NSEL ready for second FCI wheat auction

Pan-India spot commodity trading platform, the National Spot Exchange (NSEL), is planning a second round of wheat auction by Food Corporation of India (FCI) early next week, under the open market sale scheme (OMSS).

The first auction on March 16 for three centres in Delhi (Mayapuri, Narela and Ghevra) evoked satisfactory response with NSEL managing to sell 1,200 tonnes of wheat despite a premium. Anjani Sinha, managing director of NSEL, said, “The performance was as expected.”

In the spot market, fair average quality of wheat is traded at Rs 1,225 per quintal and the auction price is Rs 1,244 per quintal.

Considering that a period of two or three days is required for settling trades on an exchange platform, NSEL will be able to conduct a maximum of three auctions within the stipulated period of March 31.

To create space for the next harvesting season, FCI had allowed two private spot commodity exchanges to sell the agency’s wheat stock of 15,000 tonnes each. While NSEL — promoted by Financial Technologies (India) (FTIL) — immediately conducted its first auction, NCDEX Spot Exchange, promoted by the National Commodity & Derivatives Exchange, sought changes to certain clauses in the contract notes.

An exchange official said a change in government guidelines was a time-consuming job and there was a high chance of missing the deadline this year if the sale was not extended beyond March 31.

NCDEX Spot Exchange differs on the “unlimited liability clause” which exchange officials believe might affect future business interests. But, the exchange is believed to be ready with all other pre-requisites.

Food and Agriculture Minister Sharad Pawar had hinted that a scarcity of adequate storage facility — both in the government and private sectors — may lead to distress sale by farmers and would adversely affect the community.

Currently, the government is holding about 16 million tonnes of wheat stocks — four times the mandatory buffer norm of 4 million tonnes. Total production in the new season is estimated to surpass all previous records to around 82-83 million tonnes.