, analysts said.
“The stress on government reserves continues as rains play tricky,” Kotak Commodity Services Ltd said in a broker note.
At 3pm, August futures contract on National Commodity and Derivatives Exchange was at Rs1,175 per 100 kg, up 2%. The contract hit fresh highs of Rs1,187 earlier in the session.
India last month banned export of any wheat or rice through diplomatic arrangements.
The government may sell a part of its bulging wheat stocks in the local market to control domestic prices.
Wheat stocks stood at 32.92 million tonnes as on 1 July, almost double the required buffer norm of 17 million tonnes.