Drastic Reduction in Stock Limits

21-Feb-2025 11:05 AM

Drastic Reduction in Stock Limits
★ To ensure sufficient availability of wheat, the stock limit has been reduced by 75%, capping it at a maximum of 250 tons for traders, down from the previous 1,000 tons.
★ This order has been implemented with immediate effect, and traders have been instructed to reduce any excess stock within 15 days. The revised stock limit order will remain in effect until March 31, 2025.
Key Points:
- The stock limit for traders/wholesalers has been reduced from 1,000 tons to 250 tons.
- Retailers and large chain stores are now allowed to hold up to 4 tons of wheat, down from the previous 5 tons.
- Processors will be permitted to stock 50% of their Monthly Installed Capacity (MIC) until April 2025.

Reasons for the New Order:
- Sudden increase in wheat prices in FCI e-auction: On February 19, the highest bid for wheat in Uttar Pradesh reached Rs. 3,159/quintal, while the lowest was Rs. 2,958/quintal.
- Mandatory stock registration and updates: All wheat-storing entities must continue registering on the stock limit portal and update stock status every Friday.
- Legal action for violations: Those violating storage limits will face action under Sections 6 and 7 of the Essential Commodities Act, 1955.
★ Market Impact: I-Grain India predicts that traders may increase wheat sales to comply with stock limits, potentially impacting prices.
★ Government Stance on Wheat Imports: The government is currently not inclined toward wheat imports. However, if prices remain above MSP, it may affect government procurement. Given the current stock situation, the government will likely aim for maximum procurement.
★ Upcoming Developments: The wheat market is expected to be highly dynamic.
★ Impact of State Bonuses: The bonus offered in two states may influence procurement in other states. If prices drop in these states, farmers may prefer selling to government agencies, increasing private purchases in other states.