November 28, 2006

Pakistan's surplus wheat may drive up global prices

With stocks towering above 0.45 million tonnes, Pakistan exports would be affecting international commodity exchanges.

Pakistan has the potential to drive up international wheat prices, as it stands among the only three wheat-producing countries across the globe with surplus stocks of more than half-a-million tonnes from last year's crop.

Two other nations with similar potential are Argentina and Ukraine. Meanwhile in Pakistan, the authorities have also been considering allowing commercial export of surplus wheat rather than executing the same only through the state-run Trading Corporation of Pakistan (TCP). The move could fetch better prices.

According to officials, the Federal Ministry of Food, Agriculture And Livestock has proposed to ministries of finance and commerce to design a strategy, which could allow commercial traders to have some share in wheat exports.

Though the agriculture and commerce ministries hinted at resuming wheat exports after a gap of nearly two years, the decision still awaits a nod from the finance ministry. The latter would do so after analysing domestic needs and its impact on local markets.

The ECC (Economic Coordination Committee) of the cabinet has already removed 15 per cent regulatory duty on wheat export in order to consume surplus stocks in the country, said an official at the commerce ministry.