Flour millers rule out major fall in prices: Exporters fear losses
By Aamir Shafaat Khan
KARACHI, May 25: Despite recent ban on export and a bumper wheat crop this year, flour millers have ruled out any substantial decline in prices.
On the other hand, exporters fear a loss of $135 million against their already booked orders after the government decision of suspending wheat export aimed at checking rise in local flour prices.
The ban has resulted in reversal of wholesale wheat rate in the market. However, millers say that flour rates will witness stability and definitely not rise from the current levels.
The government soon after the ban has allowed the shipment of 1,100 containers carrying 20,000-25,000 tons of wheat to their respective destinations.
However, the exporters are more concerned over letters of credit (LCs) in hand for over 600,000 tons export shipments at a price of $225 per ton to mainly Far Eastern and African countries.
Foreign buyers are now really irked over the government’s sudden U-turn on wheat export policy, a member of Wheat Exporter Association of Pakistan (WEAP), who asked not to be named, told Dawn.
He said that a delegation of the association soon after the government decision had met the senior officials of the Ministry of Food, Agriculture and Livestock (Minfal) on Thursday but they did not respond positively.
However, the officials had asked the exporters to provide details of LCs to the ministry by Saturday (today), he informed.
“The government should allow shipment of over 600,000 tons of wheat for which deals were already done with foreign buyers. Otherwise the exporters will suffer heavy losses as this decision has definitely created uncertainty in the minds of buyers about supplies, besides raising credibility issues,” he said.
Exporters have so far successfully shipped 366,000 tons of wheat in the last two and a half months mainly to Far Eastern and African countries and little quantities to India fetching around $80 million based on average price of $220 per ton. Farmers and growers are also happy after getting better prices of their produce.
Prices of wheat flour eased to Rs1,180-1,190 after the export ban, from Rs1,225-1,250 per 100 kg bag last week. However, the rate of 80-kg flour bag, which had surged to Rs1,140, fell to Rs1,100.
The WEAP member said that for the first time wheat exports had been carried out without any government’s subsidies. He added that higher transportation cost and hoarding by non-exporters had led to wheat price hike and it was wrong to link domestic price hike to lifting by exporters.
When Chairman Sindh Circle Pakistan Flour Mills Association (PFMA) Ansar Jawed was asked by Dawn about any possibility of price fall in view of huge wheat production and ban on exports, he said that the rate of atta would now remain stable and chances were dim for any drop in prices.
He said the price of various varieties of wheat flour was set to increase by Re1 per kg from June 1 in case wheat exports continued. “Stability in flour rates will benefit the consumers,” he added.
He said that the government had assured the millers that it would not allow wheat export unless the provinces achieve their wheat procurement targets. The actual wheat production figure was likely to come by July end.
PFMA chief said that exporters had emerged as a third buyer of wheat in the market after two seasonal buyers – millers and the government. Exporters started lifting the commodity from the open market and even resorted to hoarding in view of having secured huge export orders.
