Food Corp of India (FCI) will begin electronic auctions of wheat from March 16, using National Spot Exchange Ltd. (NSEL) platform under the open-market sales scheme, the company said in a statement March 15.
The government releases excess stocks available after public distribution through an open-market sales scheme (OMSS) to stabilize prices every year. Part of this will now be sold electronically by FCI.
“Electronic platform provided by NSEL will be used for selling wheat stocks,” state-run FCI said in the statement without giving any details about amount to be auctioned.
India had a bumper wheat crop in the last season and swelling stocks are forcing state-owned distribution firms to explore OMSS plans and exports, analysts said.
The company, which procures food grains from farmers and sells it across the country had been trying to use the electronic platform provided by NSEL and rival NCDEX Spot to sell grains under the OMSS.
India’s wheat stocks as at March 1 were at 18.4 million tonnes against a target of 8.2 million tonnes, government sources said on Monday.
“FCI has become a member on our platform…after the first auction process which begins on March 16…there may be another auction on March 22 and 23…,” said Anjani Sinha, managing director and chief executive of NSEL.
The electronic auction of wheat under OMSS is happening for the first time in India.
FCI may not be able to offer large quantities of wheat at this time around as the arrivals are to begin and prices are already lower, analysts said.
FCI had earlier planned an e-auction of 500,000 tonnes of the grain, but may offer a lower amount, trade and analysts said.
The price offered by FCI is 1,254.08 rupees per 100 kg which is almost near the market prices, analysts said. The e-auction would have been very effective a month or two ago when prices were ruling over 1,350 rupees, they said.