As per the USDA's monthly report on commodities, global production of wheat in 2015/16 is now expected at a new record level, being forecast up 1.9 million tons this month to almost 735 million tons - an increase of over 13 percent over last year. The revised estimates are based upon larger-than-anticipated crops in Canada and the EU. Consequently, this raises global wheat trade as well as ending stocks.
As for consumption, the USDA is looking at 717 million tons globally - an increase of 14 percent year-on-year. Nevertheless, another comfortable surplus is abound and ending stocks are projected at almost 230 tons - up 8 percent year-on-year. So, wheat prices might not be looking at a rebound soon.
As for Pakistan, wheat production and consumption estimates for 2015/16 have thankfully been kept unchanged at 25,000 and 24,600 million tons, respectively. But the problem is, and always has been, our surplus that just can't be gotten rid of; as per industry sources, the surplus of wheat present in Pakistan is currently between 8-9 million tons. And the latest numbers from PBS show that wheat exports for the month of November were a mere 200 MT, amounting to a laughable $47,000. However, the same time last year, wheat exports were zero, so that's something at least!
The issue of our un-exportable wheat is primarily due to the exorbitant support price. Our largest market for wheat, Afghanistan, accounted for around 6 lac tons of wheat annually.
However, industry sources say that this market is being lost to India and other players. The problem occurs when you keep a support price so high that the exports become uncompetitive (as is the case with sugar as well). Instead, why not subsidize the farmers directly?
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