January 19, 2006

 

Pakistan wheat imports may hit 500,000 tonnes in 2006
 

 

Pakistan may import 400,000-500,000 tonnes of wheat in 2006 despite an expected bumper wheat crop this year, a senior industry executive told Dow Jones Newswires in an interview.

 

"I am quite confident about a great wheat harvest, but imports will continue as long as the government sells its procured wheat at high prices," said Mohammad Yusuf, chairman of Pakistan Flour Mills' Association, Karachi chapter.

 

Pakistan's federal government procures wheat from farmers at a state-set price which currently stands at 415 rupees (US$6.93) for 40 kilograms, and sells part of its wheat stocks to traders in the domestic market. The current domestic sale price is higher than the price of imported wheat.

 

Yusuf said imported wheat from Russia now costs 10,500 rupees/tonne (US$175.44) while the government is selling wheat at 11,500 rupees/tonne. (US$192.14)

 

"I don't understand the government's logic in selling wheat at such high prices. But they don't seem to be in any hurry to dispose of their massive stocks," said Yusuf.

 

Pakistan currently has government stocks of about 3.6 million tonnes of wheat. When the new crop reaches the market by April, the government is still expected to have about 2 million tonnes in old stocks.

 

However, Yusuf says this stock will have no impact on wheat price as the government has priced itself out of the market.

 

"Unless the government gets market-savvy and cuts prices, this wheat stock won't really affect supply and demand," said Yusuf.

 

Pakistan had imported about 400,000 tonnes wheat since wheat imports were allowed in June 2005, according to media reports.

 

Meanwhile, the government is optimistic production this year will hit 22 million tonnes, up from 21.5 million tonnes harvested last year.

 

With sowing mostly over, the current wheat crop will be harvested in March and April.

 

Yusuf said it is hard to predict the size of the wheat crop until harvesting is concluded. However weather conditions this season have been ideal so far.