The government’s offer to sell 1 lakh tonnes (lt) of wheat from official reserves in the first round of weekly e-auction under the Open Market Sales Scheme (OMSS) witnessed 1,501 processors successfully bidding for 98,700 tonnes of the grain, The tender floated by the Food Corporation of India (FCI) showed that the price-sensitive commodity market was waiting for the sale given the high market rates.
“It is not that the supply chain is dry. The millers are scared to hold stock when prices are on rise and that is the reason such huge participation has been noticed in the first round of auction. There will be more participation as the weekly auction progresses,” said a flour miller from a southern State.
Sales at MSP plus transport
According to the results of the e-auction, held December 4, out of 23 States/regions where bidding happened, 16 States saw 100 per cent offtake while 5 States witnessed between 95 and 99 per cent sale. In Tamil Nadu, 86 per cent and in the North-East region 60 per cent of the wheat on offer was sold.
Sources said that for the top 11 consuming States, the government had offered 75.5 per cent of the total 1 lt and as many as 1,137 bidders were successful in buying 74,900 tonnes. The demand for FCI wheat is only due to price as it has offered to sell at the minimum support price (MSP) plus transport and taxes.
The Food Ministry in the OMSS policy has fixed the reserve price at ₹2,325/quintal for fair and average quality (FAQ) and ₹2,300/quintal for the category under relaxed specifications (URS) excluding transport and taxes. But, the reserve price for each depot in the States are different as the government has added the transport cost (from procurement point to depot) and mandi taxes.
New norms
The government has introduced some new norms this year in OMSS wheat with the objective of keeping the processors out of the tender process if they have “excess stock”. Each bidder has to submit an undertaking saying he does “not have wheat stocks over and above” his monthly processing capacity (on the basis of weekly wheat stock declaration on the WSMS portal).
Further, it has stipulated that while mentioning the monthly processing capacity of the unit in the declaration, the bidder has to submit an undertaking “not to bid for and lift stock in excess of” his monthly capacity.
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According to the results, the highest price at which wheat has been sold has come from Assam at ₹3,219/quintal, followed by ₹3,162 in Jammu and Kashmir (highest price in the State), ₹3,161 in West Bengal, ₹3,160 in Punjab and ₹3,122/quintal in Odisha.
The highest bid price in Rajasthan was ₹3,062/quintal, in Haryana it was ₹3,020, ₹3,010 in Bihar, ₹2,981 in Delhi and ₹2,931 in Uttar Pradesh. On the other hand, the highest price in Karnataka was ₹2,827 and in Tamil Nadu ₹2,730.
Among other States, FCI is offering 14,000 tonnes in Uttar Pradesh, 12,500 tonnes in Punjab, 7,000 tonnes in West Bengal, 6,500 tonnes in Assam, 5,500 tonnes in Delhi, 4,000 tonnes in Madhya Pradesh and 3,000 tonnes each in Jharkhand and Tamil Nadu.
On November 27, the Food Ministry announced allowing FCI to offload 25 lt of wheat in market under the Open Market Sales Scheme through e-auction to flour mills and other manufacturers of wheat products, processors and end users by March 31, 2025.
