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Weather Forecast
PAR Jan 25, 2022 193Synoptic Situation
Continental air is prevailing over most parts of the country.
Tuesday
Mainly very cold and dry weather is expected in most parts of the country. However, light rain with light snow over the hills is expected in Kashmir and surroundings. Dense fog is likely to prevail in upper Sindh, plain areas of Punjab and Khyber Pakhtunkhwa during night hours.
Wednesday
Mainly very cold and dry weather is expected in most parts of the country. Dense fog is likely to prevail in upper Sindh, plain areas of Punjab and Khyber Pakhtunkhwa during morning/night hours.
Past 24 Hour Weather
Weather remained cold and dry in most parts of the country. However, rain with snow occurred in Kakul, Balakot, Ziarat, Bagrote and Kashmir.
rnRainfall (mm): Kashmir: Muzaffarabad (AP 08, City 05), Garidupatta 05, Rawalakot 03, Khyber Pakhtunkhwa: Kakul 13, Balakot 03, Gilgit Baltistan: Bagrote 01 and Balochistan: Ziarat 01.
rnToday's Lowest Minimum Temperature’s (°C): Leh -13, Kalam -10, Ziarat, Kalat -09, Gupis, Astore -08, Parachinar, Skardu -07, Malamjabba -06, Quetta, Bagrote -05, Zhob -04, Hunza -03, Pulwama, Shupiyan, Baramulla, Chitral, Drosh, Dalbandin -02, Dir, Anantnag, Nokkundi, Cherat, Rawalakot and Murree -01.
Peshawar: prices of kitchen items remain high
PAR Jan 24, 2022 193PESHAWAR: Prices of important kitchen items, including sugar, flour, live chicken/meat, vegetables, cooking oil/ghee, black tea, pulses and others have remained on high-side in the local market, according to a survey carried out by Business Recorder here on Sunday.
As impacts of ‘mini-budget’ have started showing in the local market. The rates of almost all daily use items have increased exponentially, according to market sources.
According to the survey, once again sugar prices has been climbed up in the local market, as the commodity is being sold at Rs100-102 per kilogramme against the price of Rs95 per kilogramme in the previous week, whereas Gur (jaggery) is being sold at Rs170 per kilogramme.
According to market sources, a 50 kg flour sac is being sold at Rs4500 in the open market, while sugar is being sold at Rs95 in the wholesale market. The sources said it was noticed that the hoarding of sugar was at peak and traders started amassing stock in the wholesale market in order to sell at double rates.
Similarly, the prices of live chicken/meat remained bullish locally as this food item was available at Rs191 per kilogramme. However, a slight reduction in price of farm eggs was witnessed as available at Rs180 per dozen against the price of Rs200 per dozen a week age.
The survey witnessed butchers continuously squeezing poverty-stricken people by charging exorbitant rates as beef is being sold at Rs550-600 per kilogramme against the official fixed rate of Rs350 per kilogramme.
Similarly, the survey noted mutton is being sold at Rs1300-1400 per kilogramme.
The survey noted price of cooking oil/ghee has continued to upscale in the local market as the item is being sold within range of Rs250-300 per kg/litre, and Rs350-400 and Rs410 per litre/kg.
A visible increase in the rate of black tea was witnessed as was available at Rs1020 per kilogramme against the price of Rs900 per kilogramme, the survey noted.
The survey noticed price of a 80-kg sac of flour has been increased by Rs200-300, as it was available at Rs6200-6300, forcing the bread makers [Tandoor owners] to increase price to Rs20 from Rs15.
Amid rising chilly weather, the prices of dry-fruits have increased manifold in the local market, while manifold increase in the prices of fresh fruits was also witnessed that are completely out of the purchasing power of a common man.
Fresh milk is being sold at Rs150-160 per litre while yogurt was being available at Rs120-140 per kilogramme, the survey noted.
A mixed trend in prices of vegetables was witnessed in the local market, the survey noted. One kg tomatoes are being sold at Rs40-50 per kg against the price of Rs70 per kg in the previous week, while onion was available at Rs50-60 per kilogramme.
