Wheat prices to stay firm on tight supply

WEEKLY COMMODITIES OUTLOOK

As far as wheat is concerned prices are likely to remain firm at the current levels this week as the expected high festive demand has not materialised and supply, too, continues to be tight.

"Traders and stockists are said to be holding on to the commodity with the hope of better returns a fortnight or so later," said an official with a large trading firm.

Following tighter margins, buyers are preferring the original Uttar Pradesh mandis like Kanpur.

"The ongoing rally in the futures is speculative in nature and will see profit taking before moving up again," said an analyst.

In the current week, Ncdex November wheat contract is likely to trade between Rs 854 and Rs 860 per 100 kg (prior to contract expiry this week) and December contract between Rs 863 and Rs 872 per 100 kg.

Gold prices are seen moving up, supported by speculative fund-buying, despite a surging dollar, lower crude oil prices and poor retail demand from Asian countries, especially India. "We expect prices to stay well supported, with strong fund-buying on any price dips," said a Barclays Capital report.

Traders feel fund-buying would happen as investors are finding gold to be a safe haven against the backdrop of massive riots in France, bombings in Jordan and terrorist threat in Australia. Further, a weakening euro is pushing up investments in gold in euro terms.

The physical demand from the Asian countries seemed to have fallen as the imports had been very high during the previous quarter. Also high prices might have discouraged Indian consumers.

While the last CFTC report showed a decline in fund long positions, as the yellow metal failed to break above the $475 an ounce level, analysts see this week's report showing a net rise, said a Anand Rathi Commodities report.

On Monday, at 1615 IST, overseas spot gold traded at $467.15 an ounce. So, it would be wise to buy on dips.

Chana (chick pea): The ongoing tight supply situation, along with weak demand, is keeping prices supported at the current levels during the week. Demand has remained weak, despite festive demand following high prices.

A section of the traders are hopeful that demand will rise now and, therefore, will push prices up. Said a Delhi-based trader, "Demand is seen picking up in Haryana, Gujarat, West Bengal, and this may push up prices." Market players expect Ncdex December contracts to remain supported at the current levels but to rise to the Rs 2,200-per 100 kg level next week.