Wheat Sales in Open Market End as New Crop Arrives, Prices Remain High

The Indian government has wrapped up its open market wheat sales for this year, deciding not to float any new tenders as the new crop begins to arrive. The Food Corporation of India (FCI) sold 2.97 million tonnes of wheat out of the 3 million tonnes offered through its e-auction, which started on December 4, 2024. This is much lower than last year's nearly 10 million tonnes sold under the same scheme.

E-Auction Highlights and Price Movements

The weekly auction started with an offer of 100,000 tonnes and gradually increased to 0.5 million tonnes. During the auctions, the maximum purchase cap for processors went up from 100 tonnes to 400 tonnes, but traders were not allowed to participate.

At the last auction on March 5, several states saw changes in wheat prices:

• Uttar Pradesh, Karnataka, West Bengal, Assam, and Haryana: Prices increased by USD 0,001-0,018 per kg
• Tamil Nadu, Telangana, and Kerala: Prices rose by USD 0,001-0,007 per kg

The highest bid prices varied across the states:

• Madhya Pradesh: USD 0,30 per kg
• Uttarakhand: USD 0,36 per kg
• Jammu and Kashmir: USD 0,39 per kg

Haryana saw a significant drop in prices by USD 0,07 per kg, settling at USD 0,35 per kg. In Punjab, prices fell by USD 0,01 per kg to USD 0,34 per kg, and in Bihar, the drop was USD 0,002 per kg to USD 0,35 per kg.

Procurement Challenges Ahead

With wheat prices currently above the Minimum Support Price (MSP) of USD 0,29 per kg in producing states, the government might find it difficult to meet its procurement target of 31 million tonnes for the current crop year. Last year, the government procured only 26.61 million tonnes against a target of 37.3 million tonnes. The record procurement of 43.34 million tonnes in 2021-22 seems hard to replicate, especially with strong competition from private traders.

Wheat Price Snapshot by State

What to Watch

The government hopes to boost procurement with the help of MSP bonuses announced by Madhya Pradesh and Rajasthan. However, with private traders likely to be active buyers, it could be a challenge to meet this year's ambitious procurement target.