KARACHI, Feb 17: Two trading companies based in Karachi are negotiating export of about 0.2 million tons wheat to be available in next few weeks from the harvest which has begun on a very small scale in lower Sindh.
Market sources say that Pakistani trading companies are offering wheat shipment to their South African buyers sometimes in May and June when domestic prices would stabilize at around Rs9,500 a ton.
According to the knowledgeable sources implications of wheat export on Pakistan were discussed in a meeting of the ministry of food and agriculture last Saturday at Islamabad. This issue is expected to be discussed again this Saturday when views of the Commerce ministry will be sought.
Official trade figures show that Pakistan exported 42,000 tons of wheat in the current fiscal year so far to fetch about 6 million dollars or Rs 344 million.
Pakistan emerged as a major wheat exporter during 2002-03 when more than 931 thousand tons of wheat was exported to fetch over 103 million dollars or more than Rs 6 billion. But in the current fiscal year wheat shortages are being reported from almost all parts of the country and 14 million Karachi city suffers most where wheat price in market is about Rs 1,150 to Rs 1,200 for a 100 kilogramme bag and flour is being sold for Rs15 to Rs17 a kilogramme much before Eidul Fitr in November.
Islamabad is also reporting shortages of wheat and flour these days. Therefore, decision makers are expected to give a hard look at the export prospects in coming weeks and months.
These negotiations for wheat export are going on when 150,000 tons of imported Australian wheat is about to be off-loaded at Port Qasim in next 48 hours. The government has already scrapped another tender for import of 150,000 tons of wheat as harvesting of the crop is about to begin.
According to well placed sources one of the two companies is reported to have secured order for export of one lakh ton at $185 a ton and another company is negotiating price of $195 a ton. Interestingly, the Australian wheat imported by another Karachi-based company cost 224.75 dollars a ton.
In terms of rupees the cost of imported Australian wheat comes to Rs13,050 a ton at Rs58 a dollar. If freight and other charges are included the cost comes to Rs14,000 a ton for which the importing company would get subsidy from the government to ensure that wheat is provided to flour mills at Rs9,500 for a ton. The federal government is expected to pick up this deficit.
The wheat export is being negotiated on Rs10,730 a ton (185 dollars a ton and Rs58 for a dollar) and Rs11,310 a ton (on 195 dollars a ton). How far these prices are feasible for export is not clear. Market analysts say that freight rate is considerably high and wheat export on C and F basis at $185 and even on $195 a ton would not be feasible.
Officials of Sindh government are not happy with reports of wheat export prospects in the coming weeks. They are expected to make a lot of noise on this issue in the next wheat meeting at Islamabad on Saturday.
Sindh still groans under wheat shortages and latest report suggests that the federal government is not providing promised one lakh tons of wheat from the imported 150,000 tons. This imported wheat is reaching on Thursday at Port Qasim and would be unloaded Friday onwards.
The federal government now wants Sindh to provide 50,000 tons of its share from imported wheat to Punjab. The Passco also provided 5,000 tons of wheat less than the promised quantity.
Interestingly bulk of wheat in Karachi's open market is coming from Punjab. With a population of 14 million and located at a distance from wheat growing fields, Karachi assures Punjab traders a substantial profit margin in wheat trade. "Wheat scarcity has to be maintained in Karachi for next few weeks," a bitter market watcher remarked.
Independent wheat watchers say that there is about 38,000 tons of wheat stocked in more than 120 flour mills of Sindh and there is another 40,000 to 50,000 tons of wheat stocked with private traders.
There is about 10,000 tons of flour in Karachi mills. With a record low lending bank rates and credits available relatively on much easier terms, the wheat traders are having a field day. They borrow, buy wheat and stock and release on their terms to secure good prices.
The Sindh government plans to begin its wheat procurement programme this year much earlier than last year. It is setting up 351 procurement centres and intend to procure six lakh tons.
Market report suggests that wheat harvesting has begun on a very small scale in Jhudo in Mirpurkhas and at least one truck loaded with wheat from fresh crop reached Karachi on Tuesday. "Wheat has started just trickling in," a trader said who pointed out that wheat supply from fields will pick up in April.
A report suggests that India is making preparations for harvesting a record bumper crop of over 75 million tons wheat this spring. The domestic consumption in India is estimated at around 55 to 56 million tons and there would be a surplus of 20 million tons stock. Even if India decides to maintain a 10 million tons buffer stock there would be 10 million tons available for export.
But export prices for Indian wheat is less than that of Pakistan. It is because as a matter of policy India exports wheat from the stock of old crop and prefer to preserve the harvest of fresh crop. Food and nutrition value of Pakistan's wheat is considered to be much better than that of India.