Pakistan purchases 0.650m tons wheat

Published November 23, 2005

KARACHI, Nov 22: Pakistani traders are expected to import more wheat with deals totalling 200,000 tons expected for January-February shipment, traders and a government official said on Tuesday.

Traders have already finalized import deals for 650,000 tons of milling wheat, after a duty cut this year, and cargoes of 300,000 tons had reached Pakistan up to Nov 15.

But Qadir Bux Baluch, Pakistan’s wheat commissioner, said traders were likely to buy more to meet growing need in Karachi.

“Most of the previous imports were for Karachi and Sindh which still needed extra supplies of maybe another 200,000 tons or so,” Mr Baluch told Reuters. “Traders are continuously in the market at the moment.”

Karachi-based traders said supplies of locally produced wheat for the city of more than 15 million people were slow after bad weather trimmed last year’s crop and also damaged its quality.

Pakistan’s wheat output fell to 21.5 million tons from a target of 22.5 million after rain in March and wind in May damaged crops in central Punjab, which produces 80 per cent of the country’s wheat.

The cost of trucking wheat from Punjab is also reflected in higher prices in Karachi.

Muhammad Najib Balagamwalla, chief executive of Pakistan-based Seatrade Group, said the poor quality of government wheat was the main reason behind a surge in imports for the city.

“The government is offering 30 per cent damaged wheat grain but prices are as high as high-quality Australian wheat,” Mr Balagamwalla said.

“The landing costs of imported wheat are comparatively cheap in Karachi so millers and traders are aggressively booking cargoes from abroad,” he added.

In July, Pakistan removed all taxes on the import of wheat by private traders in an effort to make up supplies and check soaring prices.

Before the policy change, Pakistan used to charge a six per cent withholding tax and a 10 per cent sales tax on wheat imports.

Mr Balagamwalla said traders had bought wheat from Russia and Ukraine and some cargoes of US and Australian wheat had also reached Pakistan.

Pakistan’s flat-bread producers traditionally favour high-quality white wheat of the kind supplied by the United States, Canada and Australia but wheat from Russia and Black Sea countries has recently been imported.

Four cargoes of Russian and Ukrainian wheat at $141-$156.50 a ton, including cost and freight have reached Pakistan, while cargoes of 50,000 tons of wheat each from Australia and the United States have also anchored at the Karachi Port.

Traders said the price of Australian wheat was $169-$170 per ton while US wheat was $167-$169 per ton.

“Traders have finalized deals for another 200,000 tons from Russia and 50,000 tons each from Australia and the US for December and January shipments,” Mr Balagamwalla said.—Reuters

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