April 25, 2011

 

Pakistan to sell 1.5 million tonnes of wheat

 

 

Pakistan has already exported, or is contracted to sell about 1.5 million tonnes of wheat this year, selling some 50,000 tonnes of wheat to Southeast Asia this week on competitive offers.

 

Wheat cargoes from Pakistan were quoted around US$310-US$315 a tonne, including cost-and-freight (C&F), compared with US$420-US$425 a tonne being offered for prime wheat and US$325 a tonne for feed wheat, both from Australia.

 

Traders expect more deals of Pakistani wheat in the weeks ahead as there were enquiries from Malaysia and Indonesia. "Pakistan has good prospects for exports as not only the prices are competitive, they are offering grains with 12% protein content," said a trader with an international trading company in Singapore, "They are even cheaper than Australia feed wheat."

 

Asian wheat importers have remained on the sidelines in the last few weeks, buying only hand-to-mouth as global prices continue to climb. The benchmark CBOT wheat futures added more than 7% this week, taking the gains to 22% from March lows.

 

Asia's third-largest wheat producer, Pakistan resumed exports in January for the first time in three years after the government lifted a ban in December.

 

Pakistan is expected to produce at least 25 million tonnes of wheat in its 2010-11 crop, Finance Minister Hafiz Shaikh said earlier this month, with harvesting of the new-crop in full swing. The country consumes about 22 million tonnes a year, which is expected leave surplus for exports. Pakistan had already exported or is contracted to sell about 1.5 million tonnes of wheat so far.

 

India, which has been selling large volumes of corn to Indonesia in recent weeks, is likely to see slower sales with exporters increasing prices in the face of strong demand and tight world supplies.

 

Indian corn prices have risen to US$350-US$355 a tonne C&F this week, compared with cargoes sold at US$330 a tonne about 10 days ago, traders said.

 

"Indian corn is not workable as of now for Indonesia because there is disparity of US$20 between buyers and sellers," said another Singapore-trader who sells feed grains into Asia.

 

Buyers may be forced to take Indian corn at higher prices because of tightening global supplies, which pushed the benchmark US prices to an all-time high earlier this month.

 

The USDA has forecast corn inventories to dwindle to 675 million bushels by August 31, an 18-day supply, with global corn stocks at their tightest since the Great Depression.

 

Traders said corn from Argentina was being offered around US$370 a tonne, C&F and the feed grain from Thailand was priced near US$355-US$360 a tonne. "Thailand is offering old-crop at US$325-US$330, free-on-board but the quality is not very good," the trader said. "If you add another US$30 freight, the price comes close to South American corn. People will any day prefer Argentine corn over Thai."

 

Asian grain importers will be closely watching US weather as corn planting gets underway in the Midwest. There are forecasts of dry weather in the coming weeks after a slow start to the season due to excessive rains.