MUMBAI/NEW DELHI: India plans to sell wheat from its state reserves to bulk consumers such as flour millers and biscuit makers from next month, according to a government order seen by Reuters, as it seeks to keep a lid on local prices by boosting supplies.
The government has allowed the state-run Food Corporation of India (FCI) to start offering wheat from its inventories from next month at 23,250 rupees ($279) a ton, the order said, nearly 12% lower than prevailing open market prices.
FCI is yet to decide the quantity of wheat that it plans to sell on the open market. Last year, FCI began selling wheat to private players in June.
It sold a little more than 10 million metric tons in the fiscal year to March 2024, a record sale from state reserves.
Because of the attractive price at which FCI will offer the wheat from its stocks, many private players would be interested in buying the grain in large quantities, said a Mumbai-based dealer with a global trading house.
Indian wheat prices have jumped nearly 6% year-on-year. After five consecutive record harvests, a sharp rise in temperatures shrivelled the wheat crop in 2022 and 2023, pushing up prices of the staple and prompting the world’s No. 2 producer to ban exports.
Even this year’s crop is 6.25% lower than a government estimate of 112 million metric tons.
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Wheat stocks in state warehouses dropped to 29.9 million metric tons on June 1 against 31.4 million last year. India is poised to begin wheat imports after a six-year gap to replenish depleted reserves and hold down prices, Reuters reported last month.
The government in June imposed limits on wheat stocks that traders can hold, and a top government official said New Delhi might abolish or trim the import tax on the grain to allow imports to tame rising prices.
New Delhi imposes a 40% tax on wheat imports.
The reduction or removal of the tax could allow private traders and flour millers to buy from top exporters Russia and Australia.
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