KARACHI, June 4: Prices of all varieties of rice on an average have dropped by Rs10,000 per ton in the local market on low demand from exporters and the domestic traders.

Rice dealers believe the declining trend would continue to further adjust the prices artificially jacked up by hoarders, profiteers and speculators.

Market sources told Dawn that the sudden surge in rice prices during the course of negotiations between the government and representative body of rice exporters in April brought rice prices to a level where it became out the reach of consumers, who stopped purchasing rice.

The Rice Exporters Association of Pakistan (Reap) on April 18 entered into negotiations with the government and it was agreed by both sides to fix modalities and a formula for containing rice exports to ensure food security to the domestic consumers.

Besides, other terms and conditions reached by both the sides it was also agreed that the minimum export price (MEP) for each rice variety would be imposed.

However, the notification of imposing MEP on rice was issued on April 30, and during these 12 days speculators and hoarders in a hope to reap big profit margins went on a buying spree, which pushed the rice prices to all time high in the domestic market, a rice dealer Abdul Razzak told Dawn.

The exporters, who were lifting huge quantities of rice to meet their foreign contracts, suddenly felt that their deals had become unviable owing to sky-rocking prices of the commodity, he added.

Another rice dealer Mohammad Farooq said that sudden fall in demand on domestic and export front forced the hoarders to unload their stocks at a lesser price thereby improving supply side of the produce.

He hoped that in coming days rice prices would further fall, particularly with the declining trend in the world market.

The dealers said that after the imposition of MEP at $1,500 per ton the supply of super basmati to Iran by road through Zahidan also stopped because previously it was being sold at $330 to $350 per ton.

The government also fixed MEP for basmati at $1,300 per ton, Irri-9 $1,000 and Irri-6 at $750 per ton, which resulted in creating a balance between the demand and supply and the forces, which were indulging in speculative hoarding to reap wind fall profits, were ultimately cornered, Mohammad Farooq said.

According to market sources, Irri-6 prices fell down from Rs47,000 per ton to Rs35,00 per ton. Pak-386 variety price dropped from Rs85,000 per ton to Rs65,000 per ton. Super basmati superior grade having average grain length (AGL) of 7.25 to 7.5mm after soaring to Rs105,000 per ton reeled back to Rs90,000, while its short grain of AGL (6 to 7mm) traded at Rs63,000 per ton on Wednesday.

Sources said that a further price decline is expected as Thailand and Vietnam are harvesting new bumper crops, which have already reached world markets. They further said that India was also considering lifting ban on export of all rice varieties this month, which will further improve the supply side in the world market.