Wheat prices fall over 10% in 7 days on selling of FCI stock in open market

FCI sold 0.92 million tonnes since Feb 1, netting around Rs 2,290 crore

Food Corporation of India’s (FCI) sale of 920,000 tonnes of wheat through its e-auction at a reserve price of Rs 2,474 per quintal since Wednesday has brought down prices by almost 10 per cent.
 

The auction generated Rs 2,290 crore for the corporation on February 1 and 2, an official statement said.
 

Recently the Centre decided to offload 3 million tonnes from the buffer stock in the open market under the open market sale scheme (OMSS).
 

Of this, 2.5 million tonnes will be sold to bulk consumers and flour millers, 300,000 tonnes to institutions like Nafed, and the rest to state governments.
 

“The e-auction has left an impact of a fall in market prices by more than 10 per cent in the past one week,” the food ministry said in a statement.
 

The “prices are set to fall further” after wheat sold in the e-auction is lifted and wheat flour (atta) is made available, it said.
 

According to the data maintained by the consumer affairs ministry, the average all-India retail price of wheat was ruling at Rs 33.47 per kg and the price of wheat flour Rs 38.1 per kg on February 2.
 

On the same date in 2022, the average retail price of wheat and wheat flour stood at Rs 28.11 and Rs 31.14 per kg, respectively, the data showed.
 

FCI has commenced the sale of 2.5 million tonnes to bulk users across the country. More than 1,150 bidders participated in the e-auction, which was held in 23 states. Due to technical glitches, the e-auction in Rajasthan was held on February 2.
 

Otherwise, FCI plans to hold an e-auction every Wednesday till March 15.
 

The government said small and medium flour millers and traders actively participated in the auction because there was more demand for quantities in the range 100-499 tonnes, followed by 500-1,000 tonnes, and 50-100 tonnes.
 

Only 27 bids for a higher quantity of 3,000 tonnes were received at one go, it said.
 

Meanwhile, FCI has allocated 250,000 tonnes to institutions like Kendriya Bhandar, Nafed and National Cooperative Consumers Federation for converting grain into atta and sell it at a maximum retail price of Rs 29.50 per kg.
 

Kendriya Bhandar has started selling wheat flour at a lower rate and Nafed will do so at the same price soon in eight states.
 

Prices of wheat and wheat flour in the country have firmed up due to tight domestic supplies in the wake of a fall in output.
 

Under the OMSS policy, the government allows FCI to sell foodgrains, especially wheat and rice, at predetermined prices in the open market from time to time to bulk consumers and private traders.