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Informist, Wednesday, Dec. 11, 2024

--FCI official: Sold 99% wheat on offer under open market sales Wed 

--FCI official: Sold wheat at avg INR 2,920/100 kg Wed vs INR 2,885 last wk 

By Afra Abubacker

NEW DELHI – Food Corp. of India sold nearly 99% of the 100,000 tonnes wheat offered on Wednesday under the open market sales scheme, an FCI official said. The weighted average selling price of wheat at the auction was INR 2,920 per 100 kg against INR 2,885 at the previous week auction, he added. This was the second tranche of the auction of 2024-25 (Apr-Mar) and the first was conducted on Dec. 4. 

The average selling price of the last two auctions was slightly lower than the all-India average wholesale price of INR 2,928.4 per 100 kg, but higher than the reserve price for the year. For the current year 2024-25 (Apr-Mar), the government has set the reserve price of fair and average quality wheat at INR 2,325 per 100 kg and those for wheat under reduced specifications at INR 2,300 per 100 kg.

Amid rising wheat prices, the government, on Wednesday, further reduced the wheat quantity that trade entities can stock in order to prevent hoarding and moderate prices. Asked if millers and processors would purchase less wheat in the coming auctions amid tight stocking norms, the official said, "Wheat shortage is there. They will come, and they will participate." Last Wednesday, the corporation sold 98% of the 100,000 tonnes offered. 

Picking up on strong demand and rising prices, the official said that the agency "will increase the quantity (offered) from next week." According to millers, wheat prices will continue to rise until the government releases more wheat under open market sales or through imports. New wheat crop arrivals are another three and half months away, a Bangalore-based miller said. Most wheat-growing states see new crop arrivals starting from April first week. 

"Having stock limits on a staple grain for a year or so and prices still rising is worrisome," a Punjab-based miller said. As per the revised stock holding norms announced Wednesday, a wheat trader or wholesaler cannot stock more than 1,000 tonnes. Previously, they could hold 2,000 tonnes and 3,000 tonnes, as announced in September and June, respectively. 

For retailers, wheat stock limit is reduced to 5 tonnes per retail outlet from 10 tonnes earlier. For processors and millers, the stock limit is reduced from 60% to 50% of the monthly installed capacity multiplied by the remaining months in the current financial year ending March, the release said.

On Wednesday, FCI sold the entire allocated quantity of 14,000 tonnes of wheat in Uttar Pradesh, and 12,244 tonnes of the allocated 12,500 tonnes in Punjab, data from the corporation showed. The corporation had offered the highest amount of wheat to these two states. According to the FCI data, the highest bids received in Uttar Pradesh, Punjab, and Assam were INR 2,948 per 100 kg, INR 3,045, and INR 3,393 per 100 kg, respectively.

"Mills are in bad shape. Only a handful of mills have stock (to process) for more than a month in Punjab. Most mills only have a week's stock," the Punjab-based miller said. 

Wheat supply in the market is tight as FCI delayed offloading the grain from its godowns amid lower procurement and falling stocks. The corporation typically begins wheat auctions in July or August, but in 2024-25, FCI began weekly auctions only in December. 

The government has allowed FCI to sell only 2.5 million tonnes of wheat till March-end. However, the market wants FCI to sell 4.5-5.0 million tonnes. Last year, FCI sold a record 9.4 million tonnes of wheat under the open market scheme. End

Edited by Akul Nishant Akhoury

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