SUGAR: No marked change in sugar price was witnessed in the main wholesale markets of Karachi and Lahore, with sugar trading above Rs50 per kg but not crossing the Rs52 per kg mark. Sufficient sugar is said to be available till the time sugar mills start crushing fresh season cane in November later this year.
Meanwhile, sugar futures in the international commodity exchanges underwent an unexpected surge last week. On London's LIFFE, the No. 5 white sugar's October contract edged up to $559.1 per ton on August 30, from $547.1 per ton on August 23. Similarly, the December's contract increased to $552.4 per ton - a nearly $7 jump during this period. The No. 11 raw sugar future, which is traded on New York's Inter-Continental Exchange, closed at 19.75 cents per pound on August 30.
Strong, renewed demand is said to be behind the recent rally. Concerns about the Indian sugarcane output seem to have weighed in lately. India is not the world's largest sugar producer but its entry and exit from the international market does create ripples. Reportedly, India's sugar production in 2012-13 could fall by as much as one million tons, which is factoring in the international situation as export curbs linger on.
Reuters reported last week that Indian exporters seem not too keen on selling offshore, given higher prices in domestic market, even as some exporters mull over cancelling upto 0.5 million tons of white sugar export orders. For Pakistani exporters, increasing sugar prices and India's absence from the exports arena provide a promising opportunity to book export orders when the price differential between local and international prices is still feasible.
Wheat:
International wheat prices showed a bit of a flip-flop last week, as the prices receded earlier in the week, and later recovered by the end of the week. The US hard red wheat for Gulf delivery settled at $370 per ton on August 29, lower than $373 per ton on August 22. Similarly, the EU wheat (France Grade-1) decreased to $332 per ton, from $336 per ton during the same period.
The initial price decline is said to be the result of profit-taking by traders who took advantage of high prices. The later reversal, which couldn't really offset the prior fall, came after the announcement of a cut in wheat crop's forecast for 2012-13 by the Russian government. At the close of the week, there were reports about traders expecting the Russian government to announce export curbs over the weekend.
Meanwhile, Reuters reported that the prices were also supported by Saudi Arabia's fresh tender to procure 0.55 million tons of HRW from international market for delivery later this year.
Cotton
The local cotton market has shown somewhat of a steadier price trend going into the weekend, With prices starting out weak on Monday despite analyst's predictions that they would remain firm on account of supply disruptions.
Lint prices remained steady this week in Sindh on account of monsoon showers that stabilised prices, with rates ranging between Rs5,750 and Rs5,800 per maund while in Punjab they fluctuated between Rs5,650 and Rs5,700 per maund. On the other hand Phutti prices in Sindh were reported to range between Rs2,475 to Rs 2,500 per 40 kg, while in Punjab they ranged between Rs2,300 to Rs2,500 per 40 kg, marginally lower than last week's rates amid slightly subdued mill interest. However, lower prices prompted interest from exporters who have been waiting for lucrative rates to start their buying spree to fulfil export commitments.
Overall, sources report that the seasonal output is likely to remain on track with prices likely to remain range bound as long as the monsoon rains stay on track. Anticipated output for the season is likely to exceed 15 million domestic size bales on an ex-gin basis, while domestic mill consumption may range between 14 to 15 million bales with exporters likely to ship out between a half and one million bales.
Meanwhile, on the international front, the commodity market took a jump with the news of the imminent arrival of Hurricane Isaac, which brought concerns about the damage it could potentially do to the standing cotton crop in Alabama and Mississippi. Consequently, the US cotton's December contract on ICE Futures jumped 1.2 percent on Monday and despite the subsequent relegation of the hurricane to the status of a tropical storm, settled at 76.65 cents per pound on Friday.
Rice
With expectations for a bumper crop on the way; amounting between 6.8 to seven million tons of good quality milled rice according to predictions by traders, the market has remained as firm as last week. Supply remains precious at the tail of the season with all remaining rice coming at a premium rate and carrying significant processing costs on account of a higher percentage of damaged and discoloured kernels.
Prices are likely to remain within the current range, with the IRRI-6 five percent listed at $460 per ton whilst the 25 percent stood at $400 per ton according to Jackson Son and Co. Moreover, these rates are likely to stay range bound right through September, with early arrivals from Punjab expected to hit the markets by late September.
The non-Basmati variety from Punjab is likely to sell for a higher rate than varieties from down south as a result of better drying facilities in the north. Consequently demand from China is also likely to return towards the end of the year for a mix of varieties including the premium Basmati, while on the other hand demand from the Middle East and Africa is likely to be concentrated upon the non-basmati variety like last season.