Wheat Transport Ban & Smuggling, KE Settlement & Petroleum Sales, Elections, FBR Data Pacts & IMF Suggestions, South Asia Monsoon Forecast

TOPLINE

●?????PM Sharif orders a crackdown on smugglers of wheat, sugar, and urea, while the ban on wheat transportation from Punjab to KP and other provinces is criticized as unconstitutional. Bahawalpur division establishes 72 wheat procurement centers, with more than 7.39 million metric tons of wheat being procured so far. Negotiations failed between the Sindh Food Department and APFMA resulting in the closure of more flour mills in Karachi. Customs has conducted 3 raids in Khuzdar and seized 41,883 bags of urea fertilizer and 44,957 bags of sugar worth Rs 392 million as part of a major anti-smuggling operation to foil attempts to smuggle them to Afghanistan.

●?????K-Electric offers out-of-court settlement for Rs 47 billion clawback issue with NEPRA while Pakistan's total sales of petroleum products decreased by 46% YoY to 1.17 million tons in April 2023.

●?????The All Parties' Conference called for parliament supremacy, holding simultaneous elections, and implementing the NAP, while ECP has asked the SC to reconsider its order that fixed May 14 as the date for polls in Punjab.

●?????FBR signed data sharing pacts with Sindh and Balochistan Boards of Revenue to boost tax collection via digital data on land/property ownership and agriculture income while the IMF has advised Pakistan to increase interest rates further to control inflation.

●?????South Asia is expected to experience normal to below-normal rainfall and an increase in maximum and minimum temperatures during the upcoming southwest monsoon season.

●?????Russia has accused Ukraine of a failed drone attack on the Kremlin in an attempt to assassinate President Vladimir Putin.

●?????The US Federal Reserve increased interest rates by 0.25%, but may pause further increases to assess bank failures.?

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

●?????Crackdown on Commodity Smugglers: Pakistan's Prime Minister Shehbaz Sharif has ordered strict action against smugglers of wheat, sugar, urea, and other commodities which have caused significant increases in their prices in the country. Sharif expressed satisfaction over a bumper crop of wheat this year that has broken the 10-year record and stated that the government would never allow smugglers to create problems for the masses. [Dawn] [Dawn] [ARY]

●?????Wheat Transportation Ban: The Pakistan Flour Mills Association Khyber-Pakhtunkhwa (PFMA-K-P) has stated that a ban on the transportation of wheat from Punjab to other provinces has resulted in the closure of 70% of the flour industry in K-P, and urged the prime minister to remove it soon. The chairman of the association said that the ban on wheat movement was unconstitutional and called for the removal of all check posts set up by the Punjab government to stop the transportation of wheat to other provinces. [ET] [The News]

●?????Wheat Procurement in Bahawalpur: According to Commissioner Bahawalpur Division Dr Ehtesham Anwar, 72 wheat procurement centers have been established in Bahawalpur division, with more than 7.39 million metric tons of wheat being procured so far, which is 82% of the set target. A crackdown has been started against illegal hoarding and inter-district transfer of wheat in the Bahawalpur division. [PO]

●?????Flour Mill Closures in Karachi: Negotiations between the Sindh Food Department and the All Pakistan Flour Mills Association (APFMA) Sindh chapter have failed, resulting in the closure of more flour mills across Karachi and fears of a rise in flour prices. The APFMA demands the abolition of 13 check posts causing delays in delivery of wheat to the city and adding to the price of the grain in the shape of overhead cost of bribery. [ET] [ARY] [The Nation]

●?????Customs Foils Smuggling Attempt in Khuzdar: The Federal Board of Revenue’s customs department has conducted three raids in Balochistan's Khuzdar and seized 41,883 bags of urea fertilizer and 44,957 bags of sugar worth Rs 392 million as part of a major anti-smuggling operation to foil attempts to smuggle them to Afghanistan. Joint operations in different areas of Balochistan by Pakistan Customs, Frontier Corps and police were also successful in preventing the smuggling of sugar and urea fertilizer to Afghanistan, with the value of the seized sugar and urea estimated at Rs 390.22 million. [Dawn] [Dawn]