Similarly, the price of ginger has decreased to Rs350 per kilogramme from Rs400 per kilogramme, whereas garlic at Rs200-250 per kg. Cucumber was available at Rs40-50 per kg, green chilli at Rs160 per kg while one-kilogramme lemon was available at Rs120 per kg.
Peas are available at Rs80 per kilogramme, arvi at Rs100 per kilogramme, cauliflower at Rs80 per kg, red-potatoes at Rs60-70 per kilogramme, cabbage at Rs80 per kilogramme, bringle at Rs50 per kilogramme. Long, apple and round gourds were available within range of Rs80-90 per kilogramme, while ladyfinger was available at Rs100-150 per kilogramme, one-kilogramme karela (bitter gourd) was being sold at Rs150, spinach at Rs30 per bundle, lemon at Rs120 per kilogramme.
Prices of pulses/food grains remained unchanged in the retail market. Good quality rice (sela) was available at Rs160 per kilogramme, while toota rice was available at Rs80-90 per kilogramme. Gram flour (baisen) is being sold within the range of Rs80-100 per kilogramme in the retail market.
Dal mash is being sold at Rs280-300 per kg, big-size white chana was Rs160 per kg, dal chilka (green) at Rs140 per kg, dal chilka (black) at Rs160 per kg. Moonge was available at Rs200 per kg. Dhoti dal is being sold at Rs240 per kg.
Apples are being sold at Rs140-150 per kg against the price of Rs80 per kg, mangoes within range of Rs100-120 and Rs150, apricot at Rs250 per kg against the rate of Rs160 per kg, the survey noted.
Similarly, bananas were available at Rs100-150 per dozen against the price of Rs70-80 per dozen, grapes were being sold at Rs300 per kg, guava was available at Rs120-150 per kg against the price of Rs80 per kg.
CCoCPEC to fine-tune PM’s China agenda
PAR Jan 24, 2022 193The BoI had moved a summary to the CCoCPEC, seeking approval for the establishment of the CPEC Business and Industrial Tower in Islamabad.
The Capital Development Authority (CDA) had already been requested by the BOI for identification of a suitable piece of land in Islamabad on 8th May 2020; however, no suitable land could be identified for the project so far. Whereas, a few of the state-owned Chinese companies have already approached the BOI to explore this project and have expressed their interest to execute it with the BOI in public-private partnership mode.
In the 1st Joint Working Group (JWG) meeting on Industrial Cooperation (IC) under China-Pakistan Economic Corridor, held in November 2016, the Pakistani side proposed the construction of eight multi-storied CPEC towers in the ICT, all provincial/ regional capitals, as well as, in Gwadar to provide potential Chinese investors and their Pakistani counterparts with adequate services and space, with a special focus on services sector.
Later, the Pakistani side again shared this idea with the Chinese side in the second meeting of the JWG on Industrial Cooperation held in November 2017, that both sides may work on iconic projects under the Industrial Cooperation; however, no further development could take place in this regard.
It was proposed that the cost of land, to the tune of Rs500 million for this project, may be borne by the BOI from its own resources without seeking any additional budget grant; whereas, the cost of construction of the CPEC Business and Industrial Cooperation Tower may be borne by the Chinese counterpart or by a partner selected after international competitive bidding; and the project to be executed in public-private partnership mode.
Proportionate equity against the land may be taken by the BOI in the project, after valuation of the land on market principles, the summary noted.
The Defence Ministry would brief the CCoCPEC on the implementation plan for vacation of PCG and PN land at Shaba Ismail Gwadar.
The Ministry of Maritime Affairs would apprise the meeting about the recommendations of the committee on development of Gwadar under various modalities.
The Petroleum Division would brief the committee on the progress updates provision of utilities for the CPEC Special Economic Zones (SEZs).
Wheat squeezed from all sides
PAR Jan 24, 2022 193Pakistan’s wheat import tenders have been a regular occurrence for the last few years. After claiming to have harvested a record crop of 27.30 million tonnes last May, the government ordered the import of 3m tonnes — on the excuse of building of strategic stocks — in June. It came after imports of 3.6m tonnes the previous year.
