Dawn News

Market agile

A fresh consignment of 65,000 tonnes of imported canola seeds has reached Karachi this month. Industry sources say this is the first major shipment of the new fiscal year, adding that in July and August edible oil manufacturers had mostly used local oilseeds as well as stocks of previously imported oilseeds.

They say that sales of edible oil had soared beyond their expectations in the holy month of Ramazan i.e. between 20th of July and 20th of August. Now after the Eid, the sales are again up because food industry and households are making more of oily food items after the monsoon rains.

These sources say Pakistan imports canola seeds about four times the size of its own production. They say that whereas imported canola seeds are used for oil extraction by large edible oil manufacturing plants, domestic canola seeds are used not only by them but also by small edible oil making units in the unorganized sector.

Roughly a million tonnes of canola seeds are imported every year and as edible oil industry is expanding rapidly the import requirements look set to rise. Edible oil makers say besides catering to domestic demand they also export their products mainly to Afghanistan.

Domestic production of oilseeds including cotton seed, sunflower, canola, mustard or rapeseed and soybean is estimated to have reached around six million tonnes in marketing year 2011-12 (October 2011-September 2012). But during this period Pakistan has also imported around two million tonnes of oilseeds including those of sunflower, canola and soybean to meet growing demand of edible oil manufacturing industry.

Meanwhile commodity prices remained agile in the first two weeks of this month. Traders say wheat prices continue to rise on the back of strong demand by millers and on news of signing of an agreement between Pakistan and Iran on wheat-for-fertiliser barter deal.

Under this deal, formally inked in the first week of September, Pakistan would sell one million tonnes of wheat to Iran at $300 per tonne and import fertiliser from that country.

Wheat supply to Iran, hit hard by trade-sanctions by the West in regard to its “suspicious pursuit for nuclear energy”, is expected to commence anytime next month. But wheat traders have increased wholesale prices of the commodity anticipating depletion of wheat stocks in the country due to exports to Iran.

A spokesman for the Ministry of Food Security and Research recently told media that even after exporting one million tonnes of wheat to Iran, the government will have in its reserves at least half a million tonnes. But his statement could not satisfy traders who increased the per tonne price of wheat to Rs2900 in the second week of this month in the wholesale market. Before the commencement of Ramazan on July 20 wheat was selling at Rs2600 per tonne.

A sharp increase of Rs300 per tonne in less than two months has also provided a reason to flour millers to sell wheat flour at higher rates. Most brands of ordinary wheat flour are currently being sold at Rs33 per kg whereas the price of superior quality of flour (with higher content of bran) is available for at least Rs37 per kg.

Sugar prices remained subdued in both physical trading in Jodia Bazar as well as in futures dealing on Pakistan Mercantile Exchange Ltd (PMEX). Commodity traders say that reports about a possible increase in the sugarcane crop size with higher content of sucrose after the current spell of rains depressed the wholesale prices.

“Pakistan has already enough leftover stocks of sugar produced last year. Now we hear that cane harvested after the recent rains would be richer in sucrose which means millers would extract larger amounts of sugar. So, domestically these are the factors that have reduced sugar prices,” said a Jodia-Bazar based trader.

Internationally too, sugar prices have come down after reports of higher than earlier estimated production in Brazil and India and some other countries leading to decline in sugar prices in the international market. “That’s why you see sugar futures on PMEX slipping.”

In international market, sugar closed around 19.7 cents per pound on September 13, down from 20.5 cents at the end of August after reports of heavy rains in the main sugar producing country Brazil.

Palmolein futures also fell on PMEX during the first two weeks of this month. “Weaker demand in China and India and Euro zone countries is driving palmolein prices down,” said an importer, adding that prices may rise with the start of the winter season when the demand for palmolein and other edible oil varieties move up.

“Besides, Malaysia currently has huge stocks of palm oil (of which palmolein is a more refined) and there is no sign of palm oil output falling down there. That too is keeping palmolein prices stable for now.”  —Mohiuddin Aazim

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