July 25, 2012

 

Pakistan resumes bulk wheat export to Sri Lanka

 

 

A 20,000-tonne, high-protein, milling-grade cargo to a buyer in Sri Lanka for prompt shipment have been sold by Pakistan as it resumed its bulk wheat exports, trading executives and cargo surveyors said Tuesday (July 24).

 

Pakistan made its first wheat export sales after the April-May harvest only a few weeks ago. Almost all were in containers of 20-25 tonnes each, but traders say now a bulk cargo has also been sold.

 

Buyers are increasingly turning to Pakistan to meet their immediate needs amid a severe drought in the US, a fall in Black Sea regional output, slow exports from India and rising Australian prices.

 

Multinational grains-trading companies that have sold optional origin wheat in recent months, have also begun sourcing wheat from Pakistan, pushing up local prices by 6.8% in one week.

 

Pakistan has a surplus of around two million tonnes that can fill a crucial gap in global wheat supply and cool prices that, on a delivered basis, have risen by around US$75/tonne in East Asia since mid-June.

 

The bulk cargo to be shipped to Sri Lanka comprises of wheat with both 13% and 14% protein and is priced around US$308/tonne and US$311/tonne respectively, free-on-board, an executive with a global commodities trading company said.

 

High protein US wheat prices are now above US$400/tonne, basis cost and freight, East Asian ports. Freight for Pakistani wheat in containers to Indonesia and Malaysia is around US$14 and US$4/tonne, respectively. Most sales so far were in containers but there is a sudden surge in enquiries for bulk cargoes, a grains trader in Karachi said.

 

Pakistan has sold at least 115,000 tonnes of wheat this month, mostly in containers, to buyers in Southeast Asian countries such as Malaysia and Indonesia and shipments have already started, said Muhammed Najib Balagamwalla, chairman of Seatrade Group, one of Pakistan's largest commodity trading companies.

 

Local wheat prices ex-Karachi warehouses, rose to PKR28,300 (US$300) a tonne this week as many trading companies who have sold wheat in advance to importers rushed to cover their requirements, said Balagamwalla.

 

Prices were around PKR25,800 (US$273.5) per tonne at the start of the harvest in April and PKR26,500 (US$281) a week ago.

 

Pakistan started exporting wheat this month at around US$285/tonne, free-on-board and the latest offers are between US$310-318 per tonne, FOB, depending on whether the trading company has already purchased the wheat locally, Balagamwalla said.

 

Many companies which had sold wheat in the global market around US$290-300 per tonne, FOB are still in the process of covering their commitments locally, traders said.

 

Sales are likely to touch 200,000 tonnes this month though shipments will spill into August, Balagamwalla said. If prices remain competitive, Pakistan can export at least 500,000 tonnes wheat by early September, he said.