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Prices stable

January 16, 2011

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ENCOURAGING news from export front, mainly about wheat, dominated trading on the Karachi wholesale markets last week where prices showed tendency to rise as some exporters covered their forward sales to meet their shipment deadlines.

A major breakthrough on the wheat front was widely welcomed by commercial traders and exporters who hoped the exportable surplus would add to foreign exchange earnings, market sources said.

But leaders of flour mills association opposed the official move fearing rise in flour prices in coming weeks. But the government was seized with the problem of disposing of the surplus of over a million tons well before the arrival of new crop, they said.

“It is a good beginning on wheat export front,” said a commercial exporter. He said the “profit-margin is not attractive but new export outlets are being explored to dispose of future surplus.”

With a loaded consignment of 27,000 tons of wheat for some African destination, a loader has already left, while another Bangladesh ship is on the port loading a consignment of 20,000 tons for Chittagong, exporters said.

But the news from sugar front was not encouraging as price tussle between growers and mill owners continued after the later reduced the cane procurement price from Rs230 per maund to Rs210 without any reason. The growers in some areas had stopped supply of sugarcane to mills.

However, sugar prices in retail and wholesale markets rose further high despite mills’ claim that supplies of new crop to commercial dealers are being made regularly and prices should remain stable around previous levels.

Much of the physical activity, meanwhile, remained confined to some essential counters where floor brokers reported pressure on supplies.

Arrivals from upcountry markets remained steady, which, in turn, did not allow speculative increase in prices and most of the increases were orderly. Dealers said changes in prices were mostly orderly and did not reflect speculative rise on any counter amid two-way activity and higher ready off-take.

The industrial sector showed two-way active trading as some commodities showed rise under the lead of guar seeds and cotton-based items because of a record rise in cotton prices owing to a short crop, they said.

On essentials’ counters, including wheat and sugar, prices remained stable despite higher demands followed by reports of steady arrivals from upcountry market.

Sugar prices remained stable early but rose later, although dealers reported a fairly large business at the unchanged rates in an apparent effort to sell it later at higher rates, they said.

Rice exporters said the recent increase in global prices was expected to significantly add to export earnings of the private sector exporters. They said talks were going on with some importers and hopes of some deals were bright during the next couple of days.

On the other hand, cotton prices showed wild either way movements amid alternate bouts of buying and selling but late in the week a sharp decline in New York cotton futures pushed them lower around Rs9,000 per muand, which spinners said were still higher than their export parity level for textiles.

Cottonseed followed it in sympathy because of a short local crop and was traded at a record high in line with cotton prices. Other major oilseeds including til and castor seed were traded around the previous levels followed by fall in both local and foreign demands. But late in the week til came in for active short-covering against export orders.—M.A.