THE activity on the Karachi wholesale commodity markets was relatively slow as leading commercial and brokerage houses remained busy analysing the impact of 0.5 per cent hike in the discount rate to 10 per cent from the previous 9.5 per cent on the commodity trading.

But at the fag-end of the week, leading importers of pulses indulged in panic selling pushing prices sharply lower under the lead of moong and masoor, which were marked down by Rs300 to 375 per bag of 100 kg. Others followed them fearing fresh fall in prices.

But there was no matching demand from the retailers or wholesalers as they kept to the sidelines anticipating fresh decline in prices as there was a confusion among the importers how to react to the new interest regime, dealers said.

Unlike previous weeks, ready offtake even on most of the essential counters was light as stockists and commercial importers held on to their positions apparently assessing the impact of interest hike on the future prices, dealers said.

There was consensus among the leading dealers that the hike will make the bank borrowings expensive in the coming weeks but the big question before them was whether or not the impact could be passed on to the consumer, they added.

Owing to lower interest rates during the last one year or so many investors had entered the commodity trade after having arranged bank credit lines as the margin of profits in the commodity trade was much higher than the overhead costs including interest on loan, some others said.

“The concept of hoarding of commodities after having cornered them at the harvesting stage at the lower rates kept prices at the higher levels throughout the year and consumers have to pay more to meet their needs”, some leading consumers said. The next couple of weeks will show how the hoarders of essential commodities react to the latest hike in the interest rates, which some of them said could rise to 13 per cent.

Some leading brokers said prices could ease from the current higher levels as some of the stockists are expected to shed their extra weight, which could evoke sympathetic selling from the others.

In physical trading, there was no immediate impact on the ruling prices of both essential and industrial raw materials but physical activity shrank to a modest proportion.

Private sector rice exporters were, however, a bit worried over the reports of damage to Sindh crop owing to floods and feared a price flare-up.

Harvesting of rice crop is expected to resume by next month. Supplies after processing are due on the local markets by end of next month or early October.

The market decline was led by the pulses sector under the lead of imported types of moong and masoor followed by urad, gram whole and gram dal, which were quoted lower by Rs25 to Rs50 but dal fell by Rs200 per bag.

Peas and some other varieties on the one hand came in for active support and were marked up by Rs100 to Rs200 per bag in early week buying. They are also expected to follow the lead of other by the next week.

Among other essentials, wheat remained in active demand of mills and was quoted higher by Rs35 per bag. Slow arrivals from upcountry markets were another factor behind the increase in prices.

The rice sector, on the other hand, showed mixed trend. While IRRI types rose by Rs10 to Rs100 followed by reports of damage to Sindh crop after the recent floods but slack export demand and higher local prices were said to be one of the negative factors behind falling prices.

Sugar prices remained stable around previous levels but desi sugar came in for fresh selling and was marked down by Rs200 per bag of 40 kg.

Cereals and major export items were generally traded around the previous levels, leading among them being maize, jowar and barley, while bajra fell by Rs100 on selling triggered by reports of steady new crop arrivals. Oilseeds sector did not show much as prices of major seeds, including cottonseed, rapeseed and til were firmly held at the last levels amid light two-way activity followed by reports of comfortable ready position.

Oilcakes rose by Rs60 per bag on reports of higher phutti prices and cottonseed prices owing to a short crop and falling arrivals from the ginneries. Rapeseed cakes were held unchanged for want of active demand.—M.A.