April 19, 2011

 

Pakistan upholds Asia's wheat supply pipeline

 

 

The urgent wheat needs of Asia is being sustained by sufficient supply from Pakistan, which is exporting existing stocks to make way for the new harvest, trading executives said Monday (Apr 18).

 

"Pakistan has filled a crucial gap in Asian wheat trade due to the absence of supply from the Black Sea region," said a Singapore-based executive with a global trading company.

 

If Pakistan hadn't permitted wheat exports during this period of tight overall global supply, price conscious buyers in South Asia and Southeast Asia would have had to turn to costly alternative supply from Canada, the US and Europe.

 

The absence of Pakistan would have also increased demand pressure in Australia, where ports are already facing congestion and there are logistical delays in moving wheat from upcountry warehouses.

 

Pakistan approved wheat exports in December and shipments began the following month.

 

In less than four months it has shipped out an estimated 1.16 million tonnes of wheat.

 

The International Grains Council has projected Pakistan's wheat exports in the year ending June 30 at 1.6 million tonnes, the highest in at least four years.

 

Close to one million tonnes of Pakistan's wheat has been exported in bulk shipments and 160,000 tonnes in containers, said Muhammed Najib Balagamwalla, chairman of the Seatrade Group, a Karachi-based commodities trading company.

 

Bangladesh has emerged as the major buyer of Pakistan's wheat, purchasing more than 700,000 tonnes from the south Asian country, traders said.

 

The country is one of the world's largest wheat importers, buying around 3-3.5 million tonnes of the grain annually.

 

Since Russia banned grain exports last August and exporters in Ukraine defaulted on several deals, Bangladesh purchased cargoes from a variety of origins, including Germany, Canada, Brazil and Australia, before finding a less expensive source in Pakistan.

 

Pakistan's milling wheat is among the cheapest in the world. Even though the bulk of the sales are to Bangladesh, thousands of containers have also been shipped to Southeast Asian countries and to the UAE.

 

Earlier this year, Pakistan sold wheat around US$329-$335 a tonne, free on board, while recent sales have been around US$300-$310/tonne.

 

With freight charges of around US$4-$18/tonne for wheat export in containers from Pakistan, Southeast Asian buyers have locked in purchases at less than US$320/tonne on a cost-and-freight basis for prompt shipment.

 

Earlier this month, Australian Prime Wheat traded at US$423/tonne and Australian Standard White around US$370/tonne, C&F, for bulk shipment in June.

 

Last month, Taiwan bought high-quality US milling wheat for bulk shipment in April and May at prices between US$350 and US$564/tonne, C&F.

 

"Bulk shipments are still taking place from Australia and the US but they are costlier and take more time to deliver," said one of the transnational grain exporters.

 

Flour millers in Vietnam and Malaysia, which require limited volumes on short notice, prefer Pakistan's grain, he said.

 

Pakistan's exporters are purchasing the grain from the provincial governments of Sindh and Punjab. Exports of existing stocks will make room for the bumper harvest that is under way.