While the lifting of Pakistani wheat progressed smoothly in bulk ships and containers, exporters, being naive in this trade, indulged in price war, resulting in prices going down considerably in international market, according to leading wheat exporters here.
Pakistan, which was potentially a wheat importer 4-5 years back, entered export trade of wheat in February 2011, when the federal government allowed Punjab and Sindh provinces to export about 2.0 million tons and 0.2 million tons respectively.
During 2010 season, Pakistan had a bumper wheat crop, in excess of 24.0 million tons. The federal government had reserve stocks of about 1.2 million tons, whereas Punjab was holding reserve in excess of 3.5 million tons.
Punjab had approached the federal government to allow export of about 2.0 million tons during October-November 2010 but due to the sensitive nature of food grain and losses suffered as a result of unprecedented floods, it was reluctant to allow export of wheat in spite of the fact that Punjab was facing difficulty in storing this huge quantity of food grain because there are few covered warehouses, and majority of cargo was stored in open areas, resulting in payment of considerable amount towards cost of mark-up on loans secured by Punjab government.
However, the Federal Cabinet, following consultations with agriculture experts, allowed export of wheat to boost the national economy by increasing the volume of overall exports. Experts had predicted a super-bumper crop once again for the new season despite colossal damage caused due to floods.
Export of wheat was allowed in the private sector as the government found itself incapable to handle the mammoth project of lifting and finding markets to export the surplus wheat.
The private sector, being more efficient and outgoing and knowing the job well, did not take much time in finding buyers in United Arab Emirates, Tanzania, Malaysia, Vietnam and Burma, and sold the commodity at prices ranging between $320 and $342 per ton (pmt) fob Pakistani ports.
The government forecast for the new initial crop of 2011 was about 24 million tons, which was later revised to 25 million tons. However, final figures indicate that it is going to be a record crop of 26.1 million tons, about 4.0 million tons above the annual consumption of Pakistan.
Exporters are again on the run for export of new crop but the international buyers, knowing the nature of Pakistan's exporters, have dropped the rate of Pakistani wheat in the international market to $300-309 per ton fob Pakistani ports.
Although traders in Asia are purchasing Pakistani wheat at aggressive rates, it appears that the rates of Pakistani wheat may drop below $300 per ton fob Pakistani ports due to competition among various exporters.
On the other hand, international market is rising due to reports that Europe's wheat crop, making up a fifth of global output, is under threat and France's soft wheat crop, Europe's largest, would drop by 12 percent because of driest growing conditions in Europe in last 36 years.
A leading wheat exporter, Captain Rashid Abro, told Business Recorder that smaller than expected harvest may boost wheat prices, and advised Pakistani exporters to wait on the sidelines to reap rich harvest, as China is contending with drought while US farmers are also facing dry weather in some areas, and excessive rains in other wheat growing areas. The US Department of Agriculture (USDA) has forecast a second consecutive annual decline in global stockpile.
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