Sugar: The wholesale prices of sugar saw a decline for most of last week in the main wholesale markets of Karachi and Lahore, yet managed to remain above Rs50 per kg as of September 6, 2012. Official estimates place domestic sugar stocks at 2.206 million as on August 23, 2012, sufficient to last till fresh crushing season starts in November, based on a presumed monthly demand of 0.35 million tonnes.
Meanwhile, sugar futures slipped in the international commodity exchanges last week. On London's LIFFE exchange, the white sugar October contract (No 5) declined to $545.90 per tonne on September 6, from $559.1 per tonne on August 30. The December contract also declined, by $7, to $545.5 per tonne during the period. The No 11 raw sugar future traded on the New York's Inter-Continental Exchange also dropped to 18.87 cents per lb on September 6, a nearly one cent drop during the period.
News reports suggest that an optimistic sugar outlook from Brazil, the top global producer of sugarcane and sugar, has eased off supply concerns emanating from an anticipated dismal cane output from India. Traders seem to have shrugged off the concerns and took to selling during the week to realise the gains from previous week's high sugar prices.
Meanwhile, Pakistan is all set to export 30,000 tonnes of sugar to Tajikistan following the ECC's approval last week, and TCP would procure another 10,000 tonnes to go above its original target of 2 lac tonnes. Reportedly, the PSMA called upon the government last week to allow the local mills to export 500,000 tonnes of sugar after a dry spell for exports lately, as the industry body expects a 1.2 million surplus sugar in the country.
Wheat
International wheat prices showed mixed trends during last week. The US hard red wheat for Gulf delivery earlier receded but later recovered to settle at $367 per tonne on September 6 - still below $370 per tonne on August 29. However, the EU wheat (France Grade-1) increased to $339 per tonne from $332 per tonne during the period.
Waning supplies and looming export curbs from major wheat producers in the Black Sea region had traders rushing towards the US and European wheat futures, reported Reuters. Though Russia is yet to show the intent to place limits or altogether ban its wheat exports, Ukraine might impose the ban as early as January 2013 to keep domestic flour prices stable, possibly chipping away 4-5 million tonnes of wheat from the commodity's global trade.
The Black Sea region's wheat is trading cheaper than the EU or US wheat; hence its supplies are running out fast. Last week, the Egyptian government ordered a purchase of 0.475 million tonnes of wheat from Russia, Ukraine and Romania, reportedly paying a price in the range of $321.50-323.41 per tonne. Iraq is also in the market to buy 50,000 tonnes of wheat, though it's unclear if it would go for Black Sea producers.
Yet there are some takers for the pricey EU and American HRW wheat, including Saudi Arabia. The Saudi grain agency is reportedly purchasing 0.575 million tonnes wheat from North & South Americas, Australia and the EU, paying between $368 and $375 a tonne. Amid constrained supply-side and fresh orders from major buyers, wheat prices would likely be heading upwards in the near future.
Cotton
A modest demand led to a slide in the phutti prices this week with mills staying away from buying due to fears of excessive moisture in the supplies from rain-soaked areas of Sindh and Punjab. KCA's official spot rate of Rs 5,650 on Friday remained unchanged from the previous day. However, there was a decline of Rs50 over last week.
Steady and timely rains over the cotton belt in the last week have otherwise removed all fears of a decline in cotton production and have prompted buyers to step away from the market on account of prospects of a further drop in rates. Although, sporadic showers are expected to slow the picking operations- retarding the supply somewhat- the weak international outlook and the prospects of a bumper crop are unlikely to provide any lasting respite to the local prices.
Cotton prices have remained similarly sluggish around the globe the past few weeks, with the availability of ample stocks and supplies leaching away value from the fiber. However, on Friday, Reuters reported a rise in cotton futures for the second day straight on the NYCE, spurred on Thursday by news of the new European bond-buying program.
Consequently, on Friday, rates picked up further on the back of a weaker dollar abetted by rallies in other commodities including crude oil and gold and the benchmark December contract ended up at 76.30 per lb, up 0.31 percent from Thursday.
Rice
Prices for Pakistani rice remained steady this week, with the Basmati variety beginning an upward trek this week, recording a $20-$40 increase, specifically for the Super Kernel variety. Since local farmers had opted to plant less acreage of Super Kernel in favour of the high-yielding 1222 variety this year, supply is going to be thin on the market; subsequently pushing buyers to secure purchases early on in the game.
The past week has also seen news circulating in the market that China has resumed its non-Basmati buying-, securing purchases of between 60,000-100,000 tonnes of Irri-6 5 percent, which is due for shipment in the latter half of October. China -which had imported 1.18 million tonnes of the Pakistani long grain white rice varities last year- is said to be all set to return to the market for further buying once the quality of the new crop is established.
The crop, which is expected to arrive soon- is expected to be a bumper one, however, recent hikes in fuel prices have prompted fears that rice sorting and milling is going to subsequently become more expensive, especially if generators are being used for the milling. Continued rains are also going to run up miller's cost, especially if the harvested paddy is delivered with higher than normal moisture contents. The next few weeks therefore, are going to be crucial in determining the price ceilings for the new arrivals, which are expected to hit the market as early as next week.
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