Now, the fears are that the next season may not be any different, as most of the wheat watchers are worried about the crop for multiple reasons. Though it is too early to predict the crop size with a measure of certainty, they calculate the final figure at around 25m tonnes. Citing multiple problems that afflict the crop, they think that the crop is bound to suffer; how much only time will tell. The deficit would naturally be met through imports.
The persistent fertiliser crisis throughout the sowing, germination and development stage provides the context of their reasoning for the drop in yield. Phosphatic fertiliser (DAP), a most essential nutrient, saw its usage slide by a whopping 40 per cent (2.2m tonnes last season to 1.5m tonnes this season), as its price spiralled out of 90pc (small) farmers’ reach. It increased from Rs4,500 per bag to over Rs10,000 per bag within a matter of weeks. It doubled the requirement for credit for farmers, which was simply not available with the middlemen or formal sector. This drop is bound to impact the final tally.
The next most important nutrient for vegetative growth is urea, which suffered an even bigger crisis. Its disputed supplies (production, demand and availability) caused an even bigger crop calamity. The industry claims to have produced 6.4m tonnes (half of which is required during the Rabi season) this year and says production and marketing failure during the peak period made its application uncertain.
The opening inventory this October was 116,000 tonnes against 473,000 tonnes last year as two plants went offline because of gas supply disruptions. This gap was further accentuated by the fact that around 250,000 tonnes of urea are always on wheels, reducing buffer stocks by the same margin and creating panic during crunch time. It started a price spiral, which went out of hand and led to massive domestic hoarding and smuggling — since the international price was over Rs10,000 per bag — to Afghanistan and Iran.
The National Fertiliser Development Center (NFDC) paints equally confusing facts when it says that a total of 3.35m tonnes urea would be available (116,000 tonnes opening balance, 3.11m tonnes local production and 100,000 tonnes import) during this Rabi season (Oct-April), but how much of it was actually available to farmers and applied to wheat, no one knows. Apart from the seasonal positive picture, the NFDC does concede a monthly deficit of 102,000 tonnes (November), 129,000 tonnes (December), 178,000 tonnes (January) and 168,000 tonnes during February.
Thirdly, a psychological shift among farmers added yet another layer to the urea problem. For farmers, who were unable to apply DAP, urea became fertiliser of the last resort; though this product substitution has no agronomical reasoning, that is how the urea issue worsened into a crisis when farmers went for panic purchases. If the media reports are to be believed, this process is still going on.
The feared drop becomes huge when measured against official targets of 28.90m tonnes for the season. This increase could only come either from expansion in the area or an increase in per acre yield (read better nutrients). With nutrients contribution or damages becoming a question mark, the acreage also does not leave room for any optimism either.
The country was able to increase acreage in 2020 (from 8.79m hectares in 2019 to 9.10m hectares) by jacking up support price by over 30 to 40pc; Punjab from Rs1,400 to Rs1,800 per 40kg and Sindh to Rs2,000. It added 2.4m tonnes to the national tally (from 24.90m tonnes to 27.30m tonnes) or 9.6pc. This year, the support price was increased by 8-10pc (Punjab to Rs1,950 and Sindh to Rs2,200 per 40kg) and wanted to increase production by 1.6 million tonnes.
Though Punjab has not officially announced its wheat acreage so far, farmers insist that it may not be even what the province (16.67m acres) had last year for two reasons. The cost is one and competing crops outperforming wheat commercially is the second. The farmers got only an 8pc increase in support price against provincial calculations of a 28pc increase in the cost of production. The fertiliser crisis, which might have increased this cost of production by another 20-25pc, started even before the sowing started and rigged the commercial viability of the wheat crop.
Privately, most of the officials do concede a drop in production as weather, which had created some optimism in early January, is turning inclement with continual wet spells that promise to continue even in February. Resultantly, they also admit the necessity of imports to meet the expected deficit and plan in time.
