The prices of Phutti in the ready market in Sindh meanwhile were down by as much as Rs 100 per maund, while in Punjab, prices were slightly more firm. Overall prices remained range bound with finer varieties in Punjab going for Rs 2,800 while those in Sindh were selling between R2500 to Rs 2,600 per maund.
Prices in the coming week are likely to dip lower than the current levels on account of decreased business activity and low mill buying since production in some 20 percent of Punjab's mills that do not run on CPPs will remain out for another week if power is not restored.
However, in a recent talk with media, Minister for Water and Power Chaudhry Ahmed Mukhtar has confirmed that revising its previous intent to restore electricity within a fortnight, the Ministry is now planning to restore power by Monday the 31st of December. In case the power restoration goes through, the market should expect to see higher activity levels in the next few days.
Global cotton prospects on the other hand remained stagnant, however, volume picked up significantly as investors eased back into trading post-Christmas. However, a three-day rally came to an end on Thursday as speculative buying and trading dried up.
Overall, cotton prices for the March contract on ICE futures dropped some 2 percent over the last three days gains, ending up at 77.1 cents per lb, which happens to be the lowest price levels since mid-September.
Rice
Prices for Pakistani varieties remain unchanged this week, with the benchmark Irri-6 5 percent going for an unchanged price of $415 per ton. Trade activities have also remained steady this week, with demand from China remaining a sustainable factor.
However, Chinese buying of Vietnamese rice is also picking up steadily, and with prices for Pakistani varieties at relative par with Vietnamese varieties, there is a chance that Pakistani exporters may face considerable price pressures within the next few weeks as both countries compete over the same orders in a region where trade will remain tight this season.
The leader of the pack however remains India. The world's second-most populous country is expected to have a grain surplus of 15.7 million metric tons in the year through March that would be available for export according to FAO, meaning that it might actually surpass Thailand's dispatches this year. As of now, the country has already exported some 10.5 million ton of rice this year.
Sugar
The wholesale prices of sugar riding on the downward trajectory since the start of the crushing season have witnessed some stability after ECC decision to permit exports. This week, however, prices observed an uptick hovering around Rs 50 - 51 per kilogram owing to an increase in the demand of confectionery items during the Christmas week which spurred the demand of sugar and Gur.
However, as the newly crushed sugar has started to make its ways to the market, prices are expected to normalise soon. Besides the new sugar, market insiders highlight that TCP has also begun to receive tenders for releasing its last year's stock of White Indian sugar in the open market. This will further keep the prices on a steady stream.
With better recovery rates observed this year due to favourable weather conditions, the industry estimate for current season production rests at 5 million tons of sugar this year with the local demand clocking in at around 4.3 million tons.
Sugar millers earned more than US$200 million against the export of 300,000 tons of sugar during the past crushing season ended in April this year.
Although in this season too, State Bank of Pakistan, subsequent to the decision of ECC, has allowed domestic mills to export five million tons of sugar with no quota restriction, yet it is too late to garner good margins when the international market rates have dipped down to the level of US$518 - 520 per ton. While domestic millers highlight that any price lower than $530 per ton is not attractive for them and thus exert pressure on government to provide them with a rebate of Rs 6 per kilogram to prevent them from making losses.
The prices of the white sweetener in the international market are expected to plunge further as the German government has announced subsidy on export of sugar to support its millers.
In contrast to sugar glut in Pakistan, India awaits a harsh season as the sugar production is expected to fall short of the domestic demand. The prices of sugarcane are already surging, putting the millers in severe liquidity constraints leading to arrears in payments to farmers. Share prices of sugar companies have crashed up to 20 per cent since the new sugarcane prices were announced on December 7.
On the international front, Rabobank has increased its estimate of the global sugar surplus in 2012-13 by 27 percent to 6.6 million metric tons. The highest cane mix for sugar in the past five years would result in sugar production of 33.3 million tons and ethanol production of 20.8 billion litres, an increase of 6 percent and 1percent respectively on the previous season.
On prices front, March 2013, No. 11 raw sugar contract at ICE was traded at 19.42 cents/lb while No.5 white sugar contract at LIFFE was traded at $522/ton as on December 20th.
Wheat
This week the wholesale prices of wheat oscillated between Rs 3030 - 3050 per 100-kilogram. In Sindh, however, the prices are slightly higher at Rs 3080 per 100-kilogram due to lean supplies by Sindh food department in the open market on account of some policy issues, said a market source.
In 2012, the country produced around 23 million tons of wheat which depicted a decline of around 6.8 percent as compared to 2011. In 2012-13, the production is further expected to dip with industry production estimates resting at around 18-19 million tons as compared to the targeted production of 26 million tons.
Out of 3.5 million tons ending wheat stock of 2012, Pakistan has started exporting to Iran under a barter agreement of one million tons. The remaining stock will be utilised to feed the country until the new crop dawns upon. With production expected to fall short of demand, market insiders also underpin the fear of commodity hoarding in anticipation of getting better prices in the near future.
According to USDA grain report, wheat planting area in Pakistan has decreased by five percent since 2010 as amid surging cost of wheat production; the farmers are switching to other crops. This year, though, the government has raised the procurement prices of wheat to Rs 1200 per maund up from the previous level of Rs 1050 per maund.
However, market insiders underscore that the government decision to raise the procurement prices is more political rather than economical as it would increase their rural vote bank at the expense of severe food inflation in the country.
According to an industry source, had the government been loyal to the public, they would have given a subsidy to farmers to compensate their rising cost instead of raising the procurement prices and passing on the cost burden to public. Flour prices have risen by 60 percent since 2008 and are likely to rise by another 14 percent in coming months.
Towards the international scenario, global wheat production for 2012/13 is raised due to larger crops in Australia, Canada, and China. Moreover, India having no exports permits prior to 2011 is now seizing the opportunity to export at rates far lower than going international rates to shed its burdensome stocks amid inadequate storage facilities, according to USDA. On the price front, US hard red wheat for Gulf delivery settled on $346 per ton. While the EU France grade-1 wheat clocks in at $336 per ton, as of December 20th, 2012.