Wheat price drops, but flour still costly

KARACHI: The price of wheat has fallen to Rs3,350-3,400 per 100 kg bag compared to Rs3,700 within this week due to start of new crop. However, consumers have yet to see any price cut in flour varieties. Flour millers and wholesalers expect more decline in wheat prices when grain arrivals will reach their peak. Karachi Wholesale Grocers Association (KWGA) Chairman Anis Majeed said fall in wheat prices definitely means cut in flour price. On prospects of wheat crop size this year and import of wheat, he said he cannot predict about the actual crop size but the decision to import wheat this year should be taken on right time based on final crop size coupled with demand and supply gap. The government, he added, must also consider import of wheat when its international prices are depressed. A flour miller, who asked not to be named, said that some 16,000-18,000 wheat bags per day are arriving in Karachi from Interior Sindh now which would reach 50,000-65,000 bags from next month. When asked about price cut in flour price after reduction in wheat prices, he said that actually wheat of higher moisture content of 16-17 per cent is arriving now which will dry up as summer season gets intense day by day. The millers prefer grinding wheat when moisture level will range between 10-11pc. He anticipated further fall in 100kg wheat bag price by Rs 100-200 depending on speedy arrivals of new wheat in the open market from producing areas. Millers will rely on locally produced wheat as imported stocks have already exhausted in the open market while the Sindh government also does not have any wheat of old crop. He said flour price also depends on the ban which the provincial government usually imposes every year on wheat arrivals to Karachi from different upcountry areas. In case the ban is not imposed, chances are bright that wheat price would drop which means decline in flour prices, he said. On prospects of imports this year, the millers said that much will depend on the crop size but markets reports suggest that new wheat crop may hover between 23.5 million and 24 million tonnes. Irrespective of wheat production, around 10pc wheat usually goes in waste in transportation and due to improper storage while some quantity also finds way into Afghanistan. However, import of 377,402 tonnes of wheat worth $107 million in July-February 2013-2014 failed to bring down prices. But millers and market traders believe these imports have stabilised flour prices a little bit, because consumers would have to pay Rs60-70 per kg for flour during the this fiscal year if there were no imports. The millers said wheat imports are favourable for Karachi, a non wheat producing area, in case the provincial government imposes ban on wheat arrivals to the city from Punjab and Sindh producing areas.