SINGAPORE: Asia’s immediate wheat demand is being met by an ample supply from Pakistan, which is exporting large quantities to make way for the new bumper harvest, Dow Jones quoting trading executives said on Monday.
“Pakistan has filled a crucial gap in Asian wheat trade due to the absence of supply from the Black Sea region,” said a Singapore-based executive working for a global trading company.
If Pakistan had not permitted wheat exports during this period of tight global supply, price conscious buyers in South Asia and Southeast Asia would have had to turn to costly alternative supplies from Canada, the US and Europe.
The absence of Pakistan would have also increased the demand pressure in Australia, where ports are already facing congestion and delays in moving wheat from upcountry warehouses.
Pakistan approved wheat exports in December and shipments began the following month. In less than four months it has shipped out an estimated 1.16 million metric tons of wheat.
International Grains Council has projected Pakistan’s wheat exports in the year ending June 30 at 1.6 million tons, the highest in at least four years. Close to 1 million tons of Pakistan’s wheat has been exported in bulk shipments and 160,000 tons in containers, said Muhammed Najib Balagamwalla, chairman of Seatrade Group.
Bangladesh has emerged as the major buyer for Pakistan’s wheat, purchasing more than 700,000 tons, traders said. The country is one of the world’s largest wheat importers, buying around 3.0 million-3.5 million tons of wheat annually.
Since Russia banned grain exports last August and exporters in Ukraine defaulted on several deals, Bangladesh purchased cargoes from a variety of origins, including Germany, Canada, Brazil & Australia, before finding a less expensive source in Pakistan. Pakistan’s milling wheat is among the cheapest in the world. Even though bulk sales are to Bangladesh, thousands of containers also been shipped to Southeast Asian countries and to United Arab Emirates.
Early this year, Pakistan sold wheat around $329 to $335 a ton, free on board, while recent sales have been around $300 to $310 per ton.
With freight charges of around $4 to $18 per ton for containers from Pakistan, Southeast Asian buyers have locked in purchases at less than $320 per ton on a cost-and-freight basis for prompt shipments.
One of the transnational grain exporters said that flour millers in Vietnam & Malaysia, which require limited volumes on short notice, prefer Pakistan’s grain. Export of existing wheat stocks of Pakistan will make room for bumper harvest that is under way.