FCI has a mandate to sell a total of 45 lakh tonnes of wheat under the Open Market Sale Scheme (OMSS) to bulk users till March 15, through a weekly e-auction in order to check rising prices of wheat and wheat flour (atta)
The ongoing sale of wheat to bulk consumers in the open market has started cooling down wholesale prices and hopefully in a week's time, the impact on retail prices will be visible, FCI Chairman and Managing Director Ashok K Meena said on Thursday. In the first three rounds of e-auction, Food Corporation of India (FCI) has sold 18.05 lakh tonnes of wheat to bulk consumers like flour millers. Out of which, 11 lakh tonnes has already been lifted by the bidders.
FCI has a mandate to sell a total of 45 lakh tonnes of wheat under the Open Market Sale Scheme (OMSS) to bulk users till March 15, through a weekly e-auction in order to check rising prices of wheat and wheat flour (atta). Next round of e-auction will be held on March 2. Little over 11 lakh tonnes wheat will be offered for the sale.
Speaking to reporters, Meena said: "The response to OMSS has been very good. About 11 lakh tonnes wheat has been lifted so far. Its impact is already visible in the wholesale prices which have started coming down... Retail transmission will take time. Hopefully this week, you will be able to see the dip in the retail prices."
The model wholesale prices of wheat have declined and is hovering around Rs 2,200-2,300 per quintal in most mandis now. Maximum quantity has been purchased by buyers in Southern and North Eastern region, he said. Since large number of buyers have purchased wheat in smaller quantities, wheat availability will improve. "We hope this will normalise the prices all over the country," he added.
Stating that there is no question of hoarding of OMSS wheat, FCI CMD said it is because more than 1,200 buyers participated in the first three rounds of e-auction. Maximum bidders who quoted for 100-500 tonnes, were small wholesale buyers."Moreover, small wholesale buyers cannot hoard as they do not have capabilities to preserve like the FCI. They have to process and dispose off immediately," he said.
Looking at the weighted average sale price quoted in the first and third round of auction, Meena said it clearly indicates a falling trend in wholesale prices across the country. The weighted average sale price quoted was Rs 2,474 per quintal in the first round of e-auction, while it came down to Rs 2,172 per quintal in the third auction. The difference is more than Rs 300 per quintal.
"When the price quoted in the e-auction itself has come down by Rs 300 per quintal, I would expect that market prices would have come down more than that. Nobody would quote more than what they are getting in the open market. This is an indicator for fall in prices," Meena said.
For instance in Uttar Pradesh, the highest quoted price in the first round of auction was Rs 2,900 per quintal, which came down to Rs 2,150 per quintal in the third round of auction. There has been huge reduction in prices quoted by bidders in UP, he said. In north India, wheat prices seem to be normalised very fast. In south too, downward movement has started. Prices quoted in auction have come down below Rs 2200 per quintal, he said.
"In the open market also, its impact will be visible in a week's time when lifting takes place," he added. According to FCI CMD, wherever new wheat crop arrival has started in mandis like in Gujarat and Madhya Pradesh, the offtake of wheat offered by FCI is less. It is quite indicative that supply-side management is working very well. Wherever wheat is not available, offtake is higher.
As on April 1, wheat stock with FCI would be 113 lakh tonnes. Even if entire quantity under OMSS is sold, the closing wheat stock would remain at 93 lakh tonnes, which is higher than the buffer norm of 75 lakh tonnes, he said. Wheat prices have come under pressure in the last few months due to decline in production during 2021-22 crop year (July-June) to 107.74 million tonnes from 109.59 million tonnes in the previous year because of heatwave in few states.
However, wheat production this year is projected to be a record at 112.18 million tonnes and procurement will begin from March 15 onwards.