February 22, 2012

 

Pakistan set to hit record wheat exports this year

 

 

Pakistan's wheat exports may reach 1.5 million tonnes this year, which are in line with previous year's record helped by an upcoming bumper crop, industry source said Tuesday (Feb 21).

 

Output from the coming harvest is likely to total 24 million tonnes, almost unchanged from last year, due to good soil moisture, adequate use of fertiliser amid high farm incomes and fine weather throughout the planting and development stages, said Muhammad Najib Balagamwala, the chairman of Karachi-based Seatrade Group.

 

Last year, Pakistan exported a record 1.5 million tonnes of wheat. That level may be reached again this year if prices remain competitive, Balagamwala said ahead of a grains conference here.

 

The Pakistani government has raised the procurement price this year by PKR100-1,050 (US$1.10-11.56)/40 kilogrammes, or PKR26,250 (US$289)/tonne.

 

Based on this price, Pakistan's export prices of the new harvest will be around US$335/tonne, free on board, which won't be competitive, Balagamwala said. Australia, the US and Russia are offering wheat well below US$300/tonne.

 

However, brisk exports are still likely because the government is holding at least three million tonnes of wheat from previous harvests, and may sell some of its stocks to traders and millers at lower prices to create storage space for the new harvest and bolster dwindling foreign exchange reserves, Balagamwala said.

 

Not all growers have access to the government's grain-procurement machinery and prices in many regions generally fall below the intervention price due to the harvest pressure, thus boosting exports, he said.

 

Pakistan enjoys a geographical advantage in shipping wheat to Southeast Asia and freight costs for container shipments are negligible.

 

Pakistan emerged as a major exporter last year because its wheat was among the world's cheapest in the May-July period but shipments slowed after Russia lifted a ban on exports.

 

Ukraine, another major exporter, now plans to restrict exports due to concerns that bad weather will hurt its June-July harvest. Australia has ample supply but most of its shipping slots are fully booked due to strong demand.

 

Many buyers looking for small volumes for prompt shipment and delivery at short notice may turn to Pakistan, Balagamwala said.

 

Pakistan is currently exporting wheat after processing it into flour to several countries, including Sri Lanka and the United Arab Emirates, he said.