WHEAT, rice, sugar and pulses became dearer during the holy month of Ramazan. The trend continued during the week that ended on August 4.
Commodity brokers say wheat and rice prices may gain further on growth in exports. Prices of sugar and pulses that have moved up on higher demand may, however, stabilise after the fasting month is over.
Wheat prices have moved up from as low as Rs26,000 before Ramazan to over Rs27,000 per tonne for a host of reasons. These include growth in exports, higher international prices on scant global supplies and black marketing of subsidised wheat provided to flour millers by provincial food departments.
Meanwhile, rice prices are up due to reports of troubled paddy crops on lower water supplies due to delayed rains and depletion of carryover stocks amid reports that fresh arrivals may be delayed. Sugar prices have inched up chiefly on speculations based on movement in international prices. And prices of pulses remain strong on increased costlier imports ahead of and during the holy month and additional local demand.
“Food grain prices almost always show some volatility during Ramazan not only in Pakistan but also globally,” says an official of International Multi Foods Ltd — the largest exporter of food commodities with packaging and warehousing facilities in Dubai, Karachi, Nairobi, Singapore and Yangon. “But this year some new factors are also in play. Because of drought in America and short supplies of food grains in other major markets, food prices are moving upwards. That’s why our food grain dealers have started factoring in this element in domestic prices—rightly or wrongly.”
Prices of wheat had begun moving up on reports of higher exports in July and the trend continued in first few days of August as well. Per tonne price of the commodity rose to Rs27,000 in wholesale market during the week ending August 3 up from Rs26,500 a week earlier.
A wheat dealer in Jodia Bazar said the price may rise further because transporters have warned of increasing fares. “As I speak my trucker has just informed he would be charging at least 10 per cent more for transporting commodities from interior of Sindh or from Punjab to Karachi citing higher cost of fuel due to the recent rise in local fuel prices,” said an official of Karachi Wholesale Association.
“Normally six people engage a trucker if the truckload is 30 tonnes each one of them with orders of five tonnes of a commodity and then divide the fare accordingly. If the truckload is 15 tonnes three people do this to cut costs of transportation. Hardly any dealer orders for a full truckload on his own.”
The arrangement is cost-effective. But when dealers get supplies in lots of five tonnes of a major commodity like sugar or wheat or rice they sell to semi-wholesalers in still lesser lots—ranging from half a tonne to maximum one tonne. Those semi-wholesalers then offers still shorter volumes to retailers—from 50kg to 100kg or so and it becomes easier for speculators to manipulate local prices even if they hoard a commodity for a very brief period. “That sometimes also pushes up prices and I personally know that this is happening right now in case of sugar,” explained a sales agent of a leading Sindh-based sugar mill.
Ex-mill price of sugar went up during the week under review to Rs50,000 per tonne from Rs49,000 a tonne a week earlier.
As a result, wholesale prices shot up to Rs5,220-Rs5,260 per 100kg in Akbari Mandi of Lahore and Jodia Bazar of Karachi.
Prices of both Irri and Basmati rice also continued upward trend in wholesale markets. Basmati rice, in particular, was quoted in the range of Rs1,000-Rs1,100 per 100kg up slightly from the rates seen a week earlier. Rice dealers said that entry of Bangladeshi exporters in aromatic rice market came as a fresh setback to local rice millers as Bangladeshi exporters are getting local supplies of aromatic rice at much cheaper rates than prevailing in Pakistan.
Dealers of pulses say prices of gram, gram pulse, mash whole and mash split moved up during the week under review showing a gain of Rs1-2 per kg not only because of higher demand in Ramazan but also because some delayed shipment from Myanmar.
Dealers hailed the government plans to allow import of black gram from India through land routes saying it would cut cost of imports from other countries.
“We don’t know when exactly we’d be allowed to import gram and gram pulse from India but the sooner it is done the better it is,” said a Jodia Bazar-based trader adding low production of gram in the country has pushed its price to as high as Rs8,800- Rs1000 per 100kg during this year, up at least 10 per cent from the last year.— Mohiuddin Aazim