Aug 10, 2011

Myanmar commodity prices (Report)

Commodity prices have remained largely stable since April, despite the shift to democratic government, large fluctuations in the value of the US dollar and a lift in government pensions, traders said recently.

Traders at Yangon’s largest market, the Bayintnaung Wholesale Commodity Exchange Centre, said most prices have remained more or less unchanged for the past four months.

However, a spokesperson for OK rice and oil company at Bayintnaung said rice prices had increased slightly, while palm oil had come down in price by about 25 percent since April.

He said 49-kilogram (108-pound) bags of low-grade ehmeta (including 25pc broken grains) rice were selling for about K17,500 each, about K500 higher than in early April. The trader said that in the past fortnight rumours of crop damage had pushed ehmeta prices up by about K1000 a bag, while high-quality pawsan had risen by K2000 to K32,000-34,000 on April prices.

He said groundnut (peanut) oil prices have remained unchanged at about K4300 a viss (1 viss weighs 1.6 kilograms or 3.6 pounds). However, palm oil prices have fallen by about 25pc to K1850-1900 a viss in retail markets from K2750 in early April after the Minister of Commerce opened the lucrative trade to new companies.

The trader added that the supply of palm oil into the marketplace had greatly increased following the ministry’s action and prices had fallen accordingly.

He added that pork prices, which had jumped to K6000 a viss in early July on the back of fears about the spread of porcine respiratory and reproductive syndrome virus, had returned to about K5000 a viss.

U Khin Soe, the owner of Ayeyarwady groundnut oil company, said consumers have no extra money in their pockets and cannot afford higher commodity prices.

“The main reason prices are flat is that demand hasn’t risen at all because incomes are not rising.

“That means that farmers cannot sell their crops at higher prices,” he said.

The government unified pension payments in early July but he said the number of people who were affected by the increase was comparatively small and there had been no flow-on effect with pricing.

An economist said that while exporters had been hurt by the fluctuating value of the US dollar, which hit a low of K750 in early June, most of the population was unaffected. Last week the dollar was selling for about K765, down from K785 a week earlier.

“Myanmar’s currency price isn’t increasing in value, it’s just that there are lots of dollars available relative to the amount of kyat. And there has been a steady stream of new dollars all the time,” he said.

He added that the high saving rate offered by banks here – 15pc – encouraged people to bank their money.

“It makes sense for people to put their money into the banks when they can get 15pc annual interest on it. Unfortunately, that also helps to withdraw kyat from the market,” he said.

Source: Myanmar Times