Wheat prices down 10% in 7 days on selling FCI wheat in open market

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New Delhi: The government on Friday said wheat prices have fallen more than 10 percent in the past week following its decision to sell the grain in the open market to check rising prices.

State-run Food Corporation of India has so far sold 9.2 lakh tonnes of wheat to bulk users at an average rate of Rs 2,474 per quintal on the first two days of the e-auction held this week.

Recently, the Centre decided to offload 30 lakh tonnes of wheat from the buffer stock in the open market under the open market sale scheme (OMSS).

Out of which 25 lakh tonnes will be sold to bulk consumers, and flour millers, 3 lakh tonnes to institutions like Nafed, and the remaining 2 lakh tonnes to state governments.

“The e-auction has already left an impact of a fall in market prices of wheat by more than 10 percent in the past 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 in the market, it said.

As per 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 was at 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 per kg and Rs 31.14 per kg, respectively, the data showed.

FCI has already commenced the sale of 25 lakh tonnes of wheat to bulk users across the country. It has sold 9.2 lakh tonnes of wheat at an average rate of Rs 2,474 per quintal through e-auction on February 1-2, generating Rs 2,290 crore, the statement said.

More than 1,150 bidders participated in the e-auction held in 23 states. Due to technical glitches, the e-auction in Rajasthan was held on February 2.

Otherwise, the FCI plans to hold a weekly e-auction every Wednesday for the sale of wheat 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 of 100 to 499 tonnes, followed by 500-1000 tonnes and 50-100 tonnes.

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

Meanwhile, the FCI has allocated 2.5 lakh tonnes of wheat to institutions like Kendriya Bhandar, Nafed, and NCCF for converting the grain into atta and selling at a maximum retail price of Rs 29.50 per kg.

Already, Kendriya Bhandar has started selling wheat flour at a lower rate and cooperative Nafed will start selling at the same rate soon in eight states.

Wheat and wheat flour prices in the country have firmed up due to tight domestic supplies in the wake of a fall in domestic 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. The purpose is to boost the supply during the lean season and moderate the general open market prices.

The Centre had banned wheat exports in May last year to control rising prices, after a slight fall in domestic production and a sharp decline in the FCI’s procurement for the central pool.

India’s wheat production fell to 106.84 million tonnes in the 2021-22 crop year (July-June) from 109.59 million tonnes in the previous year due to heat waves in a few growing states.

The procurement fell sharply to 19 million tonnes this year from around 43 million tonnes last year.

The area under wheat crop in the current rabi (winter-sown) season is slightly higher. The procurement of new wheat crops would commence on March 15.

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