After showing an initial spike during the first half of Ramazan prices of sugar somewhat stabilised during the week that ended on August 10. News of August 7 decision of the government allowing up to 30,000 tonnes of sugar to Tajikistan also made no impact on the price-line.

“Sugar stocks are sizable. Initial price hike was because of huge buying by Trading Corporation of Pakistan and in line with rising trend in international market,” said a sugar dealer at Jodia Bazar. “News of exports to Tajikistan didn’t make an impact on local prices because the quantity (to be exported) is so small.”

Sugar prices stabilised also because in the international market its price fell after gaining a huge 13 per cent in July. As on August 9 the October 12 contract sugar future sugar fell to 21.09 cents down from its peak of 22.76 cents per pound at the end of July.

Quotes on Pakistan Mercantile Exchange (PMEX) mirrored this trend during the week that ended on August 10 though no big volumes of sugar, or of wheat or rice for that matter, were traded on the local commodity exchange. Traders say whereas future contracts of grains listed on PMEX move quite in line with the international trend regardless of the volumes traded or not, actual prices in Jodia Bazar of Karachi and Akbari Mandi of Lahore reflect the rates at which volumes change hands.

“That’s why you see that prices in Jodia Bazar were higher than the PMEX futures. The prices we quote are inclusive of the transportation cost and our own margins whereas PMEX quotes are no more than calculations made on the basis of international prices,” said a leading sugar dealer. “Even if some volumes are traded at PMEX the quotes would not change much because PMEX quotes reflect the prices that sugar millers are willing to accept and that investors are willing to pay. Delivery is not an issue for them.”

Sources in PMEX also confirm that their price quotes normally change with fluctuations in international prices regardless of investors’ inquiries or actual trading which is not so much in sight in case of wheat, sugar or rice. “At PMEX prime interest is in gold or oil. Interest in food commodities is yet to pick up.”

Prices of wheat also remained stable at Rs2650 per 100kg in wholesale markets during the week that ended on August 10 after showing some spike in earlier week when wheat exporters were out to shop around.

Wheat dealers said that news about Pakistan and Iran coming closer to the wheat-for-fertiliser barter deal did not lead to any immediate upward pressure on prices simply because the market had already factored it in after the two sides had resumed talks about the deal. If everything goes as planned, Pakistan has reportedly agreed to sell one million tonnes of wheat to Iran at a lower-than-earlier-indicated price of $300 per tonne for fertiliser or fuel.

In the international market wheat rates continued moving up on concerns about global supplies in the wake of drought in the US. In July wheat futures had gained a massive 25 per cent from a month earlier to close at $345.69 per tonne. The rate went further up to $359.71 as on August 9.

With fast depleting stocks of rice from the last harvest, its prices moved up in local wholesale market but the increase remained confined to coarse rice and rates of Basmati varieties remained unchanged. Rice dealers said exporters are busy purchasing non-Basmati rice for exports thereby putting pressure on the prices. They said fresh arrival of rice from some parts of Sindh is expected to begin as early as next month.

Prices of rice normally remain high during Ramazan as consumption increases for preparing traditional Biryani which not only the fasting faithful prefer over breads but is also distributed in large quantities by charities among the poor.

Rice millers are waiting for rice supplies to pick up because there is a bigger scope for exporting coarse rice now as Bangladesh last week announced to keep a ban on export of non-aromatic rice till June next year to prevent domestic price hike. Earlier Bangladeshi government had indicated it would lift this ban. —Mohiuddin Aazim