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Indian wheat prices in the auction held by the Food Corporation of India (FCI) surged ₹61/quintal in the past month as the harvesting of new crop is set to begin in another 40-45 days. The surge of ₹39 in a week has been attributed to normal course of price behaviour to align with the minimum support price (MSP) of ₹2,275/quintal.
The average selling price of wheat was₹2,234.37/quintal in FCI’s weekly e-auction on Wednesday against₹2,194.95 in the previous week whereas it was ₹2,172.94 on December 13.
With 3.78 lakh tonnes (lt) sold in last auction, FCI has so far sold 62.51 lt since it started selling wheat to augment open market availability from June 28.
‘Artificially fixed’
“As the harvesting season will start after about 40 days, it is normal course of the price trend to align with MSP, since the offered price by the government was artificially fixed in favour of consumers,” said an industry official. The reserve price of wheat in the auction at about ₹2,130/quintal is much below the economic cost of the grain which is now ₹2,703/quintal, the official said.
The all-India average retail price of wheat has jumped to ₹31.11/kg on January 9 from ₹30.95 a week ago.
For the first time, the government has been selling wheat at uniform price across the country, whereas earlier it used to be from Bhopal and Ludhiana along with freight cost, said Naresh Goel, a stockist. This one factor has contributed a lot in depressing the prices, which may cause some “market disturbance” once the open market sale ends, particularly in the southern states, Goel said. Millers in the south have to buy fresh wheat from Madhya Pradesh, Gujarat and pay the freight cost, too, he said.
For instance, in Tamil Nadu and Kerala the highest selling prices were ₹2,225/quintal and ₹2,250/quintal, respectively, on January 10 auction. However, in Karnataka, the highest price was ₹2,780/quintal due to depot-wise availability vis-a-vis demand. Millers in Karnataka had bid for 11,150 tonnes, but received 10,500 tonnes, while the total offer was for 12,000 tonnes.
100% offtake in North
The maximum 3,500 tonnes in the State was offered and sold from Bangalore-silo Malur (in loose/bulk without gunny bags) for which FCI received bids for 3,610 tonnes in the last auction. The highest price in Karnataka was also for the wheat from Bangalore-silo Malur.
While comparing the average selling prices, north India emerged with highest ₹2,260/quintal in which Haryana, Uttar Pradesh, and Rajasthan have reported nearly 100 per cent offtake. While millers in Haryana have been allocated entire 33,000 tonnes offered, FCI sold 57,970 tonnes out of 58,000 tonnes offered and in Rajasthan 32,950 tonnes out of 33,500 tonnes.
The highest winning bid price in Uttar Pradesh was ₹2,540/quintal, in Haryana ₹2,450/quintal and in Rajasthan ₹2,405/quintal.
In the weekly e-auction, the government has been offering maximum 250 tonnes each to one processor in a State to ensure maximum distribution happens without getting accumulated at a few hands.