The Food Corporation of India (FCI) has sold 0.38 million tonne (mt) of wheat to private bulk buyers on the second round of e-auction held on Wednesday, taking the total grain sold in open market this year to 1.3 mt.
More than 1,060 bidders participated in the second e-auction and the average price of wheat realised by FCI has been Rs 2338.01/quintal against the Minimum Support Price (MSP) of Rs 2125/quintal fixed for the next procurement season beginning on April 1.
Food ministry officials said that since the commencement of open market sale of wheat in the beginning of the month, the mandi prices of grain have declined to around Rs 2400/quintal on Thursday from Rs 2900/quintal prevailed last month.
The government is aiming to bring down the mandi prices of wheat to MSP for 2023-24 marketing season (April-June) in the next couple of weeks so that agencies get sufficient volume of grain for procurement.
A food ministry official told FE that In the next two weeks retail prices are expected to fall sharply because of improvement in supplies because of open market sale. In addition wheat crops of early varieties have started to arrive in the market in Madhya Pradesh and Gujarat which is expected to cool down prices further.
At present, the FCI has wheat stock of 13.9 mt which is above the buffer norm of 13.8 mt for January 1. As per the food ministry’s assessment, the wheat stocks held with FCI by April 1, 2023 would be a comfortable 9.7 mt against a buffer of 7.4 mt.
In the second e-auction, quantities ranging from 100-499 tonnes had maximum demand followed by 500-1,000 tonnes and 50-100 tonnes which indicates participation of small and medium flour millers and traders in the purchase of wheat from FCI stocks.
The third e-auction of wheat is likely on February 22.
Last month, the government approved sale of 3 mt of wheat from FCI’s stock in the open market till March 15 as part of its efforts to improve domestic supplies and control prices of grain and wheat flour. FCI would be selling 2.5 mt wheat through e-auctions while 0.2 mt is allocated for purchase by states and 0.3 mt is provided to institutions such as Kendriya Bhandars, NCCF and NAFED for sale without e-auction.
Inflation in wheat prices rose by a sharp 25.05% on year in January, pushing up retail food inflation to 5.94% from 4.19% reported in the previous month.
The agriculture ministry’s estimate of a record wheat harvest of 112.18 mt for the 2022-23 crop year (July-June) has given a boost to the prospects of the government’s procurement drive for next the marketing season which begins on April 1.
