Informist, Thursday, Feb. 20, 2025

By Afra Abubacker

NEW DELHI – Despite the Food Corp. of India offering more wheat at its weekly auction Wednesday, prices surged as millers made aggressive bids amid shortages in the open market. To bag more wheat from government godowns, millers mostly quoted above INR 3,000 per 100 kg Wednesday, and the average selling price rose to INR 3,011 from INR 2,667 per 100 kg last week, an FCI official said.

On Wednesday, the FCI offered 400,000 tonnes of wheat, the highest in the financial year 2024-25 (Apr-Mar), and sold 99.9%, or 399,940 tonnes, to millers and processors. "There is no wheat in the market. The situation is grave. Mills are closing thrice a week and running at 40% of capacity," a miller from Punjab said.

According to millers, despite urging the government to release more wheat into the market, the government did not acknowledge that pipelines are dry. "The government has now got a reality check," the miller said. "The auction results are now getting close to the actual picture."

To check wheat prices and ensure the availability of the staple in the country, the FCI allowed mills to quote for up to 400 tonnes per auction, from 150 tonnes earlier. "They (the FCI) increased the per miller allocation in the auction, but prices rose as there is no wheat in the market," Rahul Chauhan, director, IGrain India, said.

"The government has been artificially controlling wheat prices by restrictive bidding at OMSS (open market sales scheme)," the miller from Punjab said. With the FCI easing the cap on purchase quantity, millers got into a bidding war to win more wheat. At Wednesday's auction, the highest bids were INR 3,159 per 100 kg in Uttar Pradesh, INR 3,100 per 100 kg in Punjab, and INR 3,131 per 100 kg in Delhi, FCI data showed.

On Wednesday, the all-India average wholesale price was INR 2,965 per 100 kg, up INR 216 per 100 kg, or 7.8%, on year amid tight supply in the market. Retail prices of atta, or wheat flour, in Delhi have risen INR 7 per kg, or nearly 22.6%, on year to INR 38 per kg.

Millers and processors buy wheat from the market and sell wheat flour to households and the large segment of bread-biscuit-pizza makers. The government also releases wheat from its godowns through the open market sales scheme to the market.

"A large segment is dependent on market wheat. Only about 800 million people rely on the government's free food programme," G.K. Sood, a farm expert, said. "There is also (a section of) out-of-home eating people, majorly migrants," he added. Under the Pradhan Mantri Garib Kalyan Anna Yojana scheme, 813 million people are eligible for free food grain through the public distribution system.

Though new wheat crop arrivals have started in Madhya Pradesh, prices have not eased, market participants said. Traders say the new wheat crop will be available across key markets from April-end. "New crop is about to come and millers are paying more for old wheat to keep their mills running," Sood said.

On Thursday, prices of loose wheat in the benchmark market at Kota, Rajasthan, were up INR 100 at INR 3,480 per 100 kg, a new lifetime high, according to local traders. Prices of mill-quality wheat in Navi Mumbai's Vashi market also rose from the previous day, taking a cue from the government's weekly auction.

Market participants say wheat prices will remain firm until the government offers more wheat at the weekly auctions. "From 400,000 tonnes, FCI should offer 600,000 tonnes (every week). The more the better. The market will welcome (it)," the Punjab miller said.

Sood agreed. "The government should offer more wheat to the market," he said. "They can increase weekly auction quantum to at least 500,000 tonnes. Just about 6 weeks are left till March end."

As of Feb. 1, FCI had 16.2 million tonnes of wheat in its godowns, up 22% on year. The agency should be left with 9.5-10.0 million tonnes by the end of March, Sood said. The opening stock for this financial year was only 7.5 million tonnes. End

With inputs from J. Navya Sruthi

Edited by Rajeev Pai

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