LAHORE: Flour prices, if left to the market dynamics alone, are likely to drop as rates of wheat in the open market have begun to slide.
Wheat rates, even during the harvesting season, had crossed the mark of Rs2,200 per maund (40kg) despite a much better than expected crop this year, and market pundits were expecting the prices to go further up in the later months, like in the last year when grain had vanished from the open market and its prices touched the mark of Rs2,400 per maund though the minimum support price then was Rs1,400 per maund.
However, grain rate in the open market fell by Rs50, coming down to Rs2,000 per maund on Monday, and traders expect a further fall of about Rs70 per maund after Eid days.
Sources say the official announcement of allowing import of 4.0 million tonne wheat has dampened the market, forcing the hoarders to sell out their stocks. They believe that hoarders had stockpiled at least 2.5m tonnes of grain worth Rs100 billion this season in the hope of making easy money like they did last year.
Another factor, they say, is that the hoarded wheat was facing pest attack as the hoarders didn’t have proper storage and fumigation services.
Punjab Food Director Danish Afzaal says flour millers have also procured around 2.3m tonnes of wheat this season and that this stock is documented as the provincial government has introduced permit system this year for the mills and defined them areas for lifting wheat.
The permit system led to tracking of grain, automatic declaration of stocks as well as bringing the millers into the system, he says, claiming the carryover stock with the millers was to the tune of 900,000 tonnes.
He says the flour price was Rs1,092 per 20kg bag a week ago, but it has dropped to Rs1,068 per 20kg, the lowest across the country, and expects a further plunge in it in the weeks to come.