KARACHI - The current wheat season has additional challenges for the government, as the prices in international markets are presently lower at Rs800/40kg than what local market is offering, an incentive for imports to dump wheat through informal channels in the domestic market is ever present. On the other hand, potentially subsidised exports would easily be channelling the same back, thereby giving double advantage to traders active through informal channels. Most importantly, even sustained production and higher stocks in the country does not appear to help curb inflation in the near term, due to pricing mismatch and stock slippages. The burgeoning stress on government to meet its wheat procurement target at prescribed support price of Rs950/40kg ahead of upcoming crop is expected to keep commodity financing pressures intact. Meanwhile, lifting ban on export of wheat is also on the cards so as to relieve pressure on mounting wheat stocks that is currently 4.3m tons. The govt had set procurement target of 7.5m tons for current season. The interesting fact behind current procurement story is that government is opting to buy wheat at Rs950/bag support price, while considering granting subsidy on exports in an attempt to retire accumulated stocks so as to make them competitive with international pricing, said Farhan Basheer Khan at Investcap research. He said even though support price mechanism was adequately driven to promote higher cultivation of the crop, any subsidy on export should be eyed keenly as it will allow for potential arbitrage for traders, especially through informal channels. Khurram Schehzad, a market expert, said similar inequities had been observed in the past, which eventually created domestic supply shortfall and consequently mounted food inflation in the country. Another noticeable aspect is that, while support price at Rs950/bag was initially granted and later maintained with international parity pricing in mind, the same appear substantially less reasonable and difficult to justify under the present case as international prices have come down significantly, he added.