●?????Proposal for Import Duty: The Pakistani government has proposed a 20% customs duty and regulatory duty on imported edible oils and oilseeds to achieve self-sufficiency for 60% of the country's edible oil requirements by 2033-34 under the National Oilseed Policy. The move is aimed at reducing the import bill, which currently stands at $7.668 billion, and achieving self-sufficiency. [BR]

●?????Pakistan's Cement Industry Contracts: The cement industry in Pakistan has experienced a 16.55% contraction in sales in April 2023, reaching 2.951 million tons compared to 3.536 million tons in the same period of the previous year, according to data released by the All Pakistan Cement Manufacturers Association. The industry sold 2.531 million tons of cement in the domestic market during April 2023, down 25.13% from April 2022 sales of 3.380 million tons. [ET]

●?????Gold Hits Record High: Despite the stability of the Pakistani rupee against the US dollar in the interbank market, gold reached an all-time high of Rs 222,700 per tola on Wednesday, with investors purchasing it to avoid the impact of further rupee devaluation. Meanwhile, the government raised Rs 706 billion through the sale of T-bills to commercial banks at a historic high return of 22%, with the import bill falling to less than $3 billion in April as part of measures to manage low foreign exchange reserves and mitigate the risk of debt default. [ET] [ProPakistani]

AGRI-INPUTS, WEATHER, WATER & POWER

●?????South Asia's Monsoon Outlook: South Asia is expected to experience normal to below-normal rainfall and an increase in maximum and minimum temperatures during the upcoming southwest monsoon season, according to a statement from the South Asian Climate Outlook Forum. The regional climate outlook was developed collaboratively by all nine national meteorological and hydrological services in South Asia with support from international experts. [Dawn]

●?????Sindh Farmers Demand Action: Sindh Abadgar Ittehad (SAI) has demanded the immediate restoration of natural waterways in Sindh and warned of the potential for billions of rupees in losses in the event of heavy rains and flooding. SAI members have also called for subsidies on electricity for the agriculture sector and demanded that action be taken against hoarders to address the current artificial shortage of fertilizer. [Dawn]

●?????KE Willing to Settle: K-Electric has expressed its willingness to an out-of-court settlement of the outstanding issue of clawback of Rs 47 billion with the National Electric Power Regulatory Authority (NEPRA), which is supposed to be refunded to consumers. This offer was made during a public hearing on KE's FCA adjustment request for March 2023, and the Authority approved a positive adjustment of Rs 3.70 per unit in KE's tariff for March to be recovered in May's billings, with a total financial impact of Rs 5.47 billion. [BR] [Dawn] [ET]

●?????Petroleum Sales Drop: Total sales of petroleum products in Pakistan dropped by 46% YoY to 1.17 million tons in April 2023, primarily due to higher petroleum prices, an economic slowdown, increased smuggling of petroleum products from Iran, and lower FO-based power generation. Sales volumes of MS, HSD, and FO fell by 24%, 50%, and 83% YoY, respectively, while petroleum sales rose by 6% MoM in April 2023 due to higher HSD demand and absence of heavy rainfall across the country. [BR] [Dawn]

AGRI UPDATES & PAKISTAN POLICY

●?????Senate Committee Raises AMLA Concerns: The Senate Standing Committee on Finance has raised concerns about the issuance of notices to the business community under the Anti-Money Laundering Act (AMLA) and has asked for clarification from the Financial Monitoring Unit (FMU). The committee was briefed by FBR officials on the list of names of people/businesses issued notices under the AMLA, and it was noted that some of the cases had been quashed by a special court, with the order to be shared in the next meeting. [BR]

●?????APC Calls for Supremacy: The All Parties' Conference (APC) called for ensuring the supremacy of parliament, holding simultaneous elections, and implementing the National Action Plan (NAP). The APC also emphasized the need for political decisions to be made in parliament and criticized the judiciary's role in legislation and not implementing the NAP to end terrorism. [BR]

