Sources told FE the wheat would be sold under the Open Market Sale Scheme (OMSS) to bulk buyers and traders from September.
At the start of the month, FCI had wheat stocks close to 40 mt against the strategic reserve and buffer stock norms of 19.1 mt. At present, wheat prices are stable and traders have enough stocks from this year's crop, a senior official said.
According to Agricultural Marketing Information Network (Agmark) data, wholesale wheat prices were quoted on Monday at R1,402 per quintal at the Khanna market (Punjab) and R2,100 per quintal in the Visakhapatnam market.
However, after consultation with the finance ministry, the food ministry will move a cabinet note to seek approval for selling excess wheat stock in the open market.
The OMSS would be in operation from September 2014 to March 2015. FCI commences the wheat procurement drive for the season from April 1.
Experts said FCI must sell at least 10 mt of rice and wheat in the open market to keep prices in check, particularly when there are reports about a deficient monsoon likely impacting foodgrain production.
Sources said wheat prices under OMSS would be kept at R1,500 per quintal along with freight to the consuming locations from Punjab, the key producer of the grain.
The government has been selling wheat through OMSS in the last few years in a bid to reduce FCI's excess grain stocks.
In the last fiscal, FCI had sold 5.8 mt of wheat to bulk buyers such as flour millers under OMSS. The corporation had realised an average price of more than R1,604 per quintal for the wheat sold to private traders.
Earlier, the government had targeted selling 8.5 mt
of excess wheat stocks to bulk buyers by the end of March 2014.
In 2013-14, about 20 key consuming states such as Uttar Pradesh, Madhya Pradesh, Kerala, Tamil Nadu, Karnataka, Odisha, Bihar, West Bengal and Maharashtra were allocated 2 lakh tonne of wheat for sale to bulk buyers. Himachal Pradesh and the north-eastern states have been allotted 50,000 tonne of wheat each under OMSS.
Meanwhile, the government's foodgrains stock at the start of the month has fallen to 66 mt from 70 mt reported in the previous month. The government has rice stock of 21.2 mt, and around 6.4 mt of rice is still with the millers. The FCI has wheat stock of around 40 mt.
The total grain stocks is more than double under the strategic reserve and buffer stock norms.