Govt bars traders in wheat auction, lowers quantity in next round
The government has barred traders from participating in the next round of the online wheat auction, scheduled for July 19, after realizing that the open market selling policy only helps middlemen, and there has been no apparent drop in retail prices for which the scheme was initiated. There is also a significant drop in the quantity offered for sale from 4.18 lakh tons (litres) in the last round to 1.83 litres now.
An official said that the quantity had to be reduced because a large section would not participate, after there was a 56 percent reduction in the wheat offered for sale in the fourth round of the electronic auction. The current bid is based on the buying we saw at last week’s auction. So far, the government has sold 3.93 liters of wheat since June 28 through the weekly online auction. On June 12, Food Minister Sanjeev Chopra announced a plan to sell 15 liters of wheat from Central Pool stocks in the first phase and said it would be increased if necessary.
Rising prices
The main objective of selling on the open market is to increase the availability of grain and reduce its price in the retail market. While the sale was on the rise in each round of the previous auction, prices began to rise. The purchase of wheat amounted to 21 percent in the first round and 42 percent in the third round of the auction.
According to data maintained by the Ministry of Consumer Affairs, the average retail price of wheat in India in June rose to $31.67/kg from $31.27/kg in May and now the average retail price this month has risen to $31.99/kg. similarly, atta The prices were USD 36.42/kg in May, INR 36.95/kg in June and INR 37.16/kg during July 1st-14th.
“A change in the guidelines was necessary after the results of the third round showed an increase in the average rate despite claiming that actual user participation would be allowed through a cap requirement at 100 tonnes. Unless the government addresses the core issue of increasing Physical availability in the market more realistically, not through police methods such as inventory limit, prices may not be contained.
The average price sold in the third round of FCI’s online auction was over ₹2,150/quintal, while during the previous two rounds the prices were ₹2,136 and ₹2,137.
Traders said there appeared to be a scarcity in the market as the highest selling rate of $2,245/quintal was reported from Uttarakhand, a wheat-growing state. Even at $2,170/quintal in Uttar Pradesh and $2,189/quintal in Rajasthan, the rates were higher compared to consuming states like Kerala, Karnataka or Tamil Nadu, traders said.
Trade sources said Yadav Foods offered to buy at $2,285/quintal from FCI’s Haldwani warehouse in Uttarakhand, the highest price among all states. Even in Delhi, as many as 65 out of 90 successful participants offered to buy wheat at 2,200/quintal or more. But traders said the allocation in the fourth round to Uttarakhand was cut by half in the last round while the same amount was maintained in Delhi.