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February 21, 2015

Wheat export outlook bearish on world prices, rebate order

Business

February 21, 2015

KARACHI: Farmers fear the country will be unable to export enough wheat this season to rein in the stockpile and a failure means new crop risks rotting in fields instead of being sold on world markets to cash in on good prices.
In March, farmers will begin to harvest the wheat crop expected to exceed demand, and when threshing is over in May stocks are set to hit 27 million tons.
Pakistan is likely to produce 26 million tons of wheat this season. Last year, the country produced 25.29 million tons. Farmers said prevailing weather conditions are also supportive to the standing crop.
Traders said the country may miss a target to export 1.2 million tons of wheat this year after a decline in global prices slowed sales. The sluggish export has also made farmers worrisome about getting the minimum support prices fixed by the government for this year harvest. “The government has not yet clarified at which stage of the export it will reimburse the rebate of $45-55/ton in announced,” said an exporter. The delay is keeping the export sluggish.” He, however, expects the central bank to issue the much awaited notification in a couple of days. “We believe, the government should give the rebate within one-week from the date of receipt of export proceeds,” the exporter said.
Mehmood Molvi, an importer and exporter, said the country has exported only 3,000 tons wheat since the Economic Coordination Committee (ECC) of the Cabinet approved export of 1.2 million tons in January 2015.
Molvi said Sri Lanka, Bangladesh and Malaysia are likely to buy wheat from Pakistan because of freight advantage. “Pakistani wheat would cost them $255/ton (C&F) as compared to $260-265/ton from a European country,” he said.
The country would have a carryover stock of one million tons if it fails to export the allocated quota. Growers, especially small farmers, fear they would be forced to sell their commodity at a throwaway price. The government revised up the new

support price by Rs100/40 kg and fixed it at Rs1,300 /40 kg for the new season.
Syed Mehmood Nawaz Shah, vice chairman of Sindh Abadgar Board, said farmers in the province would sell the grain below the support price, as they are about to start harvesting and surplus stocks are still at government warehouses.
Shah said provincial food department has failed to sell major portion of procured wheat after traders in the private sector imported around 700,000 tons of grain in the first half (July-December 2014) of current fiscal year. “The imported (low cost and low nutrition) wheat consume mostly in Karachi and some other parts of Sindh,” he said.

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