Wheat processors pick 42% of wheat offered in FCI’s first tender

Domestic wheat prices, which had crashed by more than 6% last week after the FCI’s announcement that it would be selling the grain in the open market, are expected to decline further after the movement of wheat from the FCI warehouses starts, said wheat processors.

The FCI had announced on January 25 that it will sell 30 million tonnes of wheat under the open market sales scheme (OMSS) to cool down wheat prices in the open market. ET had reported on January 25 that the record wheat prices in the open market could make farmers turn away from selling wheat to FCI, thus affecting its procurement operations.

“Out of the 22 lakh tonnes of wheat we had offered in our first tender issued last week, 9.26 lakh tonnes of wheat have been successfully bid for by the buyers,” FCI chairman Ashok KK Meena told ET.

India is facing a shortage of wheat after a heat wave in the country contracted output in the 2022 rabi season. Exports and private buying have not left enough wheat for government procurement, say traders.

“We expect the lifting of the wheat to begin from next week. With every tender that we will issue in the coming weeks, we expect the market to cool down further,” said Meena.

Wheat prices, which had fallen sharply in the previous week on the news of OMSS, have remained firm at those levels. With FCI’s wheat yet to reach markets, the pipeline is dry at most places.”Wheat prices have remained stable at around Rs 28/kg in West Bengal since last week. We expect the prices to move downwards in the coming weeks,” said Rohit Khaitan, a wheat processor from West Bengal. “Along with FCI wheat, there will be a gradual build-up of the pressure of the wheat from the upcoming harvest”

Wheat prices in eastern India are normally higher than in the northern parts due to the additional cost incurred in transporting wheat from the growing centres.

Millers said that at most places, bids for wheat have been Rs 50-70/quintal over the reserve price. Some traders claimed that the quality of wheat offered by FCI is not up to the mark. At most places, FCI has offered wheat from the 2021-22 procurement. “It is always the ‘first-in first out’ policy,” said Meena.