Wheat -- an essential food item -- has become more and more expensive in the domestic market despite the fact that the government had claimed of achieving a bumper crop in 2007. However later it decided to import some one million tons of wheat.
Market movers have once again shown their strength in the local market, increasing wheat prices to an all time high of Rs2,000 per 10-kg bag or Rs20,000 per ton in the domestic market.
During the current year, the overall wheat price has gone up by 68 per cent or Rs750 per 100-kg bag during the current calendar year.
After the current upsurge the price of the commodity has increased to Rs2,000 per 100-kg bag in the domestic market from Rs1,100 per 100-kg bag in March 2007.
During the last week the price of the commodity has increased by Rs400 per 100-kg bag and reached the historical level of Rs2,000 per 100-kg bag in the domestic market. Earlier, the price stood at Rs1,600 per 100-kg bag.
The current increase has been witnessed at a time when the imported wheat had started to reach Karachi.
The first consignment of imported wheat of over 26,000 tons reached Karachi on November 30, booked by the Trading Corporation of Pakistan (TCP) to meet the local demand besides arresting the soaring prices.
Yick Hua- ship transported around 26,498 tons of Russian wheat which arrived at Port Qasim. The commodity was then shifted to the TCP godowns.
This is the first consignment of imported wheat after two years received by the Trading Corporation of Pakistan (TCP) following the federal government’s decision to import wheat in the wake of its shortage across the country.
Earlier, in 2005 Pakistan imported some 800,000 tons of wheat from Australia due to a similar kind of situation, which hit the country's local markets. However in the following year, 2006, the country's wheat production was satisfactory therefore it was not imported.
However, in 2007 despite the bumper crop of 23.5 million tons, the federal government was compelled to import the commodity from the international market owing to its soaring prices in the local markets and also to meet the local demand, besides reining in its prices.
The first consignment of wheat has arrived while the second of some 23,500 tons is likely to reach in the second week of December. The TCP has made arrangements to avoid storage of imported wheat, however there were no such arrangements made for checking its quality.
The imported wheat has been directly shifted to the stores of the provincial food department, Sindh.
"The TCP has instructed the Sindh food department to arrange transportation of wheat to the godowns."
Overall the TCP has finalised some 772,000 tons of wheat import deals with foreign suppliers, including 370,000 tons of red wheat (Russian) and some 402,000 tons of white wheat (USA or Canadian).
However despite the fact that the TCP has finalised over 0.7 million tons of wheat import deals and the food department is supplying imported wheat to the millers, the commodity price in the local market continues to increase.
Market movers have once again shown their strength in the local market, increasing wheat prices to an all time high of Rs20,000 per ton in the domestic market.
During the current year, the overall wheat price has gone up by 68 per cent or Rs750 per 100-kg bag during the current calendar year. Traders said there were some factors behind the current price hike in the local market, including import of the commodity at a higher price and hoarding of wheat by the exporters.
During the last week the price of the commodity has gone up by Rs4,000 per ton to a historical level of Rs20,000 per ton in the domestic market. Earlier on Thursday, price of wheat stood at Rs16,000 per ton in the local market.
"Approving of wheat import tender at high rates by state-run grain traders has brought the commodity prices to peak level in the local market," the traders said.
Despite the fact that presently there was no shortage of wheat and it had a high demand in the domestic market, the price of the commodity had shown an upward trend in the last few days, they added.
"Trading Corporation of Pakistan (TCP) has been importing wheat at Rs445-511 per ton due to the high international prices, therefore the market mover has been activated in the local market to gain more on the hoarded wheat stocks," said Hashim Sharjawala, a leading wheat trader.
He said there was no need of huge import of grain, as the local stocks were enough for the next two or three months.
"Wheat import on high rate has made the traders increase the price of the commodity, and at the time of issuance of wheat tender by the TCP in September 2007, the local wheat price stood at Rs14,750 per ton compared to Rs18,500 per ton being charged at present," Mr Hashim said.
Although, the government is supplying grains to the flourmills at low rates, the mills are selling their quota in the local market, which was one reason for the increase in the price of the commodity, he added.
Therefore, the market movers are manipulating the market to earn more and more profit from the hoarded commodity, Mr Hashim added.
Wheat hoarding by some exporters and millers is another reason for the price hike of wheat and despite several announcements, the government has failed to take stern action against those concerned to ensure price stability of the commodity, he added.
"We are expecting further increase in wheat prices in future if the government does not float its stocks," he said.
If the current situation of wheat grain continues then it is expected that the wheat price may touch a mark of Rs20,000 per ton in the next few weeks, he said.
Market sources believed that presently the price was not based on the shortage and the manipulators were getting a huge margin.
They said wheat grains were available in the market at a huge quantity and not a single trader has refused to sell wheat, however, they are demanding higher prices for the commodity.
"The government has not taken any action against the hoarders and manipulators, therefore the prices of wheat were going up," they said.
They suggested that the government should form special teams for checking wheat godowns and the recovered commodity should be supplied to the millers at low rates.
On the other hand, the wheat flour price in the domestic market has also been raised to the historical level of Rs24 per kg and millers have forecasted that if the current price hike continues then it could cross Rs25 per kg in the local market.
