The open market sale of wheat from the official stock has ended this year as the government has decided not to float any new tender as the weekly schedule was for Friday. Through the weekly e-auction that started from December 4, 2024, the Food Corporation of India (FCI) has been able to sell 2.97 million tonnes (mt) of wheat out of 3 mt offered under open market sales scheme (OMSS), whereas it had sold nearly 10 mt in 2023-24 fiscal.
The weekly offer that began with 1,00,000 tonnes was gradually increased by 0.5 mt, while the individual cap for a processor was also raised from 100 tonnes to 400 tonnes during the auction, where traders were not allowed to participate.
Highest bid price
In the last auction held on March 5, Uttar Pradesh, Karnataka, West Bengal, Assam and Haryana had witnessed increase in the lowest bid price from the previous week in the range of ₹10-150/quintal whereas Tamil Nadu, Telangana and Kerala had witnessed hike in the highest bid price in the range of ₹10-58/quintal.
The highest bid price in the last auction was in the range of ₹2,540-3,009/quintal in wheat-producing States, with rates in Madhya Pradesh at ₹2,540 and in Uttarakhand at ₹3,009/quintal. Though Jammu and Kashmir, where the highest bid price was ₹3,275/quintal, is also a wheat-producing State, mills source most of their requirement of the grain from other States including Rajasthan, due to high level mandi tax/cess in Punjab and Haryana (6 per cent).
Also, during the last auction in wheat growing States, there was a drastic fall in highest bid price in a week in Haryana that dropped by ₹570/quintal to ₹2,880/quintal, whereas in Punjab it was only ₹50/quintal drop to ₹2,850/quintal and in Bihar by ₹15/quintal to ₹2,953/quintal, trade sources said.
Limitations
But officials said despite too much demand for wheat from the processors, which got reflected in the 100 per cent offtake and sales at higher than reserve price, the government was able to bring down the prices to some extent. “Unlike last year, when stock was comfortable, there was limitation of offering more quantity this time. Still, there was a drop in prices by over ₹170/quintal between first and last rounds of the auction,” official sources said.
Against the average reserve price of ₹2,464/quintal, FCI sold the wheat at ₹2,800/quintal this year. In the first round of auction the average selling price was ₹2,885/quintal whereas in the last round, it dropped to ₹2,712/quintal, sources said.
“Now, that wheat prices are ruling much above the MSP in producing States, it will be a challenge for the government to procure the crop as private trade is also likely to pick up as much as possible,” said a flour milling industry veteran. Though the government is banking on the bonus (over and above the MSP of ₹2,425/quintal) announced by Madhya Pradesh and Rajasthan to help garner higher quantity than last year, some experts have expressed doubt over achieving last year’s level.
The Centre has set a target to buy 31 mt from the current year crop, whereas last year it could buy 26.61 mt against target of 37.3 mt. After the Centre procured record 43.34 mt of wheat in 2021-22, the procurement has been continuously missing the target in last three years.