“The Indian side is also experiencing almost identical problems and may also go for imports,” warns Khalid Khokhar of Pakistan Kissan Ittehad. If Pakistan and India go to the world market together, international prices are bound to go up. Another problem is the brewing crisis between Russia and Ukraine — both potential suppliers of wheat — further complicating the process.
The ever increasing freight forwarding charges also require the government to plan ahead and efficiently. Wheat price in the domestic market is already climbing up and has touched Rs2,700 per 40kg against the official price of Rs1,950 per 40kg in Punjab. All these factors point in one direction: plan for imports at all stages (when, from where, which agency to import) and send clear signals to markets to keep them from overheating as has been the same for the last three years, Mr Khokhar suggests.
Oil prices rise on supply fears amid tensions in Eastern Europe, Middle East
PAR Jan 24, 2022 193TOKYO: Oil prices rose on Monday on worries about supply disruption amid rising tensions in Eastern Europe and the Middle East, which could make an already tight market even tighter, while OPEC and its allies continued to struggle to raise output.
Brent crude futures rose 81 cents, or 0.9%, to $88.70 a barrel by 0344 GMT, reversing a 0.6% loss on Friday.
US West Texas Intermediate (WTI) crude futures gained 72 cents, or 0.9%, to $85.86 a barrel, having fallen 0.5% on Friday.
Both benchmarks rose for a fifth week in a row last week, gaining around 2% to hit their highest since October 2014. Prices are already up more than 10% this year on the concerns over tightening supplies.
"Investors remained bullish due to geopolitical risk between Russia and Ukraine as well as in the Middle East, while OPEC+ continued to fail to reach its output target," said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
Oil prices fall despite lingering supply concerns
"An expectation for higher heating oil demand in the United States amid cold weather also added to pressure," he said.
Fuelling fears of supply disruption in Eastern Europe, the United States on Sunday ordered the departure of family members of staff at its embassy in Ukraine, citing the continuing threat of military action from Russia.
The New York Times reported late Sunday that US President Joe Biden was considering deploying several thousand US troops to NATO allies in Eastern Europe and the Baltics.
Russia will face severe economic sanctions if it installs a puppet regime in Ukraine, a senior British government minister said on Sunday, after Britain accused the Kremlin of seeking to place a pro-Russian leader in power there.
In the Middle East, the United Arab Emirates' defence ministry said it destroyed two Houthi ballistic missiles targeting the Gulf country on Monday, with no casualties, the state news agency (WAM) reported.
The OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) with Russia and other producers, is struggling to hit its monthly output increase target of 400,000 barrels per day (bpd).
OPEC+ compliance with long-installed oil production cuts rose to about 122% in December, two sources from the producer group told Reuters, indicating that some members continue to struggle to raise their output.
"Expectations that OPEC+ members such as Saudi Arabia and Russia are likely to keep the current policy of gradual increase of output to maintain Brent oil prices between $85 and $90 a barrel are providing support to an overall sentiment," said Tetsu Emori, CEO of Emori Fund Management Inc.
Money managers raised their net long US crude futures and options positions in the week to Jan. 18, the US Commodity Futures Trading Commission (CFTC) said on Friday.
In the United States, petroleum inventories have continued to slide over the last month, while energy firms cut oil rigs this week for the first time in 13 weeks. Analysts expect cold weather to boost heating demand over the next few weeks.
Palm scales record high on oil rally, talks of export curbs by Indonesia
PAR Jan 24, 2022 193JAKARTA: Malaysian palm oil futures hit a record high on Monday, rising for a fourth straight session, buoyed by a rally in crude oil prices and talks of export restrictions by top producer Indonesia.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange was up 0.94% at 5,372 ringgit ($1,284.25) a tonne by 0238 GMT, after scaling an all-time high of 5,380 ringgit earlier in the day.
The contract posted a fifth straight weekly gain last week amid lingering output concerns and talks of export control by Indonesia.
Fundamentals
Indonesia starting Jan. 24 required palm oil exporters to get shipments approvals from the trade ministry. Meanwhile, the government is also discussing a plan to limit exports of the vegetable oil, an industry group said.
Indonesia's plan to limit palm oil exports is likely to make leading importer India shift to substitute soy and sunflower oils, potentially capping the market's rally, industry officials and analysts said.
