Wheat Prices Witness Surprising Decline
In the latest round of the Center’s Open Market Sale Scheme (OMSS) weekly e-auction, there was an unexpected drop in wheat prices that caught both the trade and industrial sectors off guard. This downward movement is attributed to the Center’s announcement of releasing an additional 5 million tonnes of wheat into the market, coupled with an expanded allocation. The average price achieved during this auction was approximately $0,29 per kg, marking a significant decrease from the previous week’s valuation of around $0,30.
Successful Procurement Figures and Regional Trends
Out of the total offered wheat quantity of 2.06 million tonnes, an impressive 1.52 million tonnes were successfully sold, constituting an accomplishment of about 74 percent, according to official sources. This current round of wheat acquisition ranks as the second-highest within the ongoing year’s sequence that commenced on June 28, as confirmed by an authoritative source. The previous peak occurred on July 12, involving the procurement of 1.77 lakh tonnes with an offered quantity of 4.18 million tonnes, which also included participation rights for traders.
The prevalent trend across different states reveals a consistent pattern: a significant reduction in the maximum bid price. For instance, the highest bid price which stood at around $34.85 in West Bengal during the preceding week plummeted to about $32.60 in the current round. This trend is mirrored across various regions. Notably, the most substantial price reduction, amounting to approximately $0,46 per kg, was observed in Delhi, where the bid price decreased from around $33.44 to approximately $28.84.
Geographic Price Variations and Market Dynamics
Diverse states display variations in quoted wheat prices, with Maharashtra experiencing a decline from about $36.31 to around $33.28, Assam witnessing a decrease from approximately $35.15 to about $32.37, Madhya Pradesh seeing a drop from about $34.09 to approximately $30.91, Jharkhand undergoing a decline from around $33.85 to about $31.20, Rajasthan facing a decrease from roughly $33.54 to about $29.96, and Uttarakhand observing a reduction from around $31.99 to about $29.04. Odisha, however, bucks the trend with prices rising from around $32.42 to about $32.62.
Considering the market dynamics, prior speculation suggested that prices might experience a decrease if the government increased the offered quantity, a measure aimed at preventing unnecessary inflation of bidding rates by participants. The Food Corporation of India (FCI) effectively doubled the offered wheat quantity in the ongoing cycle, surging from 1.09 million tonnes in the previous cycle to the present 2.06 million tonnes. This strategic adjustment aims to stabilize prices and promote fair competition.
Hence, the recent unexpected drop in wheat prices, driven by increased supply and regional bid variations, presents both opportunities and considerations for potential wheat procurement decisions. It might be advantageous to take advantage of the current lower prices. The increased supply due to the additional wheat release and the higher allocation could be contributing to the price decline.