Rice: Small slippages in regional rice quotes continue to manifest as the bloating stock residing within the Asian rice producing bloc awaits absorption. The previous month has seen a decline of nearly four percent in prices of Thai varieties while quotations for Vietnamese rice have slipped down by one percent.
Meanwhile, Pakistani rice has been one of the only stable players in the region, and prices have strengthened by as much as four percent off the back of relatively smaller stocks available with the sellers and a steady demand from Chinese quarters. Traders have reported that a supply constraint in western markets has also prompted some interest in Pakistani rice and some dispatches to Mexico have come to attention.
This week news has hit media outlets that Vietnam has plans to stockpile some one million tons of rice in a bid to buttress the sliding prices. What put the plans in serious jeopardy are the staggering amounts of rice stocks still in storage with India and Thailand, which means that short of a miracle, prices in the region are unlikely to recover in the medium term.
And with margins already slim, stockpiling does not technically seem to be a strong enough guarantee of being able to salvage profits. Hence Vietnam's plans are very likely to go the route of the Thai and Indian stockpiling nightmares.
Meanwhile, the fate of Indian rice that awaits buyers still hangs in the balance, as a shortage of covered storage facilities before the arrival of the summer monsoon will likely mean that the rice is going to be destroyed. Amid the piling stocks, the Indian Punjab government has this week issued a statement, asking farmers not to plant paddy and instead focus on alternatives such as corn and sugarcane.
Cotton
The local cotton market showed little signs of improvement this week as minimal trading was reported despite ginners lowering their asking price in a bid to flush out the lower quality stocks still in store.
However, some traders report that rains expected in the southern cotton belt have prompted some mills to come out and purchase small amounts this week. The official spot rate for ex-gin grade- three cotton meanwhile remains stagnant at Rs6,400 per maund, but a slight improvement in prices can be expected if the arrivals in Sindh are delayed further.
This week, international cotton also continued to weaken as investors scamper to liquidate their options. Reuters reports that the most active July cotton contract on ICE Futures slipped to 79.87 cents/lb on Friday, hitting the lowest level in the last four months. The contract shed 0.57 cents, to settle at 80.13 cents/ lb, as the market remained short of buyers.
At this point, analysts are expecting mills' interest to perk up as the prices slide close to 78 cents/lb. This would provide some support to cotton as future prices come exceedingly close to cash prices at the heels of a first quarter speculator driven rally that drove up prices by 18 percent in January.
Wheat
The effect of constrained supplies in Punjab have spread to KPK, as wholesale prices of the staple food commodity shot up by Rs70 this week, with a 20 kilogram bag of flour going for Rs720 as compared to the previous price of Rs620.
The prices of flour have historically been higher in KPK as the province completely depends on Punjab to fulfil its flour supply, and with provincial procurement drives in full swing in the province, supplies in the open market have reportedly been depressed. However once the drive is over in another week, prices should come back to previous levels, according to traders in Punjab.
In the global market this week news has hit media outlets that South Korean millers have suspended imports of wheat of American origin. This follows on the heels of import suspensions by Japan after signs of genetic modification were found in US wheat originating from a field in Oregon growing winter wheat.
Although officials have confirmed that the strains of wheat- which have been developed by the biotech giant Monsanto, but have never been approved for sale- have not infiltrated the commercial supply chain, this non-compliance is set to weigh heavily on the $8 billion-US wheat export industry.
As a number of nations who heavily import from US go on high alert, there are some in the market who say that GM wheat has been infiltrating the American wheat supply for some time. As a result of this speculation, US wheat fell for a second straight session on Friday as USDA continues its investigation.
The Chicago Board Of Trade's most active contract for July delivery consequently dropped 0.47 percent to $6.95/ bushel, having closed down 0.57 percent on Thursday amid fears that more importers would cancel orders.
Sugar
The International Sugar Organisation this week dashed all hopes, saying that sugar prices would not be gaining traction anytime soon, as it added to their previous estimates of the global sugar production in 2012-13, taking it to a record high of 9.98 million tons.
As the world output growth outpaces consumption growth by as much as 2.2 percent, the availability of sugar for export in the international market is slated to climb up by more than 1.6 million tons during the current marketing year. Additionally, there is little hope of a balanced market next season say sources.
For the 2013-14 season, a number of reports indicate that world sugar production is expected to decline, shedding as much as five million tons compared to the bumper global production of the ongoing season. However, production is still expected to remain at least 3.5m tons higher than global consumption.
Comments
Comments are closed.