●?????FBR Signs Data-Sharing Agreements: The Federal Board of Revenue (FBR) has signed data sharing agreements with the Board of Revenue Sindh and Board of Revenue Balochistan to share digital data, including data about land/property ownership and agricultural income, to improve their tax collection activities. The agreements were signed in April 2023, and the FBR has been making consistent efforts to acquire third party data by linking its IT systems with different provincial departments and organizations to improve transparency in the tax collection system. [BR]

●?????EC Requests SC Review: The Election Commission of Pakistan (ECP) has asked the Supreme Court to reconsider its order that fixed May 14 as the date for polls in Punjab after the government and opposition agreed in principle to hold elections in one go. In its plea, the ECP said that changing the election program was the sole domain of the commission under Section 58 of the Elections Act 2017. [Dawn]

●?????Pakistani FM Attends SCO Meeting in India: Pakistan's Foreign Minister, Bilawal Bhutto-Zardari, is set to attend the Shanghai Cooperation Organisation (SCO) Council of Foreign Ministers meeting in Goa, marking the first visit to India by a Pakistani foreign minister since 2011. Bhutto-Zardari's visit comes amid heightened tensions between the two countries and follows his previous remarks on Indian Prime Minister Narendra Modi's treatment of India's minorities. [Dawn]

●?????Pakistan PM Visits London: Pakistan's Prime Minister Shehbaz Sharif arrived in London for a five-day visit to attend the coronation ceremony of King Charles III and to hold political consultations with his brother and former Prime Minister Nawaz Sharif. Shehbaz will represent Pakistan at the coronation ceremony, and during his visit, he will seek counsel from Nawaz on issues such as elections and the ongoing confrontation with the Supreme Court. [BR] [Dawn] [ET] [RP] [APP] [The Nation]

●?????CPEC Meeting Delayed Over Commitments: China has not yet approved the decisions taken in the last meeting of the Joint Cooperation Committee (JCC) on China-Pakistan Economic Corridor (CPEC) held over six months ago, due to Islamabad’s failure to honour its commitments, resulting in a half-year delay in signing the minutes of the meeting, according to sources. As Pakistan awaits a visit from President Xi Jinping to celebrate a decade of cooperation under the CPEC project, the delay highlights the discord over policy. [ET]

●?????Pakistan's Budget Uncertainty: The budget strategy paper for Pakistan is expected to be finalized next week, with the budget for 2023-24 set to be presented in the National Assembly on June 9 or 10. However, the Federal Board of Revenue (FBR) has been hit with a new problem as its headquarters and field officers received a large number of leave applications until June 30 due to inflation, causing concern and uncertainty about the budget-making process. [ET] [PO] [The News]

●?????Interest Rates Increase to Control Inflation: The International Monetary Fund (IMF) has advised Pakistan to increase interest rates further to control inflation, according to its regional economic outlook report. However, Pakistan has already raised interest rates to their highest ever level of 21%, which has increased the government’s debt servicing cost and has not been successful in containing inflation, which hit 36.4% in April. [ET] [DP] [ProPakistani]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

●?????US Federal Reserve Raises Interest Rates: The US Federal Reserve raised interest rates by a quarter of a percentage point to 5.25%, signaling that it may pause further increases to assess the fallout from recent bank failures, political standoff over the US debt ceiling, and monitor the course of inflation. The move marks a new stage of the US central bank's management of the recovery from the COVID-19 pandemic, with what may be its final rate hike of the current tightening cycle, and heightened attention to risks facing the economy. This is the highest rate in the last 16 years. [BR] [BBC]

●?????US Soybean Planting Ahead: USDA's Crop Progress report shows that the soybean planting pace is well ahead of average, while the corn planting is now right on track with average. However, North Dakota farmers haven't planted any corn yet, and Wisconsin and Iowa farmers are behind the average planting pace. [AGWEB]

