By Sandip Das
The Food Corporation of India (FCI) on Wednesday received bids for 0.12 million tonne (MT) of wheat from around about 1340 bulk buyers including flour millers and food companies against 0.4 MT offered in its second weekly electronic auction in the current year under the open market sale scheme (OMSS).
However, the corporation received lukewarm response in the first e-auction for sale of 0.38 MT of rice with only five bidders offered to purchase only 170 tonne of grain.
Sources told FE that the average bid for the fair and average quality of wheat was Rs 2,137/quintal which was marginally above the reserve price of Rs 2130/quital. The Minimum Support Price (MSP) for wheat in the current season is Rs 2125/quintal.
Under the OMSS, the government has decided to offload 1.5 MT of wheat from the central pool to flour millers, private traders, bulk buyers and manufacturers of wheat products till March 2024 to check prices.
In the first weekly e-auction of wheat held last week, the corporation could sell only 89,000 tonne of wheat against 0.4 MT offered.
“With the government selling wheat at regular intervals, the prices are likely to moderate further in the next couple of weeks,” Gagan Gupta, a trader from Sehore, the one of the largest mandi in Madhya Pradesh, said.
Sources said that against the reserve prices of Rs 3173/quintal for rice, the bidding price was marginally higher at Rs 3175.35/quital in the e-auction.
Officials said that open market sale of rice by FCI for years has not evoked large interest from traders and bulk buyers because of diversified and bumper production of the cereal across the country.
A food ministry official said that the FCI would continue to sell foodgrains from its surplus stocks till inflationary trend in cereals prices are curbed. The official said current grain stocks are above the buffer and sufficient to carry out open market sales.
As per earlier policy, FCI had been selling surplus wheat to bulk buyers during the lean season (January-March).
FCI sold 3.37 MT of wheat under OMSS during February 1-March 15, 2023 through weekly auctions. The FCI’s open market sales stood at 7 MT in 2021-22 and 2.5 MT in 2020-21.
The wheat stock with FCI as on July 1 is 30.09 MT while the government needs 18.4 MT annually for the implementation of the NFSA. Buffer for wheat for July 1 is 27.58 MT.
FCI has 25.92 MT of rice, which excludes 15.84 MT of rice yet to be receivable from millers at the beginning of this month. The rice stock is against the buffer of 13.54 MT.
The corporation needs 36 MT of rice annually for allocation under national food security act (NFSA). The new procurement season (20223-24) for paddy begins on October 1.
Officials said that the government is discussing several options including reducing import duty on wheat from the current level of 40% to control domestic prices.
Retail wheat prices rose by 12.61% in May, against 15.46% in the previous month while inflation in rice rose by 11.33% in May, a marginal decline from the previous month.
The government had imposed stock holding limits on wheat for the first time since 2008, for traders, wholesaler and retailers till March 31, 2024 last month to control increase in prices.
This article has been republished from The Financial Express