Just in:  

You are here: Home»Articles & Letters»Articles»Wheat prices in local market climb up

Wheat prices in local market climb up

WHEAT: Wheat prices in the local market climbed up a third week running as government agencies scrambled to cover their procurement targets this week. Sources have reported that this might be the harbinger of a serious crisis and it is very likely that the government will have to impose a temporary export ban to cull this situation.

Huge quantities of the stock are said to have been purchased by exporters and other market players amid rampant speculation that this year's crop will be significantly below expectations. Currently a 100 kg bag of wheat is going upwards of Rs 3,200 in the domestic market, an increase of Rs 350 over the course of three weeks.

At this point, there is major shoulder shifting and little can be said about the singular largest source of these price hikes which are likely to have a detrimental effect on the end consumer.

Talking to BR Research over the phone, an exporter was adamant that it is the local hoarders who are buying cheaply from farmers who are causing these hikes and that the price scenario in the international market at the moment is not encouraging enough for exporters to be sending off huge quantities of wheat abroad.

It seems that policy gaps are also not encouraging direct buying from smaller farmers and that difficulties in the selling process are pushing growers-especially in Sindh-to sell to traders. The government has been expected to announce a short-term policy to counter these gaps and help address the issue of the price hikes. However, with the entire nation swept up in the election uproar, it seems that the issue might take the back burner for a few more days.

On the international front, European wheat edged higher this week amidst a thin market over the public holidays. According to reports, concerns about crop health in the Americas remain intact; however, news from Europe is better. As a number of major producers from the former Soviet Union area recover from last year's drought, grain production is slated to increase substantially, says FAO's crop forecasts with estimations of a 5.6 percent rise in production levels.


Asian rice quotes remain largely unchanged once more as the Pakistani market was quiet ahead of the May 11 general elections.

But with growing stocks and the new harvests in Thailand and India just around the corner, pressure on sellers to lower their asking prices has been reportedly building up and the next few weeks could see some major price slippages.

Pakistani exporters also anticipate this and sources have indicated that the bloated stocks within the region are very likely going to start affecting export quotations for Pakistani varieties very soon. Thailand remains the biggest culprit, assisted by Vietnam-which holds stocks in excess of 2 million tons as of this week.

Indian stocks also remain a point of concern. Having pooled massive amounts of the grain under the state procurement plan, the country has uncovered stocks that are in danger of going to waste unless buyers are found before the arrival of the summer monsoons.

Hence it seems that the rice market, which has been far too quiet for far too long might just be in for a crunch very soon. Thai rice is expected to receive the biggest shock-with some commentators saying that prices for the sought after 5 percent might even slip to as low as $300 when the government decides to sell. In any case, buyers are sitting complacently as of now, waiting to see when the whole house of cards falls down, and when it does, it is likely to take a few of the bigger producers down with it.


The markets have been largely quiet this week and business on the cotton front was almost non-existent as the week drew in to a close. Sources report that little trading took place during the last few days of the week. Spot rates have remained unchanged over the course of the last few days.

Moreover, the stock that remains with the ginners is reported to be of low quality and a majority of textile mills are said to be covered for the time being. Thus trading activity post-elections might not pick up exponentially, at least until some of the new crop starts arriving towards the end of June.

In the last few weeks the yarn intensive mills have also largely been on the sideline as demand for Pakistani yarn crawls to a slow. Chinese buying has been waning amid lower prices of cotton and polyester and until demand for Chinese textiles from European quarters picks up, things are likely to remain in limbo on the yarn front.

This week international cotton, however, managed hit a high note propelled by fresh buying. Concerns about the weather condition in America prompted the rallying, which died down when news about the selling of Indian reserves hit the market.

India this week sold off some of its hoard to cushion local mills from expensive imports, consequently, the most active July cotton on ICE Futures managed to gain slightly more than one percent, climbing as high as 88.11 cents/lb.

While these were the highest prices since April 11 -breaking out of a recent 83-88 cent/lb range-the anticipation of the US government's monthly crop report which is expected to re-iterate the weather concerns about the American crop was slated to take the prices up even higher.


Reuters this week reports that Brazil is postponing sales of raw sugar to exporters in a bid to sell higher quantities to ethanol producers. Earlier estimates for the global sugar surplus have been revised and it is reported that the global surplus for the season ending in November is likely to 38 percent higher than previously forecasted.

With prices having already declined by more than 39 percent over the last two years, the sweetener remains the worst performing commodity in the market right now and if this year continues along the same curve, prices will see the biggest slump in a decade as per Bloomberg data.

However, in line with this new information about Brazilian growers choosing to sell to the ethanol market in favour of sugar might mean that raw sugar is likely find support at the 17 cent/lb level shortly. On the futures front, the market continues the long-term downtrend and raw sugar futures on ICE inched lower for the second straight day on Wednesday as the cane crushing in Brazil picked pace.

The August white sugar on LIFF fell further, declining by $6.80, or 1.4 percent, to settle at $487.20 a ton at the close of the week. Dealers have said that the rush to cater to the pre-Ramadan orders might mean cue a supply glut for white sugar in the medium term and this could mean that prices are likely to inch even further down in the next few weeks.

Copyright Business Recorder, 2013


Index Closing Chg%
Arrow DJIA 16,408.54 0.10
Arrow Nasdaq 4,095.52 0.23
Arrow S&P 1,864.85 0.14
Arrow FTSE 6,625.25 0.62
Arrow DAX 9,409.71 0.99
Arrow CAC-40 4,431.81 0.59
Arrow Nikkei 14,516.27 0.68
Arrow H.Seng 22,760.24 0.28
Arrow Sensex 22,628.84 1.58

where to buy

cheap wedding dresses

online -

Buy cheap Nike Mercurials cleats at
cheap wedding dresses on - Best Online Wedding Store

Banking Review 2013

Buy direct from

China free shipping trade platform

Foreign Debt $60.9bn
Per Cap Income $1,368
GDP Growth 3.6%
Average CPI 7.5%
Trade Balance $-1.433 bln
Exports $2.167 bln
Imports $3.600 bln
WeeklyApril 14, 2014
Reserves $9.713 bln