Staff ReporterTuesday, May 14, 2013 - Karachi—Wheat prices in the local market climbed up a third week running as government agencies scrambled to cover their procurement targets this week.
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.