Oil prices jumped on Monday as geopolitical tensions in Eastern Europe and the Middle East heightened concerns about an already tight supply outlook, while OPEC and its allies continued to struggle to raise their output.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Dalian's most-active soyoil contract rose 0.84%, while its palm oil contract gained 1.14%. Soyoil prices on the Chicago Board of Trade were up 0.16%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may break a resistance at 5,366 ringgit per tonne and rise towards 5,484 ringgit, Reuters technical analyst Wang Tao said.
Market News
CBOT corn futures rose to their highest in seven months on Friday as concerns about production in South America spurred demand for US supplies, traders said.
Asian share markets slipped on Monday with the Federal Reserve expected to confirm it will soon start draining the massive liquidity that has fuelled the huge gains in growth stocks in recent years.
Wheat: a case for higher intervention price?
PAR Jan 24, 2022 193Pakistan’s best hope at putting an end to cyclical mismatches between wheat supply and demand is for government to exit procurement operations, create ease for imports by liberalizing tariffs, and allow market-based price discovery. But reforming wheat market does not seem to be on the agenda under the incumbents.And it certainly won’t happen a year before general election, in the throes of peak global commodity prices (in a decade). Surprisingly enough, the best recourse in the short-run – to avoid another local shortage – may be to fix a higher intervention price. Self-contradictory? Consider the following.
Between FY12 – FY18, local wheat output and consumption remained at par, with negligible imports. This period coincided with grain prices bottoming out in the international market. Local prices on the other hand, held steady – a consequence of both:a downward sticky minimum support price regime, and an artificially overvalued exchange rate.
Since late 2018 when Pakistan adopted a market-based exchange rate, wheat prices in the local market have declined substantially in dollar terms, trading at par – and for a short-while even below – prices in the international market. This price parity has coincided with local supply falling short of domestic consumption, manifesting itself in a local price spiral. Between Aug-18 and Dec-21, wheat prices rose by 80 percent in local wholesale market (WPI).
This inverse correlation between domestic wheat availability and price competitiveness in the international market is not without cause. An obvious possibility is that lower prices in dollar terms leads to higher disappearances as incentive foroutward smuggling grows. However, an official export ban means that both the extent and impact of any such cross-border disappearances remains unknowable. Another possibilityis that currency depreciation and price control may reduce the profitability of wheat crop in dollar terms, driving farmers to substitute cropswhose prices adjust more readily to movements in international market or in exchange rate.
Either way, what is patently obvious is that every time exchange rate comes under significant pressure, local wheat market falls into disequilibrium, which cannot be immediately addressed through market forces due to barriers to trade. Eventually, the administration is forced to increasing MSP significantly – as it did by 50 percent in FY08, or by 30 percent in FY21, permanently raising prices for domestic consumers (as support pricesare never revised downwards).
Like Sisyphus’ rock, local market can be emancipated from the cyclical disequilibrium if policymakers were to let the market forces reign free; let imports flow in; and have stockists/exporters ‘officially’ make one-off gains each time local and international markets are trading at significant differential. But the incumbents most certainly lack the courage to undertake reforms of such import, especially not in the year leading up to election. Also, international prices’ recent flirtation with fresh peak means that the timing may not be right; more so, with a war looming between Russia and Ukraine, two of world’s six largest wheat producers.
Nevertheless, the differential against international price may once again widen in the coming months, especially if the currency continues its downward slide. Meanwhile, the federal government has raised MSP by only 8 percent for the upcoming season (in rupee terms). For farmers, this season the price is well below market equilibrium range ($275 to $325 per ton over the last decade), inflationary pressure means that cost of wheat production in dollar terms is highest in the last seven years. At current MSP of Rs 1,950 per 40kg, profit margin for farmers shall be lowest in the last 15 years!
Government’s decision to not raise MSP abnormally is also not without cause. Official rate for wheat has already been raised by 50 percent since PTI came to power. At this price, public sector commodity operations debt is all set to exceed Rs 1 trillion for the first time in history, as cost of debt servicing alone may round up to Rs 60 billion or above! And that’s just accounting for local procurement; in case of a shortfall and imports through TCP, cost to the exchequer shall witness yet more slippages.
