Wheat prices at the government’s weekly auction on Wednesday spiked abruptly in most of the States, industry sources said. They attributed it to the relaxation granted to individual processors to lift a higher quantity. Out of 4 lakh tonnes (lt) wheat offered at the auction as much as 3,99,940 tonnes were sold out on Wednesday against 2,93,110 tonnes out of 3 lt on February 12.
“While the offered quantity was hiked to 3 lt from 1.5 lt two weeks ago, the maximum bidding quantity for processors remained at 150 tonnes per auction. But in the current round the individual cap was raised to 400 tonnes and it created a frenzy among millers,” said a top industry official.
Traders also attributed the rise in prices of sale under Open Market Sale Scheme (OMSS) to a rumour in the market that the government may stop wheat auction from March in producing States, per the guidelines of not conducting the bids once procurement starts. Besides, there has also been apprehension about the size of new crop as the temperatures are rising, traders said.
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Dry supply chain
At Ratlam and Chhindwara mandis in Madhya Pradesh, where new crop has arrived though in very small quantity, the average prices were ₹3,000-₹3,300 per quintal for the common variety, said Rahul Chauhan of I-Grain India. He said it is natural for prices to rise as the supply chain is dry and many of the millers are completely depending on the government auction to run their plants.
On Wednesday, the highest bid price at the FCI’s e-auction in Uttar Pradesh was ₹3,159/quintal and the lowest was ₹2,958/quintal. As many as 168 buyers bid above ₹3,000 per quintal, while only 30 processors had below ₹3,000.
In comparison, the highest bid price in the State was ₹3,010/quintal and the lowest was ₹2,520 on February 12 auction when 42,725 tonnes were sold. Only one buyer — Shri Banke Bihari Ji Industries — out of 332 successful bidders bid above ₹3,000 for 25 tonnes.
- Also read: Govt’s higher allocation of wheat under OMSS helps ease prices
Need for bonus?
“The government has to do some serious re-thinking on the e-auction if it really wants to bring down prices around MSP level, otherwise it may have to announce a bonus to achieve the targetted procurement,” the industry official said. The government is likely to finalise the target for next wheat procurement by this month-end as the buying season starts from April 1, sources said.
All the offered quantity 62,000 tonnes in Punjab and 58,000 tonnes in Uttar Pradesh got sold out in the Wednesday e-auction. Other major States where maximum quantity of wheat sold include 36,000 tonnes in Haryana, 33,500 tonnes in Rajasthan, 25,000 tonnes in Madhya Pradesh, 24,000 tonnes in Bihar and 23,950 tonnes in West Bengal.
The highest bid price in Karnataka — where all 11,000 tonnes got sold out — was ₹3,019/quintal, in Rajasthan it was ₹3,029, in West Bengal ₹2,835, in Bihar ₹2,803, in Haryana ₹3,335, in Delhi ₹2,871 and in Punjab ₹2,610/quintal.
