FCI Wheat Auction Sees Up to $0,57/kg Price Drop After Allocation Rejig
The Food Corporation of India’s (FCI) recent e-auction for wheat under the Open Market Sale Scheme (OMSS) saw a significant dip in prices, with the highest bid price dropping by up to USD 0,57 per kg compared to the auction held on December 18. The decline comes as the government adjusted state-wise allocation quantities, maintaining the total weekly offer at 0,1 million tonnes.
This adjustment had varying impacts on the highest bid prices:
In contrast, states where allocations were reduced saw marginal price increases ranging from USD 0,02–0,12 per kg as supply became tighter.
The government’s reserve price for wheat remains at USD 0,28 per kg for fair and average quality (FAQ) wheat and USD 0,28 per kg for the relaxed specifications category. Transport and mandi taxes vary by depot and state.
Since November 27, the government has been offloading up to 2,5 million tonnes of wheat under OMSS via e-auctions, targeting flour mills, processors, and other end-users. The initiative aims to control supply dynamics and price stability until March 2025.
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Quantity Allocation Adjustments and Price Changes
For the latest round on December 26, the government redistributed the allocation, increasing quantities in eight states, including Odisha, Telangana, and Punjab, by a total of 10,700 tonnes. Correspondingly, allocations in states like Delhi, Gujarat, Rajasthan, and Kerala were reduced by the same amount.This adjustment had varying impacts on the highest bid prices:
- Telangana experienced the steepest decline, with a fall of USD 0,57 per kg.
- Chhattisgarh saw a dip of USD 0,36 per kg.
- Punjab and West Bengal reported decreases of USD 0,18 per kg and USD 0,19 per kg, respectively.
- Assam recorded the smallest drop at USD 0,09 per kg.
In contrast, states where allocations were reduced saw marginal price increases ranging from USD 0,02–0,12 per kg as supply became tighter.
Auction Performance and Market Insights
The auction saw high demand, with 99,465 tonnes sold—similar to the previous three rounds. While 14 states achieved a 100% offtake, fewer regions met full demand compared to earlier auctions. Notably, the northeastern states, which had only a 60% offtake in the first round, improved to 92%.The government’s reserve price for wheat remains at USD 0,28 per kg for fair and average quality (FAQ) wheat and USD 0,28 per kg for the relaxed specifications category. Transport and mandi taxes vary by depot and state.
Industry Feedback
Industry experts suggest further adjustments to meet regional demands. A former president of the Punjab Flour Millers’ Association remarked, “The government should increase Punjab’s allocation, as millers here heavily depend on FCI wheat. Extending the auctions until March would also stabilize the market.”Updated Policies and Processor Restrictions
The Food Ministry introduced new norms this year to prevent processors with excess stock from bidding. Processors must now submit undertakings confirming their stock aligns with their monthly processing capacity.Since November 27, the government has been offloading up to 2,5 million tonnes of wheat under OMSS via e-auctions, targeting flour mills, processors, and other end-users. The initiative aims to control supply dynamics and price stability until March 2025.
Conclusion: Navigating the Wheat Market
With wheat prices fluctuating, buyers in states with reduced allocations might consider acting quickly to secure stocks, while those in states with increased supply could wait for potential further price reductions. Monitoring future auctions and government policy shifts will be critical for all stakeholders.Click here to reach our trading platfrom CMBroker
