FCI Delhi unit begins wheat quota release

The Delhi division of Food Corporation of India (FCI) has begun the release of 32,000 tonne wheat, including the additional quota of 20,000 tonne, under the open market sale scheme (OMSS) in a bid to curb any speculative rise in commodity prices.

"We hope prices will be lower than Rs 950 per 100 kg in a fortnight, after a spiralling rise to Rs 1,055 per 100 kg in the first fortnight of January," said Asit Singh, general manager (delhi region), FCI.

The OMSS price in Delhi is Rs 844 per 100 kg compared with spot price of about Rs 990-1,000 per 100 kg.

In Delhi, FCI has sold 15,000 tonne wheat in January and another 11,000 tonne in December. Singh, however, feels the release was enough to avoid any speculative price rise. Now, in a bid to keep prices lower, FCI plans to release an additional quota of 20,000 tonne apart from the normal quota of 12,000 tonne.

Out of the January quota, 7,500 tonne was given to the roller flour mills in the state and the rest 7,500 tonne to flour mills and atta chakkis. Earlier, FCI has also sought its various state agencies to lift directly under the OMSS to curb speculative rise of wheat prices.

Further, following OMSS rates lower than the prevailing market prices, FCI will release higher quantities of wheat across country in January-February period. "In January, we plan to release about 1.5 lakh tonnes of wheat. In February, we plan to release another 1.5 lakh tonnes but the exact quantity will depend on the market situation," said , said Siraj Hussein, executive director.

The month of March, however, will see little sale of wheat as prices begin to crash in anticipation of huge harvest expected to enter market late-March onwards.

In total, FCI's country wide wheat sale under OMSS will be about 3-3.5 lakh tonnes in the January-March period. Earlier this year, in the April-December period, FCI had sold about 4 lakh tonnes under OMSS compared with 2.3 lakh tonnes last year," Hussein said.

As on January 1, FCI has a stock of 60 lakh tonne wheat. The federation releases about 9 lakh tonne for per month for the public distribution system and other government-sponsored welfare schemes.

Overall, FCI is likely to end the financial year with about 25-30 lakh tonne of wheat. From April, the wheat procurement season will also begin.

At present, the rabi wheat crop is facing the brunt of intense cold wave in North India. While cold wave till now has only benefitted the yield of wheat, agriculural experts suggest that if the cold wave continues for over the next few more days, frost may hit the yield of various winter crops like wheat, mustard and chick pea.

"Wheat prices usually peak in the first half of March with the new crop harvest likely to begin by last week of March or early April and slide down as new crop comes to market. As this peak comes, all holding onto stocks "� be it traders, stockists, flour millers or even farmers "� try to push it all into market before the new crop comes in," said an industry expert.

While the government estimates the shortfall in 2005 crop is not significant at 720 lakh tonne (compared with 721.1 lakh tonne last year), market players peg the recently harvested crop at around 690-700 lakh tonne.