(Bloomberg) -- Wheat futures traded in Chicago were set for a third week of gains as India’s decision to limit stockpiles underscored the tightness in global wheat supplies.
Wheat for December delivery rose as much as 3.5%, the biggest intraday gain in more than a month.
The Indian government cut the size of wheat stockpiles traders and big retailers are allowed to maintain by 33% to 2,000 tons to prevent hoarding, according to a statement from food ministry on Friday.
“That is an indication that supplies are tight and that they want to try to bring domestic prices down by making more supplies available,” said Angie Setzer, cofounder of farm advisory Consus Ag Consulting LLC.
The move adds to concerns that dry weather will hurt crops in key producing European countries as Russia and Ukraine, even as the US Department of Agriculture raised its estimate for global wheat stockpiles at the end of the 2024-2025 crop season.
Yet, the escalation of the conflict between Russia and Ukraine — with a Ukrainian ship carrying wheat to Egypt struck by Russia this week — also is bullish for wheat futures, Setzer said.
“We saw Russia targeting that grain ship yesterday — that’s the first time we’ve seen anything like that, and I think that’s a big deal,” Setzer said. “We’re coming to a point where folks may think they don’t have anything to lose.”
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