The recent developments in the food grain market have showcased a remarkable upwelling in the off-take of wheat. The third round of e-auctions conducted by the Food Corporation of India (FCI) under the Open Market Sale Scheme (OMSS) witnessed impressive 42% sales of the 0.41 million tonnes of wheat on offer, marking a significant increase from the initial 21% purchase in the first round.
Increased Wheat Sales Highlight Positive Market Sentiment
An official commented, “In the e-auction held on Wednesday, 0.177 million tonnes of wheat were sold. Wheat sales witnessed a significant increase of 38%, while rice sales observed a commendable growth of 70% compared to the previous e-auction.” The wheat auction took place across various depots across the country.
Government Measures to Ensure Fair Distribution and Small Buyer Participation
The government has taken steps to control the retail prices of essential food items like rice, wheat, and wheat flour through the FCI’s weekly e-auctions. By imposing a maximum bidding quantity of 100 tonnes per entity in each auction, the government aims to ensure fair distribution and encourage the participation of small and marginal end-users. Officials believe that this strategy enables more buyers to bid for the quantity of their choice, contributing to the targeted sales volume.
Concerns Raised Over Capped Purchase Limit for Wheat
However, some traders have expressed concerns about the capped purchase limit for wheat, stating that it primarily benefits middlemen who later sell the grain at market rates. One trader, with extensive experience in the wheat trade, remarked, “Neither small attachakkis (flour mills) nor large processors are buying from FCI due to the limited purchase quantity. A roller flour mill typically requires 2,000-3,000 tonnes per month but can only buy a maximum of 400 tonnes in the e-auction.”
Market Outlook Attractive Reserve Prices Amidst Market Challenges
Despite these challenges, flour millers remain interested in purchasing wheat from FCI auctions due to the attractive reserve prices set by the government. The uniform reserve price for fair average quality (FAQ) wheat is USD 0,28 per kg, while under relaxed specifications (URS) wheat is priced at USD 0,28 per kg. In contrast, the average wholesale market price of wheat in North India currently ranges from USD 0,30 -0,31 per kg, traders have reported.
In a nutshell, the recent e-auctions conducted by the FCI have revealed a positive trend in wheat, with sales doubling within a short period. The government’s initiative to stabilize prices and encourage small buyers has yielded promising results, although concerns remain regarding the capped purchase limit for wheat. Finally, it is advisable to exercise caution and wait for the market to stabilize before making significant wheat procurement decisions.