NSEL to start wheat e-auction today

The Financial Technologies promoted spot commodity exchange National Spot Exchange Ltd (NSEL) is commencing auctions of Food Corporation of India’s (FCI) wheat on Tuesday for selling 15,000 tonnes from three depots in Delhi. With the threshold price as Rs 1,244.08 a quintal, the auction will continue till Wednesday.

FCI has fixed threshold price for Andhra Pradesh at Rs 1,380 a quintal, way above the current prevailing price of Rs 1,250 a quintal. The government’s grain procurement agency has also set the threshold price for Delhi at Rs 1,244.08 as against the spot market price of Rs 1,200 a quintal.

NCDEX Spot Exchange and NSEL have obtained permission to sell FCI wheat in Andhra Pradesh and Delhi respectively. The government releases excess stocks available after public distribution through an open market sales scheme (OMSS) to stabilise 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. India’s wheat stocks as at March 1 were at 18.4 million tonnes against a target of 8.2 million tonnes. 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 Rs 1,254.08 a quintal 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 Rs 1,350, they said.