The Food Corporation of India's (FCI) open market sale of wheat for the current year has commenced. The corporation on Friday approved sale of more than 36,000 tonne in the open market to bulk buyers such as flour millers, traders and food companies through its first weekly e-auction.
Sources told FE that 14,000 tonne of wheat was approved for sale in Karnataka while other major bids received were from Madhya Pradesh (3,500 tonne), Haryana (3,350 tonne), Tamil Nadu (2,000 tonne) and Goa (2,000 tonne)
FCI will operate the weekly auction till end of the March 2015 for selling 10 million tonne (mt) of wheat through the Open Market Sale Scheme (OMSS).
Sources said the bids received for wheat sale exceed the reserved price of R1,500 per quintal plus freight cost to the consuming locations.
Besides, the buyers would have to pay 5% extra on the base price for new wheat crop (2014-15 season) whose procurement by agencies ended in June.
Last month, the cabinet had approved sale of 10 mt of wheat from FCI stocks under the OMSS. FCI had wheat stock of around 40 mt at the start of July and the grain stock is more than double under the strategic reserve and buffer stocks norms.
The wheat would henceforth be sold under OMSS through weekly e-auction to bulk buyers at 20 locations, while traders can buy on 'dedicated movement basis' from the depots of state government-owned agencies of Punjab, Haryana and Madhya Pradesh. The auction is being done on the NCDEX spot exchange platform. The move is expected to keep wheat prices under control in the coming festive months.
The government has uploaded excess wheat stock in the open market to bulk buyers during September -April in the last couple of years.
In the last fiscal, FCI had sold 5.8 mt of wheat to bulk buyers while the government had set a target of 8.5 mt of grain to be sold under OMSS.
The corporation had realised an average price of more than R1,604 per quintal for the wheat sold to private traders from the total sell earning of R9,310 crore.
The governments move to sell wheat in the open market comes at a time when wholesale prices have started to move up marginally across the country. FE was first to report about 10 mt of wheat under OMSS last week.
In a bid to fight inflationary trends, the government last month announced allocation