With wheat prices reaching a record high, the government may be looking to sell wheat in the open market in an effort to bring down prices. After wheat prices reached a record high of Rs 2,915 per quintal in markets in Delhi, the Central government will be selling wheat in the open market through the Food Corporation of India (FCI) in order to bring down prices, sources told CNBC Awaaz.
With the end of the food grain disbursal under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) from December 31, the Food Corporation of India is expected to have a surplus of food grains like rice and wheat. The government had sharply cut down its sale of wheat and rice under its Open Market Sale Scheme as extreme weather had caused poor harvests for both crops in the previous year.
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Despite bans on the export of wheat, wheat farmers have found it more lucrative to sell to exporters as the supply situation has remained poor. Due to the heatwave in the summer months, the government was only able to procure 18.7 million tonnes compared to 43.3 million tonnes in the previous year. The Russian invasion of Ukraine also meant that Indian wheat had a higher demand in global markets creating further supply-side pressure on price before the export ban was enforced. While the government was still able to maintain its buffer stock of wheat, the central stock of wheat was down by more than half compared to the previous year in October 2022.
With the government expecting a good harvest in the winter season, the FCI could be offloading wheat through its open market scheme by selling the grain to small traders at a price of Rs 2,250 per quintal, sources told CNBC Awaaz.
The government had earlier suggested that it would begin offloading wheat in January after easier procurement in December due to better harvests in the winter season.
(Edited by : Sudarsanan Mani)
