Government Reduces Wheat Allocation for Weekly Auction as Millers Face Open Market Shortages

The government has reduced the overall wheat allocation for sales in the weekly auction, scheduled for October 28, by 5,000 tonnes to 1.01 lakh tonnes (lt) compared to the previous tender. This reduction comes even as processors and millers scramble to buy the grain at over ₹3,100 per quintal in many states, while the all-India average wholesale price currently stands at ₹2,910 per quintal.

According to industry sources, millers have suggested that the government progressively increase the quantity offered in weekly auctions due to stressed open market availability. With open market supplies constrained, millers have grown heavily dependent on the Food Corporation of India (FCI) for their stock.

“It seems there is not as much wheat in the market as was earlier thought and hence, the millers wanted to buy as much as they could from the government auction,” said Dharmendra Jain, President of the Roller Flour Millers’ Federation of India. He reiterated the Federation's suggestion for the government to increase auction quantities.

In bids floated by FCI state offices across Assam, Odisha, Telangana, Andhra Pradesh, Karnataka, Rajasthan, Gujarat, Bihar, and Kerala, the allocation for the latest round is approximately 11,900 tonnes lower than the October 21 auction. While Odisha saw a reduction to 3,500 tonnes after millers bought only 3,050 tonnes out of 6,000 tonnes offered previously, industry participants note that similar reductions do not align with demand in other states.

Millers in states such as Assam, Karnataka, and Telangana have questioned the rationale behind lower allocations despite near-total offtake in prior rounds. In Assam, millers purchased 7,940 tonnes out of 8,000 tonnes offered; in Telangana, 3,460 out of 3,500 tonnes were bought; and in Karnataka, 5,430 out of 6,000 tonnes were cleared. Despite this high demand, the new allocation has dropped significantly to 5,000 tonnes for Assam, 1,000 tonnes for Telangana, and 5,000 tonnes for Karnataka.

Conversely, states including Maharashtra, Chhattisgarh, Himachal Pradesh, West Bengal, Jharkhand, Tamil Nadu, Madhya Pradesh, Uttarakhand, and Punjab witnessed a combined increase of 6,450 tonnes compared to October 16 allocations. Punjab received the maximum allocation of 25,000 tonnes, up from 23,000 tonnes previously, backed by 204 successful processors and millers bidding between ₹2,861 and ₹3,065 per quintal. A total of 8,970 tonnes of wheat were sold at ₹3,000 per quintal or higher to 72 buyers in Punjab.

Industry representatives have also called for structural changes in how quantities are distributed. Naresh Ghai, President of the Roller Flour Mills Association of Punjab, stated that offered quantities at individual depots should reflect local mill concentration rather than a flat cap of 500 tonnes per week. He noted that Ludhiana, which accounts for 20 percent of Punjab's flour milling capacity across 18 mills, receives the same allocation as depots with lower demand. Ghai suggested raising Punjab's weekly allocation to 40,000 tonnes and noted zero arrival of wheat in the state's mandis, adding that he does not foresee any easing of wheat prices.

Data shows that the FCI held 479.92 lt of wheat stock as of September 1, the highest for that date in the past five years, compared to 517.87 lt on September 1, 2021. The government procured 357.57 lt of wheat in the 2026-27 season, up from 299.75 lt in the previous marketing season. India's total wheat production for the 2025-26 crop year reached a record 120.66 million tonnes, compared to 117.95 million tonnes in the preceding year.

"The dynamic between central stock levels and regional open market availability highlights the complexities of supply chain management in the agricultural sector. While overall procurement and FCI reserves remain strong, localized discrepancies in auction allocations can create short-term supply pressures for processors. Aligning distribution caps with regional milling capacities and actual demand will be essential for stabilizing wholesale prices and supporting processors navigating tight open market conditions." — Dr. Shishir Gupta, Founder & CEO, StartupLanes