Put the pieces of the puzzle together, it appears likely that the PTI government may face yet another wheat crisis come mid-2022, whether it is due to shortfall in production, farmers’ unwillingness to sell to Food departments, disappearances due to smuggling, or expensive imports. So, what can it do to ease the pain in the short-run?
Raise the minimum support price for the upcoming season, at least up to $300 per ton (rupee equivalent); lower government procurement target substantially to minimize loss on commodity operations;instruct SBP to facilitate in-season buying by private sector through raising financing limits;and allow post-season import by private sector to counter threat of disappearances through smuggling. A higher support price with lower procurement target will in effect act as an intervention price, minimizing risk of farmer exploitation by private sector due to distressed sales. And let this be a first step towards a phased but very permanent exit of public sector from the messy wheat market.
Free market is an operating system. Market based exchange rates would only bring price stability to commoditiessuch as wheat - if pricing of goods is also market-based, not administratively controlled. But here in Pakistan,the public has become victim to an unenviable situation. The policymakers arekeen to make the market-based exchange rate stay, without offering the nuts and bolts of what makes it work in other countries. By not liberalizing goods markets alongside exchange rate regime, policymakers have made a bad problem worse.The state is unwilling (or unable due to reasons of political expediency) to let go off administrative controls over goods markets. This anomaly won’t last for too long;and something will have to give, sooner or later.
In the meantime, the public is left with remedies that are akin to palliative care for terminal cancer patients.Raising wheat MSP (or intervention price) is one such solution. But such is also the cost of systemic governance failure.
Gwadar Safe City Project: PSCA to provide technical, operational support
PAR Jan 24, 2022 193LAHORE: The Punjab Safe Cities Authority (PSCA) has signed a memorandum of understanding (MoU) for providing technical and operational support to the Gwadar Safe City Project.
The agreement was signed between Gwadar Safe City Project Director DIG Shehzad Asif and PSCA Chief Operating Officer DIG Muhammad Kamran Khan at an appraisal meeting held here recently.
According to the MoU, the PSCA will provide maximum technical and operational support to Gwadar Safe City Project in the installation of CCTV cameras, formation of the command centre, networking and communication. The PSCA’s technical support team will also visit Gwadar and provide guidance on technical requirements for all important posts and operational positions.
Speaking on the occasion, DIG Shehzad Asif said the PSCA’s assistance will be highly beneficial for making Gwadar a safe and secure place. “PSCA is a masterpiece project of modern technology and a success story of modern policing in Pakistan,” he added.
PSCA COO DIG Kamran Khan assured DIG Shehzad Asif of providing all possible support and technical assistance for the early completion of the Gwadar Safe City Project. “It is a historical moment and we are witnessing a positive change of policing in Pakistan,” he said, adding that they had already provided assistance to establish Safe and Smart City projects in Quetta, Peshawar, Islamabad and Karachi.
FDU Swat contributes value-addition to horticulture produce
PAR Jan 24, 2022 193PESHAWAR: The Fruit Dehydration Unit established by Small and Medium Enterprises Development Authority (SMEDA) has been contributing the value addition of horticulture produce of district Swat, said official sources of the authority on Sunday.
Post harvest losses of about 30% have been a big problem for the farmers and traders. The situation has been aggravated by the adverse climate changes especially hailstorms during the season. This damages the fruit like, apricot, apple, peach, and persimmon.
Ever since its operations in July 2020, the FDU, Swat has been facilitating SMEs engaged in processing of fruit and vegetable. As per its mandate, the project provided direct employment to 16 people. While processing the fruit of over 40 farmers and traders, it has helped the cluster to earn about Rs. 3.1 million by adding value to the fruit that would have otherwise damaged and wasted.
Talking to this scribe Sulaiman a farmer from Charbaagh, Swat expressed pleasure over the establishment of the processing facility. He added that he has come to the project so that he can get his fruits processed and utilize the possible waste into profitable products.