●?????Oil Prices Plummet: Oil prices dropped 4% on Wednesday as investors expressed concern over the US economy ahead of an expected Federal Reserve interest rate hike. Brent futures fell 3.8% to $72.47 a barrel, while US West Texas Intermediate crude fell 4.1% to $68.74. [BR]

●?????Russia accuses Ukraine: Russia accuses Ukraine of a failed drone attack on the Kremlin in an attempt to assassinate President Vladimir Putin. Ukrainian President Volodymyr Zelenskiy denied the accusation and called it a sign that the Kremlin was planning a major new attack on Ukraine. [BR] [AlJazeera]

●?????India Plans to Disband Cantonments: India is reportedly planning to disband cantonments and convert them into "exclusive military stations," with the Indian army having "absolute control" over them, according to news reports. The move involves merging civilian areas with local municipalities, which will be responsible for their maintenance among other things. [BR] [Lokmat Times]

●?????India's Press Freedom Ranking Downgraded: Reporters Without Borders (RSF) has downgraded India's press freedom ranking to 161 out of 180 countries and territories, 11 spots lower than Pakistan which now occupies the 150th position. [Dawn]

●?????Israel Seeks Hajj Flights: Israel is hopeful that direct flights for its Muslim citizens to make the Hajj pilgrimage in Saudi Arabia will be allowed, which would be another step towards normalizing relations, although the chances have been clouded by Riyadh's recent tensions with the US and fence-mending with regional rival Iran. Yair Lapid, the predecessor of Benjamin Netanyahu, said he had secured Saudi consent for direct Hajj flights from Israel last year, but there has been no confirmation from Riyadh. [BR] [Reuters]

●?????Iran Seizes Greek-Owned Tanker: Iran has seized a second oil tanker in less than a week, a Greek-owned vessel traveling empty from Dubai to Fujairah, as tensions rise in the Gulf waters. The US military said a fleet of high-speed Islamic Revolutionary Guard Corps Navy craft surrounded the vessel in the Strait of Hormuz and forced it to head toward Iranian territorial waters off the coast of Bandar Abbas, Iran. [Dawn]

●?????Iran-Syria Meet: Iranian President Ebrahim Raisi praised Syrian President Bashar al-Assad on Wednesday for achieving "victory" in the country's 12-year-long civil war despite sanctions and threats. [BR] [Dawn] [ET] [CGTN]

●?????Food Aid Report: According to a UN report released on Wednesday, 258 million people required emergency food aid in 2021 due to conflict, economic shocks, and climate disasters, up from 193 million the previous year, with over 40% living in the conflict-affected countries of Yemen, Ethiopia, Nigeria, Afghanistan and the Democratic Republic of Congo. UN Secretary-General Antonio Guterres called it a "stinging indictment of humanity's failure" to achieve food security and nutrition for all. [BR]?

PAKISTAN - REMAINDERS

●?????Karachi Central emerges as the most populous district of Karachi, again. [Dawn]

●?????Pakistanis Spend More on Brands: Brand image matters in Pakistan more than most other nations as 70% of the respondents in the latest survey reported they’re willing to spend more on a well-known brand. [Dawn]

●?????Opinion: Hazardous Waste Challenge - “Pakistan has become a free-for-all dumping ground for hazardous materials including chemicals, plastics, e-waste, and long-term pollutants. The health of the Pakistani people and their physical environment is under siege: our water bodies, food chain, aquifers, and the air we breathe have all become carriers of toxic material and chemicals.” - By Ali Tauqeer Sheikh [Dawn]

●?????Opinion: Exports, not Loans, Constitute Solution - “Pakistan's textile exports for April 2023 were $1.24 billion, which is $500 million lower than the previous year's exports, and $1 billion less than the industry's capability due to enhanced capacity. The decline is attributed to Pakistan's short-sighted decisions and failure to follow through on proven policies, while competing countries such as Bangladesh, Sri Lanka, and Vietnam posted impressive growth ranging from 10-30% in textile exports over the last year.” - By Dr Gohar Ejaz [BR]