India: Open market sale of wheat likely to start next month

The government is likely to commence open market sales of wheat to bulk buyers like flour millers from its buffer stock with the Food Corporation of India (FCI) next month. The move is aimed at curbing any possibility of a rise in prices in the coming festive season. Last year, the FCI had commenced open market sale operations from June and had offloaded a record 10 MT for bulk purchasers.

Traders said while the supply situation is quite adequate given the stocks there is the possibility of a spike in prices in the festive season when the demand gets a boost. At present, FCI has 25.89 MT of wheat stock against the buffer of 20.52 MT for October 1. An official note had stated that after meeting the requirement for the public distribution system and other welfare schemes, which is approximately 18.4 MT, sufficient stocks of wheat will be available to undertake market interventions, as and when required.

Sources told FE the government is keeping a close on wheat prices which have been stable over the last six months. The sales of wheat in the open market would commence once there is a possibility of spurt in price.

According to the department of consumer affairs the modal retail prices of wheat on Thursday was Rs 28/kg, which has remained at the same level in the last six months. The food ministry has allocated 2.5 million tonne (MT) of wheat for open market sales for the current fiscal from the FCI’s stocks. The FCI would start offloading wheat at a price excluding transportation at Rs 2,325/quintal . The prices are at lower than the prevailing market prices of around Rs 2,500/quintal.

“Currently wheat prices are stable, while there are some issues about supplies to southern states,” Dharmendra Jain, President, Uttar Pradesh Roller Flour Millers Associations, said.In June, the government had imposed stock holding limits on wheat for retailers, wholesalers, processors and big-chain retailers till March, 31, 2025.

Officials stated that there was no shortage of wheat in the country, the move to impose stock holding limits on the commodity would help improve supplies. Chopra ruled out lifting the export ban on wheat imposed in May 2022. “The wheat stock has at no point of time dipped below the quarterly buffer stock norms. In addition, at present, there is no proposal to alter the duty structure on imports of wheat,” according to a food ministry note earlier.

Inflation in wheat was 6.95% in July on year and due to record open market sales of wheat from the FCI stocks, inflation has been in single digit since August, 2023.

According to the agriculture ministry, wheat output in the 2023-24 crop year (July-June) is estimated at 112.92 MT.

Tags: prices, wheat, stocks, demand, FCI, Food Corporation of India, market sales, festive season