The prices of wheat grain rose by Rs 100 per 100-kg bag in the domestic market due to hasty buying of the commodity by market movers and exporters. Traders told Business Recorder on Friday that upward movement of wheat prices at the time of harvesting signals a serious commodity crisis in the country. Earlier, it was being expected that with the arrival of wheat crop, its prices will further decline.
Presently, wheat harvesting has already begun in several parts of the country including Sindh and Punjab. However, the government has not imposed a ban on export of wheat, before arrival of new crop, which resulted in massive and hasty buying of the commodity by exporters and market movers, they said. “Wheat crop 2013 has arrived in the market and despite this the surge in the wheat prices is a matter of concern,” they added.
Traders said that prices of wheat grain have gone up by Rs 80 to Rs 100 per 100-kg bag in the domestic market during the last one week. With current increase wheat prices have surged to Rs 2,980 to Rs 3,000 per 100-kg. The prices of wheat grain in the local commodity market fell to Rs 2,850 per 100-kg bag during last month after reports the country will get a bumper crop of 25 million tons during this year.
Talking about the reasons of current increase in the price of the commodity, traders said there are reports that recent rains have hit the standing wheat crop badly, and per acre yield is also less than expectations this year. Growers were expecting a crop of 50 maund per acre, however, it is about 40 maund per acre in Sindh, they said.
In January this year, the prices of wheat grain went up to Rs 3,500 per 100-kg bag due to short supply by the provincial food departments. However, the market situation improved in mid of January, when Passco offloaded some 0.6 million stocks in the domestic market.
Pakistan Flour Mills Association Chairman Jawed Ansar has confirmed that wheat prices rose by Rs 80-100 per bag. He said the current increase is because of the government”s wheat procurement campaign and exporters” buying. He said flour millers are closely monitoring the market, which is continuously on the increase for last two weeks. Talking about increase in the prices of wheat products, he said so far no increase has been announced by the association. However, he said, millers will be compelled to raise the prices of wheat flour, meda and other products, if prices of wheat grain further increase in the local market.
Traders said higher commodity prices will also hurt the Sindh government wheat procurement campaign as now the prices are equal to support price. Sindh government has fixed a target of 1.3 million tons for wheat procurement as strategic reserves to avoid any wheat crisis in the province.
“The government has fixed a wheat support price of Rs 1,200 per 40-kg for procurement of wheat and in terms of per 100-kg bag it stood at Rs 3,000. The government agencies have recently started procurement campaign offering higher than the market price, therefore some increase has been witnessed in the commodity market,” said Hashim Sharja Wala, a wheat trader. Although, higher commodity price will increase inflation, however it”s better for the growers as they will get more money for their crop.