Sugar, Wheat, Rice Worth $2.9 Billion Ruined by Pakistan Floods

Floods spread for hundreds of kilometres

Floodwaters ravaged 700,000 acres of planted cotton, and 200,000 acres each of rice and cane. Photographer: Paula Bronstein/Getty Images

Aug. 10 (Bloomberg) -- Husain Haqqani, Pakistan's ambassador to the U.S., discusses the floods that have devastated northern Pakistan and uprooted 14 million people so far. Pakistan’s deadliest floods may sweep through southern areas increasing damage to crops and infrastructure. Haqqani talks with Margaret Brennan on Bloomberg Television’s “InBusiness.” Mortimer Zuckerman, chairman of Boston Properties Inc., also speaks. (Source: Bloomberg)

Pakistan’s deadliest floods in its history damaged more than a million acres of sugar cane, cotton and rice fields and caused 250 billion rupees ($2.9 billion) of agricultural losses, a farmers’ group said.

Floodwaters ravaged 700,000 acres of planted cotton, and 200,000 acres each of rice and cane, Mohammed Ibrahim Moghul, chairman of Agri Forum Pakistan, said by phone. Rains also destroyed 500,000 metric tons of wheat, 300,000 acres of animal fodder and 100,000 head of livestock, he said.

Wheat prices gained in Chicago after five days of declines and sugar rose in New York and London on speculation the losses may force the world’s sixth most-populous country to import the staples. Pakistani officials appealed for urgent deliveries of food, shelters and medicine for 14 million people displaced by the catastrophe that’s killed at least 1,600 people and is now in its third week.

“Dozens of districts have been totally flooded, which means crops have been damaged, strategic food stocks have been damaged and the soil destroyed,” Maria Kuusisto, an analyst at consultant Eurasia Group, said from London. “These floods have caused severe damage to agriculture in Khyber Pakhtunkhwa and in Punjab and south in Sindh. These are the agricultural hubs.”

Flood surges triggered by unprecedented monsoon rains have swept south along the 3,200-kilometer (2,000-mile) long Indus River, devastating low-lying areas of Punjab and Sindh provinces, the densely populated economic and agricultural heartland of Pakistan.

‘Buy Now’

“If the cane fields are destroyed, there’s no time to replant and grow cane for the coming season,” said Sergey Gudoshnikov, an economist at the International Sugar Organization in London. “If Pakistan believes the sugar market is going to continue to go up, they may buy now.”

Pakistan’s cotton production will be less than forecast, a producers’ group said yesterday and shipments of rice from the nation, the third-largest supplier, may slump after crops and stockpiles in areas that represent 90 percent of the country’s output were damaged, Samarendu Mohanty, an economist from the International Rice Research Institute, said in an interview.

“A lot of stored grains have also been damaged,” curbing seed supply for next year’s crop,’’ he said.

Punjab, which was among the provinces hit by flooding, accounted for nearly 60 percent of the nation’s rice harvest, and Sindh 30 percent, Mohanty said. The country was to ship 3.8 million tons this year, more than 10 percent of the estimated global shipments of 30.4 million tons, according to the Food and Agriculture Organization, which made the forecast in July, before the flooding.

Higher Trade

“We might see higher grain trade across the globe” as Pakistan steps up purchases, said Amol Tilak, a senior research analyst at Kotak Commodity Services Ltd. in Mumbai.

December-delivery wheat rose 1.5 percent to $7.36 a bushel on the Chicago Board of Trade at 4:43 p.m. in Mumbai, taking the contract’s gains to 53 percent since July 1. Refined sugar for October delivery rose 1.2 percent to $538.70 a ton at 12:16 p.m. on NYSE Liffe in London. October-delivery raw sugar jumped 1.2 percent to 18.47 cents a pound on ICE Futures U.S.

Cotton output may be 10.25 million bales, according to the Pakistan Cotton Ginners Association. Floods have destroyed 2 million bales, Chairman Haji Muhammad Akram said.

“We will miss the target of 14.7 million bales and won’t be able to match last year’s production of 12.6 million bales either,” Akram said.

Flood Damage

Demand for cotton from India, the second-largest grower and shipper, may increase because of the damage in Pakistan, FCStone Group Inc. said in a report.

“According to local sources, the flooding in cotton- producing regions in Pakistan is prompting heavy inquiries from panic-stricken Pakistani traders,” FCStone said.

The floodwaters first struck the western province of Baluchistan on July 22 before inundating the Khyber Pakhtunkwa province. Punjab and Sindh were the next hit.

Thunderstorms are expected to bring more rain to the north, Muhammad Riaz, the chief meteorologist said by phone from Karachi, though they are not expected to be heavy. Flood forecasts were issued for parts of Punjab along the Chenab River.

President Asif Ali Zardari made his first visit to regions swamped by the floods yesterday as relief officials appealed for urgent deliveries of food, shelters and medicine.

The U.N. started a $460 million appeal for aid on Aug. 11 and the U.S. has pledged $55 million in assistance. The U.K. allocated 16.8 million pounds ($26 million) and earmarked up to 31.3 million pounds for relief aid, the Department for International Development said on its website.

“We need relief supplies immediately, not today, not tomorrow but right now,” Ahmed Kamal, spokesman for the National Disaster Management Authority, said by phone from Islamabad, the capital.

To contact the reporter on this story: Madelene Pearson in Mumbai on mpearson1@bloomberg.net; Khurrum Anis in Karachi at kkhan14@bloomberg.net

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