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Global wheat production and consumption estimates for the 2020/21 season were updated by the United States Department of Agriculture last week, and the changes were broadly in line with market expectations.
The USDA reduced total production as smaller crops in the European Union, Kazakhstan, Argentina and Turkey more than offset larger crops in Russia and Ukraine. Global consumption was lowered mainly on feed and residual use for the European Union. Exports were raised for Russia, Ukraine, and the US, and reduced for the EU.
The biggest mover on the import side of the global equation was Pakistan after production from their recently completed harvest fell short of expectations. The USDA increased imports from .01MMT to 1MMT, but further increases are expected if recent reports out of Pakistan prove correct.
The Pakistan government estimates final wheat production ended up at 25.5 million metric tons (MMT), slightly above the five year average of 25.38MMT. While that represented a 1.2MMT increase on the 24.3MMT harvested in 2019, it was well short of the government’s target of 27MMT.
Wheat is one of the four main crops in Pakistan alongside rice, cotton, and sugarcane. It is grown during the ‘Rabi’, or winter season, by around 80 per cent of the country’s farmers.
The planting season commenced on time in October last year, and the area planted was expected to be 9.2 million hectares (Mha), around 40 per cent of the country’s arable area. However, soaring costs of production and a low government support price discouraged some farmers from planting, and the area finished up at around 8.5Mha.
Early crop development was excellent on the back of favourable weather conditions. But heavy rains and localised hail over areas of the leading wheat-producing province of Punjab in March and April delayed harvesting operations and caused damage to standing crops.
Wheat is an essential crop in Pakistan as flour is a food staple. The government has supposedly been storing surplus wheat since 2010. Yet, with the harvest season concluding less than three months ago, it is already hard to find wheat offered on the open market at the government’s fixed price and flour is also being sold at inflated prices.
The USDA pegged domestic consumption at around 25.6MMT, but according to the country’s Ministry of National Food Security and Research, the country’s annual wheat requirement is 27.5MMT. With low carryover stocks from last season and the lower than expected production, the balance sheet is now in deficit.
https://www.linkedin.com/pulse/pakistan-turns-wheat-importer-solve-domestic-market-peter-mcmeekin/
