More Stories

Informist, Friday, Feb. 7, 2025

 

By Afra Abubacker

 

NEW DELHI – The Food Corp. of India has started selling rice on Thursday and Friday through auction under the open market sales scheme instead of Wednesday and Thursday so that it does not clash with the weekly auction of wheat, an official in the food procurement agency said. FCI holds the weekly auction of wheat on Wednesdays. 

 

"The bidding rates were on the higher side. And this way, the rice auction will not coincide with the wheat auction on Wednesday," the FCI official told Informist. Since January, FCI has been offloading rice twice a week--Wednesday and Thursday--through e-auctions to clear its swelling stocks. Rice stocks with FCI were at 29.1 million tonnes as of Jan. 1, the highest in a decade for the month. 

 

Before January, weekly auctions of rice and wheat were held on Wednesdays.

 

However, traders say FCI will likely not clear its rice stocks substantially until the government reduces the reserve price of rice. "Having auctions for two days is not going to solve the problem. There is a parallel availability of rice in markets," Rajesh Paharia, a Delhi-based trader said. Currently, the reserve price of rice is INR 2,800 per 100 kg.

 

In Thursday's auction, FCI could sell only 50% of the offered 135,000 tonnes of rice, FCI data showed. Since August, FCI has sold only 36% or 1.23 million tonnes out of the 3.47 million tonnes of rice offered. Rice off-take continues to be slow amid the availability of paddy from the new crop across the country. 

 

Traders say FCI rice will be export competitive if the government cuts the reserve price of rice. Though the government prohibits bidders from shipping out the rice bought through the open market sales scheme, it does get exported. "Indirectly, it is going outside by changing hands," Paharia said. 

 

"A lot of rice is being shipped out. And prices at destinations have fallen by at least 20% to $430-$445 per tonne," Naveen Kumar, a Delhi-based trader said. Additionally, Pakistan's rice prices are more competitive than India's, Kumar said.  

 

"If the government gradually cuts the reserve price to INR 2,500-INR 2,600 per 100 kg rupees, then lifting will improve," Kumar said. "But the government seems to be only pushing distilleries and breweries to buy rice," he added. 

 

The government has cut the reserve price for rice for distillers to INR 2,250 per 100 kg from INR 2,800 per 100 kg. Distillers buy FCI rice to make ethanol and sell it to oil marketing companies for their blending needs. Ethanol is blended with petrol to make it a greener fuel. 

 

Amid piling rice stocks and space constraints at godowns, the government has been encouraging rice sales to clear stocks and make room for rabi procurement. Rabi procurement of wheat and rice will start in April. End

 

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.