Wheat Approaches 2-Month Low on Trade Deal Optimism

Wheat production

CHICAGO: Wheat futures fell to under $8.1 per bushel, approaching the two-month low of $8 touched on November 10th as optimism regarding continued exports from major producer Ukraine supported supply expectations.

Turkish officials, including President Erdogan, said they are confident that Moscow will extend the UN-brokered deal guaranteeing a trade corridor in the Black Sea beyond its November 19th deadline.

Previously, Moscow held out on extending the deal amid accusations that grain exports hurt the competitiveness of Russian agricultural exports.

In the meantime, data from the USDA’s WASDE  Wheat report increased projections for world supply and ending stocks for the upcoming marketing year, compared to expectations of a decline, as higher output in Australia and Kazakhstan offset potential declines in Argentina and the EU.

While the agriculture industry, on Tuesday, decried the delay in implementing the revised electricity tariff of Rs13 per unit fixed for tube wells as promised earlier by Prime Minister Shehbaz Sharif. Farmers demanded the power division notify the revision with immediate effect.

“The Economic Coordination Committee (ECC), on Monday, approved the Prime Minister’s Agriculture Package but deferred a decision on providing subsidised electricity to tube-wells, due to the impact of the nearly Rs180 billion subsidy. This, however, is a 180-degree about-turn from what the PM had announced in his public address last month, said Ahmad Jawad, CEO of the Pakistan Business Forum (PBF).

As a result, the notifications in this connection have not been issued and relief has not been passed down to the waiting farmers.

“The farmers’ community will stick to what the PM had announced,” he said, adding that, “They are waiting for the notification. Secondly, they know the cabinet has the right to set aside the ECC’s decision.”

Speaking to the Express Tribune, Co-Founder of Agriculture Republic, Aamer Hayat Bhandara said, “If approved, the tariff will have widespread impact on the agriculture sector, especially in areas where tube wells are run on electricity. However, there is a dire need for a proper mechanism to execute this package efficiently.”