Government readies plan for massive offload of wheat in open market from October
In October, traders may face a price drop as the government plans to release about a million tonnes of wheat monthly from reserves to stabilize prices until the new crop arrives in March 2025. With official reserves at 5.5 million tonnes for auctions under the Open Market Sale Scheme (OMSS), this move aims to counteract recent price hikes driven by traders’ speculations.
Come October, traders who have been purchasing wheat at higher rates in anticipation of further spike in prices, may get a shock as the government has planned to offload about a million tonne every month from the official reserves to ensure stable prices until arrival of new crop around March 2025.
Official data of the consumer affairs ministry and agriculture ministry show that the average buying prices of wheat by traders from mandis have increased 8 per cent in July from year-ago whereas the rise in wholesale and retail prices are less than 6 per cent. “The government has earmarked nearly 5.5 million tonnes (mt) for weekly auction under open market sale scheme (OMSS) for this year, as against close to 10 mt sold last fiscal starting from June 28,” an official source said.
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Considering that the offtake was over 95 per cent in the weekly auction in which FCI was offering 0.5 mt in February 2024 as against 21 per cent offtake from the offer quantity of 0.4 mt in June 2024, the government sees marginally lower demand this year as private buyers were very active during procurement period.
“Though private trade differs with the government estimate, everyone agrees that wheat production in 2023-24 was better from 2022-23. The government procurement too fell short of target, which means a lot of wheat is inside the country since export has been banned,” the source said. Food ministry sources said that they are aware of some price rise, but mostly it was by wheat traders who are anticipating further rise.
However, if required, the government may re-introduce the uniform reserve price as currently it has been fixed at ₹2,325/quintal (fair average quality) and ₹2,300/quintal (under relaxed specifications) plus freight cost, sources said. Agmarknet data show that the average mandi price of wheat in July was ₹2,475/quintal, whereas the Consumer Affairs ministry data show the wholesale rate was ₹3,006/quintal and retail was ₹33.86/kg.
During August 1-25, the average mandi price was ₹2,522/quintal, whereas the wholesale rate was ₹3,001/quintal and retail was ₹33.52/kg. According to Agriculture Ministry, wheat production touched record 112.93 mt in 2023-24, up from 110.55 mt in 2022-23. The government had procured 26.6 mt of wheat in 2024 procurement period (April-June), against 37.3 mt target as private traders bought at higher than the minimum support price (MSP) of Rs 2,275/quintal amid two years of low production. The Centre had procured 18.79 mt in 2022 and 26.2 mt in 2023 whereas procurement was record 43.34 mt in 2021.
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