May 22, 2007

  

Pakistan may export up to 1 million tonnes wheat in 2007
 

 

Pakistan's wheat exports could total 1 million tonnes in 2007, due to strong demand from the Middle East, South-east Asia and India, one of Pakistan's largest wheat exporters told Dow Jones Newswires.

 

"I think Pakistani exporters can meet only a fraction of the total international demand for Pakistani wheat, due to transport constraints and lower than expected wheat output," said Najib Hussein Balagamwalla, chief executive of Seatrade Pvt. Ltd.

 

Pakistan's ongoing wheat harvest will conclude by July, and the country's actual wheat output this year may total 21.7 million tonnes, unchanged from last year's official estimate but below this year's official estimate of 22.5 million tonnes, Balagamwalla said.

 

Regardless, Pakistan's wheat supply situation is very comfortable, because the government has a 3-million-tonne wheat stockpile, he added.

 

Seatrade, which is one of Pakistan's largest wheat exporters, plans to export up to 150,000 tonnes of wheat in 2007, after the government in December lifted a ban on wheat exports imposed in 2003.

 

Pakistan's winter wheat harvesting started in March, and the country's monthly wheat exports have averaged about 150,000 tonnes in the last two to three months, he said.

 

Export inquiries are coming in from Oman, Yemen, United Arab Emirates, India, Malaysia and Vietnam, said Balagamwalla.

 

Although export prices have risen over the past few weeks, Pakistan's wheat still remains competitive at about US$218/tonne, free-on-board Karachi port, he commented.

 

Pakistan's exports have been constrained by a lack of transport, as truckers are reluctant to transport wheat to Karachi, Pakistan's main port, because a lack of cargoes from Karachi means their return trip to farming areas would be made at a loss, Balagamwalla explained.

 

However, once Pakistan's summer sowing, or kharif, season begins later this month, truckers will be eager to transport wheat to Karachi, as they can haul imported fertilisers on their return journey.

 

Nonetheless, wheat export prices are unlikely to fall even when supply to ports improve, Balagamwalla said, because domestic wheat prices are rising in Pakistan and demand for export wheat remains strong.

 

Over the next three to four months, prices may remain in the US$215-220/tonne range, he added.

 

Exports to India have also been hampered by a lack of transport. So far this year, Pakistani traders have sold about 27,000 tonnes of wheat to neighbouring India, Balagamwalla said.

 

"We could have sold more, but there is a shortage of containers in India's Nava Sheva port to haul wheat from Pakistan."

 

International trading houses have submitted bids for Pakistani wheat in India's State Trading Corp's 1-million-tonne-wheat tender that closed Monday, but Pakistan might not be able to supply a significant quantity, Balagamwalla said, because Pakistani wheat typically contains more foreign material, or impurities, than STC's specifications, Balagamwalla said.

 

"There has to be some concession in that regard," he added.

 

The winning bids are likely to be announced over the next 10 days.

 

"Farmers are quite happy as they are getting more than the state-set procurement prices, but flour millers are upset because they can't get access to cheap wheat, which they can stock up and sell in months of lean supply later in the year," Balagamwalla said.