Mixed trends in food prices
Food prices are currently showing a mixed trend. Prices of sugar remain firm. Basmati prices are easing a bit as late harvesting of the aromatic rice feeds the market. And prices of wheat are still up because carryover stocks are depleting and harvesting of the new crop is two-and-a-half months away from now.
Commodity dealers say that prices of sugar are hovering around Rs49000-Rs50000 per ton —unchanged from the third week of December despite fresh arrivals from mills but far lower than Rs51000-Rs52000 per ton seen till the third week of November.
They say that ex-mill prices range between Rs47000 and Rs48000 per ton. But sugar millers claim ex-mill prices are much lower (between Rs45000 and Rs46000 per ton). They say that the government’s indecision about allowing exports of sugar back in September 2012 had caused them heavy opportunity losses, compelling them to sit on huge stocks of unsold commodity.
Export-led buying of sugar is now on but it has not made much impact on the price-line because of sufficient availability of the commodity in the country. “When international prices were touching $800 per ton (in September last year) and we also had surplus stocks of 1.2 million tonnes exports were not allowed,” lamented a Sindh-based sugar miller.
“Now the prices have come down to $500-$520 per ton and exporting sugar at these prices is not viable for most of us.” Exporters shipped out 238,000 tonnes of sugar in the second half of 2012 of which 57000 tonnes was exported in December alone. Export volumes are expected to remain around the same level in next few months due to low demand in global markets.
“Globally sugar market is long. There is rather a glut-like situation. That’s why prices actually went down 5.3 per cent in November and by another 0.6 per cent in December,” said a leading sugar dealer based in Jodia Bazar.
“During this month the prices are firm around 18.4 cents per pound. So there’s no big charm in exporting sugar from Pakistan where it costs more or less the same leaving no reasonable margin for commercial exporters. But for large sugar mills whose cost of production is lower due to economy of scale and they have also deeply penetrated into international market and there is still room for foreign sales.”
Recently the government has done away with mill-wise quotas for sugar exports and now every exporter is free to export as much of sugar as he can but there is still an overall capping on the country’s total exports at half a million tonnes.
Pakistan Sugar Mills Association says sugar output during the current crushing year (2012-13) would be no less than five million tonnes up from 4.7 million tonnes in the last year. But National Sugarcane Coordinator Mr Sohail Muhammad Khan told a local TV channel recently that this year’s production may be around 4.5 million tonnes. One of the reasons for this huge gap in the two estimates is that whereas PSMA’s estimate is based on sugarcane output of around 62 million tonnes, National Sugarcane takes into account field reports suggesting a lower sugarcane production.
Prices of Basmati rice that remained too high till the end of December are reported to have eased off in January. Dealers at Jodia Bazar in Karachi and Akbari Mandi in Lahore told Dawn that per ton price of the finest quality Basmati ranged between Rs105000-Rs125000, down from Rs110000-Rs130000 per ton in December. They said they have started receiving fresh supplies of newly milled Basmati grains of the new crop from those areas of Punjab and Sindh where harvesting was delayed.
“Throughout this month and maybe till the first two weeks of the next month we’ll continue to get supplies of late-harvested Basmati. This is going to keep the prices stable because we also have some stocks of Basmati produced at the early stages of harvesting between late-October and early-November,” said another exporter-cum-dealer at Jodia Bazar.
He said that Basmati exporters had a bad time during this marketing year (which began in October 2012) adding that lower output had pushed up domestic prices to the levels that was hurting export volumes. That is why Basmati exports between October and December 2012 fell to 100,740 tonnes from 193, 755 tonnes in the same period of 2011, data compiled by Rice Exporters Association of Pakistan show.
Wholesalers at Jodia Bazar and Akbari Mandi say that prices of non-Basmati varieties of rice were up before the arrival of the fresh crop in October but have remained stable since then.
They say that price-wise the categories of non-Basmati rice run into dozens though the actual coarse rice varieties are not more than 20 or so. “It’s the kind of blending of one type of rice with another identical type that creates a new category. Or in some cases the percentage of broken rice in one category determines its prices,” explained commodity dealer Muhammad Hussain of Jodia Bazar. “Wholesale prices (of non-Basmati rice) start between Rs3000 and Rs3500 per 100kg and go up to Rs6000 to Rs6500 per 100kg depending upon the grading.”
Grains market is running short of wheat these days and prices keep climbing up for a variety of reasons including the fact that open market wheat stocks of old crop are depleting fast with only two and a half months left in the arrival of the new crop.
Provincial food departments claim they continue to supply subsidised wheat to flour millers and will continue to do so till the end of the current marketing year ending in March.
“From mid-April new crop of wheat will come up and our estimates show that the crop size would be around 25 million tonnes which means things would be under control,” an official of the Ministry of National Food Security and Research told Dawn. The country’s domestic consumption is estimated around 23 million tonnes.
Commodity dealers say, however, that several flour millers are buying wheat from the open market because the supply of subsidised wheat does not meet the bulk of their requirement. They say that per ton price of wheat currently ranges between Rs34,000-Rs36,000 per ton depending upon the quality up from Rs32,000-Rs34,000 per ton just one month ago.
Market sources say that one of the reasons for the recent surge in wheat prices is that taking cue from the international price movements local traders have been quoting higher rates even though they have sufficient stocks of the commodity. “Hoarding, of course, is one big aspect,” admitted a Karachi-based flour miller commenting on the prohibitively high prices of wheat.
He said Pakistan Flour Mills Association had brought this issue to the notice of Sindh Chief Minister Syed Qaim Ali Shah but to no avail.
That availability of wheat in the open market has been declining and wheat exports plunged to 21,200 tonnes in the final quarter of 2012 rom 95,800 tonnes in the third quarter, data compiled by Pakistan Bureau of Statistics reveal. —Mohiuddin Aazim