Open market wheat finds takers

Falling stocks of wheat with private traders' some weeks before the harvest season has meant that the government's open market sale scheme (OMSS) for bulk buyers is gradually finding takers, despite higher prices.

According to latest data from the Food Corporation of India (FCI), between January and June flour millers and other bulk buyers lifted 4.93 lakh tonnes of wheat against approval of 5.62 lakh tonne.

A trader from Delhi said that while the market price of wheat at present is around R1,325 per quintal, the OMSS price has been fixed at Rs. 1,282 per quintal by FCI has been fixed at R1282 per quintal. But along with the additional tax component such as 4% VAT and 2.5% market tax, the trader ends up paying R84 per quintal more for FCI wheat.

“With acute shortage of wheat supplies in the market, traders are buying OMSS wheat despite higher prices,” a Delhi trader told FE on condition of anonymity.

At present, FCI has wheat stocks of more than 19 million tonnes, which is far above the strategic reserve and buffer stocks norms. The country is expected to harvest a record wheat crop of close to 82 million tonne during next few weeks. Given that FCI and state government agencies are facing an acute storage crunch, the government had been trying to sell part of excess stocks through OMSS.

Moreover, state governments have been slow in lifting wheat stocks allocated under the OMSS' retail scheme, citing infrastructure constraints. Out of total allocation of 1 million tonnes this year, only 14,000 tonnes have been lifted by states for distribution to retail consumers.

Meanwhile, in a move to allow more time to traders to lift allocated wheat under OMSS, FCI has modified the guidelines by allowing buyers seven working days instead of seven days (including holidays) after the acceptance of tenders to take delivery of stocks. “Earlier, because of public holidays, traders had to pay holding charges in case of failure to take delivery with seven days,” an FCI official said.

FCI last year had allowed small traders to lift wheat (3 to 9 tonnes per day per depot) directly from FCI godowns.

(Source: http://www.financialexpress.com/news/open-market-wheat-finds-takers/758025/0)