The Food Corporation of India (FCI) is likely to conduct its first e-auction for open market sale of wheat on February 1. Food ministry sources told FE that 3 million tonnes (MT) of wheat will be offloaded in next two months from FCI stocks through weekly auctions to flour millers, state civil supplies corporations and cooperatives etc.
The FCI is likely to inform the market of depot-wise wheat sales. A base price of Rs 2350/quintal, inclusive of freight costs, has been fixed for the sale. The corporation will offer 2.5 MT of wheat through e-auction. The focus will be to offer wheat in a smaller quantity of 10 tonne per bulk buyer to a maximum ceiling of 3,000 tonne per buyer per region.
Besides the e-auction, the wheat will be offered to government PSUs, corporates, Kendriya Bhandar and Nafed under this special scheme, subject to the stipulation that the buyer will convert wheat to atta and offer it to the public at a maximum retail price of Rs. 29.50/kg.
Traders say the government’s move to liquidate wheat stock in the open market would cool down sharp spikes in prices, just around 6-7 weeks prior to arrival of new crops in the market.
The corporation had earlier stopped the sale of wheat in the open market from its stocks for the first time more than a decade in view of a sharp drop in procurement in the 2022-23 rabi marketing season and additional allocations of the grain under the free ration scheme. The FCI’s open market sales stood at 7 MT in 2021-22 and 2.5 MT in 2020-21.
Wheat prices in the key mandis of Madhya Pradesh, Haryana, Punjab and Rajasthan have hit a new record at 40% – 45% above the minimum support price (MSP) of Rs 2,015/quintal for the current season, owing to supply constraints caused by the last year’s low output. The MSP for the next season has been fixed at Rs 2,125/quintal. According to the department of consumer affairs’ price monitoring cell data, the modal retail price of wheat and flour (atta) on Wednesday rose to Rs 29/kg and Rs 35/kg, respectively, from Rs 22/kg and Rs 28/kg six months ago.