WHOLESALE prices of rice are rising on short supplies not only in local markets but also globally.
Reports from rice fields suggest that coarse rice production this year may decline but increased output of Basmati may compensate it.
Rice dealers are, however, nervous on depleting stocks and are selling the commodity at a higher price than in last few weeks.
In Lahore’s Akbari Mandi prices of all varieties of Basmati remained range-bound during the week ending on July 19. But in Karachi’s Jodia Bazar both Basmati and coarse rice categories saw a slight increase. “Prices of Basmati rice in Karachi almost always remain a bit higher than in Lahore because the bulk of it is produced in Punjab and it’s consumption in Sindh including Karachi remains traditionally strong,” says a local rice dealer.
“Besides, Karachi is the hub of rice buying by exporters as well.”
In Karachi’s wholesale grains markets prices of the finest quality of Basmati moved between Rs9,000-Rs10,300 per 100-kg up from Rs8,700-Rs10,000 in the last week. But in Lahore prices remained unchanged at Rs8,500 and Rs10,000.
Internationally, Basmati prices began to rise from March this year and gained five per cent to close at $606 per tonne in three months to June. “The trend is keeping up during this month as well on reports of 10 per cent decline in overall rice planting area in India,” says a Jodia Bazar-based dealer. In Pakistan too up to 10 per cent decline is being feared in output of coarse rice as paddy planting has been delayed due to water scarcity in Sindh though prospects for cultivation of Basmati are reportedly good.
During the week under review a high-powered Pakistani delegation headed by Federal Minister for Food Security and Research Mir Israrullah Zehri toured Iran to discuss prospects for exporting Pakistani wheat in exchange for Iranian fertilisers and iron ore.
“This news put some pressure on wholesale wheat prices during the week though we learnt from media (by the weekend) that Pak-Iran discussions remained inconclusive and that Iran was perhaps interested in importing wheat from India,” said a wheat broker in New Chali grains market. He said that delay in release of officially-procured wheat to flour millers at subsidised rates was another reason for the hike in prices.
Wholesale price of wheat inched up from Rs2,580 per 100kg as on July 13 to Rs2,600 on July 19 but were still shy of the season’s highest price of Rs2,615 seen till mid-June.
Wheat stocks are large enough to accommodate at least 200,000 tonnes of the commodity before the arrival of the new crop in April-May next year. In twelve months to June Pakistan exported about 410,000 tonnes of wheat for $126 million.
Dealers say a slight increase in wheat prices seen last week was temporary and prices would eventually stabilise due to slackened demand in Ramazan and five per cent growth in global output of the staple this year.
Sugar prices had started moving upward in international market since the beginning of this month but because of sizable surplus of the commodity available at home, domestic prices remained unaffected. However, in the week ending on July 19 local prices also ramped up as the Trading Corporation of Pakistan began to buy the commodity for buffering its stocks and on behalf of the Utility Stores Corporation. In Karachi, wholesale price of sugar slithered up to Rs5,200 per 100kg on July 19 from Rs5,150 a week earlier. But in Lahore the prices rather slipped to Rs5,100-Rs5,140 per 100 kg from Rs5,140-Rs5,220 a week ago.
Internationally sugar prices are up because of faltering trade volumes as local consumption is said to have increased in India and Brazil. Sugar dealers say the recent rise in sugar price is temporary and is unlikely to accelerate in future chiefly because of huge carryover stocks and increased output this year. Between July 2011 and June 2012 Pakistan also managed to export 46,000 tonnes of the commodity for $28 million.
Meanwhile, prices of black tea remained stable at Rs350-Rs400 per kg and that of green tea at Rs600-Rs900 per kg during the week under review. Tea prices normally remain weak during Ramazan due to its lower-than-usual consumption. This also reflects in lower volumes of imports just ahead of the holy month of fasting. In June this year, for example, tea imports fell 18 per cent to 8,200 tonnes.
Tea traders say decline in domestic tea prices is Ramazan specific and quite in contrast to the trend being seen in international market where tea is edging up on news that Sri Lanka’s exports of the commodity would remain sluggish during this season.
Under a Ramazan relief package utility stores across the country are selling sugar, tea and other food items at subsidised rates during the holy month of fasting.
During the week ending July 19 some tea companies also reduced maximum retail prices of their products to remain competitive. The price cuts were up to 10 per cent.