Wheat prices unchanged

Post Source: Economic and Business Review

WHEAT prices remained unchanged at 2630 per tonne in the wholesale market during the week ending December 3 on news that the government has allowed export of surplus wheat by the private sector. The Punjab government had been suffering Rs2.5 billion losses per month as storage and interest payment on 6.1 million tonnes surplus wheat for quite some time. Flour millers said they had asked the government to provide them $100 per tonne subsidy on export of wheat flour and its other products instead of allowing export of wheat. But this did not happen.

“International wheat prices are hovering around $275-$300 per tonne. I fear Pakistan would not be able to sell its surplus wheat at these prices,” said Mr Bilal Sufi, a central leader of All Pakistan Flour Mills Association.

“In Sindh and Punjab government wheat prices are Rs975 and Rs1000 per 1000 kg respectively which come close to $275 per tonne. When you start exporting wheat the cost of exportable wheat, after grading and processing, would rise to $325-$335 per tonne. I wonder how our exporters would compete in the international market.” A trader in Jodia Bazar said wholesalers were aware of this fact and that was why wholesale prices of wheat did not rise after the market got news of the government decision to allow export of wheat. “Besides, wheat exports would be allowed up to two million tonnes only and the country has at least five million tonnes of surplus wheat at the moment. So, I don’t see wheat prices rising even if exports start and even amidst a somewhat increased demand in winter,” the trader said.

Earlier, the government had allowed export of wheat flour up to 200,000 tonnes but flour millers have not exhausted this quota so far. “The reason is, wheat flour market in Afghanistan has been captured by India, Russia and World Food Programme,” said Mr. Bilal Sufi.

A leading exporter of wheat flour Mr. Akhtar Hussain said his company and another Lahore-based company had successful experience of exporting wheat to a number of countries other than Afghanistan. “But we have found that unless we get $100 per tonne subsidy on such exports we cannot earn enough margins to keep our exports going.”

“All Pakistan Flour Mills Association has long been demanding a subsidy on export of wheat flour and wheat products. If the government meets our demand, it would get enough taxes on processing of wheat into wheat flour and other products and unemployed labour would also be absorbed in this business.”

During the week ending December 3, wholesale sugar prices remained stable. Mr Farid Qureshi, General Secretary of Karachi Retail Grocers Group, said they were getting low-quality sugar imported by TCP and offloaded onto the market at Rs6800/per 100 kg and were selling the same at Rs72 per kg, as per the agreement reached with the local government.
But he admitted that retail price of domestic sugar is still Rs90 and even more in some places because it’s wholesale price is Rs8400/100 kg.

After skyrocketing to Rs100-120/kg for some weeks during last month, sugar prices eased across Pakistan and more notably in Sindh after the authorities took over thousands of tonnes of the commodity hoarded by speculators and after TCP was asked to offload imported sugar to ensure its sale at Rs6800/100 in the wholesale market.

Wholesalers said prices of sugar could have eased further had sugar mills in Punjab would also have started full-scale cane crushing. They said almost all sugar mills of Sindh have started cane crushing but many of them that have begun the process only after Eidul Azha are producing much lesser than the others. And in Punjab, not all sugar mills have even begun cane crushing because of a row between them and growers over price of sugarcane.

A Jodia Bazar trader said, during the week ending December 3, cooking oil prices went up in line with higher international prices and on increased demand in winter. The price of a 16-kg tin of cooking oil gained Rs100 to close at Rs2400. He said cooking oil prices might show little increase in coming weeks provided international prices remain stable. He said that prices of pulses particularly of gram pulse firmed up further ahead of Muharram. Pulses especially gram pulse is used in preparing Haleem—the traditional dish of Muharram mourners.

He also said that prices of tea and powdered milk remained almost unchanged during the week ending December 3 but those of dry fruits kept moving up on increasing demand as weather turned chillier.

“Prices of dry fruits are sharply up during this winter not only because of the usual high demand but also because of lower supplies from the flood-affected areas of Khyber Pakhtunkhwa where normal trading activity is also marred by ongoing anti-militant drive. Farid Qureshi said a build-up in demand for dry fruits ahead of Muharram was also driving their prices up.
—Mohiuddin Aazim

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