Government selling wheat to millers as prices rise over 8% in 2 weeks

By Jayashree Bhosale

Prices of wheat-a big part of the cereals group that carries the highest weightage in the Consumer Price Index (CPI) food basket-have surged more than 8% in a fortnight, raising fresh inflation worries. Wheat prices have breached ₹32-33 per kg in wholesale trade for only the second time ever, the last being two years ago, trade insiders said.

The government has been selling wheat to the flour millers to rein in the prices. However, these trades are priced up to ₹600/quintal above the base price offered by the Food Corporation of India (FCI) in its tender for sale, trade sources told ET.

“The wheat prices surged to their highest level of this season as the government tender was awarded at higher rates,” said Rahul Chauhan, director at agri commodity market research firm iGrain India. “However, they declined this week due to profit booking,” he added.

Industry expects the government to increase the quantities of wheat being sold in the open market through the Open Market Sales Scheme (OMSS) to suppress the prices. “As the sowing of wheat is perfect and weather is favourable, the industry expects the government to increase allocation in OMSS,” Chauhan said.

But many are concerned about limited supplies. The wheat processing industry, which makes atta, suji, maida, etc, said the prices are rising as the government is not holding sufficient stock of wheat.

Millers expect the prices to stay high until fresh harvest begins in late February. At present, FCI is selling 100,000 tonnes of wheat per week through OMSS tenders.

This article has been republished from The Economic Times.