Wheat stocks hit historical peak of 9m tonnes
KARACHI: The country’s wheat stocks have swelled to a record nine million plus tonnes.
As per flour millers’ data, substantial wheat stocks have accumulated due to carryover stocks of previous years.
Wheat consumption in Pakistan stands at 23m tonnes per annum.
Pakistan has been reaping bumper wheat crop — between 25-26m tonnes — for the last two years. However, this huge stock now appears to be a liability keeping in view consumption and unfeasible export potential.
Currently, the Punjab food department holds 6m tonnes of the commodity, followed by 1.7m tonnes by Sindh, 1.4m tonnes by Pakistan Supply and Storage Corporation (Passco) and 200,000-300,000 tonnes by Khyber Pakhtunkhwa and Balochistan food departments.
“Our wheat stocks are at a historical high but it does not auger well for consumers and exports,” Central Chairman Pakistan Flour Mills Association (PFMA), Chuadhry Ansar Jawed said.
Pakistan cannot take benefit from the huge stocks due to high support price of Rs1,300 per maund (equivalent to over $300 per tonne) while global prices hovers between $150-170 per tonne, he said.
“Consumers are paying more for different flour varieties due to higher support price while millers also adjust flour price depending on the open market rate of wheat,” he added.
The market is abuzz with reports of another good crop by March/April next year. Good weather has so far proved beneficial for impressive wheat harvest in the last two years and per acre yield has also increased.
Out of the 9m tonnes wheat stocks, the provincial governments are likely to issue 3-3.5m tonnes of the commodity to flour mills.
“Due to sizable stocks and availability of wheat in the open market, wheat issuance to millers by provincial food departments has been delayed by almost three months,” Mr Ansar said.
Millers are likely to start wheat procurement from the governments by December instead of September/October, he added.
The time period of wheat procurement from Sindh food department by the millers would run for almost three months while Punjab would sell wheat to millers for four months.
Around 50 per cent of the wheat stock is lying in open while the remaining has been stored in government godowns.
Amid higher stocks, prospects of wheat exports still appear bleak in view of low price forecast in world markets.
The flour millers have requested the government for granting $170 per tonne rebate to compete with low prices in world markets.
He said old rebate claims of genuine exporters amounting to billions of rupees have not been paid by the government.
“Even at the rebate of $170 per tonne, we cannot expect to make sizable wheat exports as low world wheat price forecast will remain a major obstacle,” the PFMA chief said.
The government, he said, should devise a new export policy for at least two years for sea and land routes after consulting stakeholders for disposing surplus wheat which would otherwise rot.
The subsidy should be revised after six months keeping in view world market prices, he added.
Mr Ansar said Punjab government has asked wheat growers to grow different crops like canola in the cultivation area of wheat for which growers would get an incentive of Rs 5,000 per acre. Sindh government should also introduce a similar package, he added.
“80-90 per cent of subsidy and incentives schemes of Sindh government were marred by corruption,” he alleged.
The Sindh government has purchased some 400,000 tonnes of soft, poor quality wheat from low producing areas of Punjab at very less prices.
Most of the quantity of low grade wheat has been dumped into godowns in Karachi. This year millers are again expected to buy sub-standard wheat, he claimed.
The PFMA on record had protested the move of Sindh food department in the last two years but this year millers in Sindh would not lift soft wheat at any cost, Mr Ansar warned.
Strong demand for cotton keeps prices firm
KARACHI: Strong de**mand for quality cotton kept prices firm on Saturday.
Interestingly, higher arri*val of phutti (seed cotton) did not dent cotton prices.
Due to peak season for the textile industry, there was rush of buyers who were keen to replenish their cotton inventories. It was encouraging that the flow of quality cotton also remained high. Phutti arrival is at its peak since picking in almost all cotton growing districts of Punjab is in full swing.
However, phutti arrival from lower Sindh, where cotton sowing took place earlier, is nearing an end and a number of ginning factories have also closed down.
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Despite a glut, the prices of phutti remained on the higher side — indicating that off-take of cotton was equally high.
According to estimates, world cotton production would be much higher than last year.
On Saturday, world leading cotton markets closed firm, with New York cotton recovering its recent losses. The Indian cotton market also stood steady. The Chinese market remained closed.
The following major deals were reported to have transpired on ready counter: 800 bales, Shahdadpur, at Rs5,500 to Rs5,800; 800 bales, Shahpur Chakar, at Rs5,975 to Rs6,000; 1,400 bales, Nawabshah, at Rs5,975 to Rs6,000; 1,600 bales, Sakrand, at Rs6,050 to Rs6,075; 2,000 bales, Khairpur, at Rs6,100 to Rs6,150; 1,600 bales, Saleh Pat, at Rs6,150 to Rs6,200; 1,000 bales, Rohri, at Rs6,150 to Rs6,200; 1,000 bales, Mian Channu, at Rs6,200; 1,000 bales, Mianwali, at Rs6,100 to Rs6,200; 1,200 bales, Khanewal, at Rs6,150; 800 bales, Bahawalnagar, at Rs6,125 to Rs6,140; 600 bales, Faqirwali, at Rs6,100; and 800 bales, Burewala, at Rs6,150.
Published in Dawn, October 8th, 2017