India's Food Corp seeks government nod to sell wheat in open market

 

 

State-run Food Corp of India is looking to sell wheat from government stocks in the local market to free up storage space, which could also check a potential price rise, a senior food ministry official said Friday (July 31).

 

He said the amount for sale hadn't been decided yet but could be about the same level as March. Food Corp had earmarked 2 million tonnes for sale that month.

 

"The government is yet to make a final decision, but some quantity will be sold before the new rice crop starts coming into the market from October," said a senior food ministry official who asked not to be identified.

 

The country's wheat output in the fiscal year ended March 2009 is estimated at a record 80.6 million tonnes. Government wheat purchases from local farmers have totalled 25.2 million tonnes so far this year.

 

Two successive bumper wheat crops combined with previous imports have swelled up government stocks and state-run granaries are struggling to find storage space.

 

Despite a good crop, prices have started inching up in the local market as supplies from private millers have started drying up since the government has cornered most of the crop from local farmers.

 

Concerns over the weak monsoon rains so far this year are also beginning to weigh on local prices.

 

Local wheat prices have risen to around INR10,880/tonne (US$223.82) this week from INR10,512/tonne (US$217.93) at the beginning of the month, after touching a high of INR11,000/ton July 21.

 

"Prices will keep rising if the government doesn't sell in the local market," said Veena Sharma, joint secretary of the Roller Flour Millers Federation of India.

 

To ensure higher local supplies as faltering monsoon rains have raised concerns of a fall in the summer-sown harvest, India's farm minister Sharad Pawar said earlier this week that exports of 2 million tonnes of wheat earlier allowed through diplomatic channels will soon be banned.

 

US$1 = INR48.23 (July 31)