Punjab’s wheat export tender receives poor response on weak global prices

LAHORE: Punjab’s tender for export of 0.25 million tons of wheat received lukewarm response on Monday in terms of prices offered, diminishing prospects of significant commodity trade, sources said on Monday.

As many as 12 traders, mostly belonging to Karachi, participated in the bidding process and submitted their offer for 0.525 million tons.

Highest bid of $219/ton or Rs30,666 was submitted by Chappal Group for export of 25,000 tons.

The downward trend in international grain market has dampened the prospects of wheat export from Pakistan.

The existing price of wheat in the international market hovers around $240/ton, while Pakistan Agricultural Storage and Services Corporation (PASSCO) did succeed in exporting wheat through private sector in similar bids at a price as high as $233/ton.

Most of the bids offered on Monday by private parties were around $200/ton or Rs28,000. As prices being offered were much less than the benchmark rate and prevalent trend in the international market, there were less chances of finalising these bids by the Punjab Food Department.

The release of wheat to flour mills was already on the higher side, surpassing previous record. In these circumstances, it would be feasible for the Food Department to continue with release of grains to local private parties for domestic consumption.

Owing to robust allocation of wheat to flour mills this season, Punjab Food Department’s opening stock for new wheat year was likely to be less than what was recorded last year.

Against last year’s opening stock of 3.5 million tons, it was expected that wheat stock would be limited to 1.7 to 1.8 million tons by start of April this year.

The bids were submitted in response to tender issued by Punjab Food Department on January 31, 2019 for exporting 0.25 million tons of wheat/wheat products through sea route.

Food Directorate Punjab in a notification floated the tender for the sale of the said quantity of fair to average quality wheat with jute/PP bags in the storage centres of Bahawalpur, DG Khan, Multan, Sahiwal, Faisalabad, and Sargodha Divisions.

As per terms and conditions of the tender, the bidders were required to submit 0.1 percent earnest money of the estimated price, which was Rs8,125,000 in favour of Director Food, Punjab, Lahore.

Each bidder was required to file bid for a quantity not less than 25,000 tons and not more than 50,000 tons.

Earlier this year, a tender from Passco attracted more than expected bids to sell 100,000 tons of wheat.

The tender, closed on January 11, was issued under a government export programme to reduce high wheat inventories with possible export subsidies.

Some 12 offers were above the minimum price target of $233 a ton, which would mean the wheat could be sold and exported without a state subsidy.

Last year, the government of Pakistan granted approval for the export of additional 500,000 tons of wheat with a subsidy of $105/ton.

Out of this quantity, PASSCO succeeded in exporting 0.1 million tons of wheat so

far. Pakistan’s Marketing Year 2018/19 wheat export forecast was revised upward to

1.7 MMT.

According to USDA’s world wheat market overview for 2018/19, global wheat production was up this year mainly due to a larger crop in Russia.

Global trade was up marginally due to higher imports for Iraq and Turkey. Exports were raised for Russia, Pakistan, and Turkey but cut for Australia.