November 7, 2009

India may reduce price of wheat for sale in open market

India's federal government may lower the price of wheat being sold from its stocks in the open market to boost sales to bulk consumers, the Financial Express newspaper reported Friday (Nov 6).

The government in late October offered to sell 500,000 tonnes of wheat from its reserves to bulk consumers, which was priced above market rates. Wheat futures touched an all-time high last week following the move.

In the nation's capital, New Delhi, the sale price of wheat from government stocks is around Rs1,400 per 100 kilogrammes, while in the southern state of Kerala, it's around Rs1,780/100 kg.

These prices are much higher than the prevailing retail prices, so the government is planning to lower prices in order to attract more customers.

"The basic idea behind the new formula is to reduce the cost of wheat by Rs150-Rs300 per 100 kg, which will make it attractive for bulk buyers," the report quoted a government official as saying.

The food ministry is expected to present its proposal to a group of ministers at a meeting November 12, the report said.

Besides sales to bulk consumers such as flour mills, the government will sell another one million tonnes to states between October to December.

US$1 = Rs46.8135 (Nov 7)