Highlights

Planting of the Rabi (winter) wheat crop is expected to get underway in a few weeks. The Government has not announced a revised procurement price, but Pakistani wheat is already among the most expensive in the world and farmers are expected to match the year-ago area that led to a near-record crop. Despite an export subsidy of $120 per ton for up to 900,000 metric tons of wheat, Pakistan's high domestic wheat price is expected to limit exports to neighboring Afghanistan. Pakistan's wheat market is currently shielded by a 60 percent import tariff. Rice exports have faded after the robust monthly volumes that started the marketing year, but, with two months to go in the marketing year, appear to be on pace to reach 4.2 million metric tons in 2015/16, down slightly from the previous estimate.

Farmers in the key wheat producing provinces of Punjab and Sindh are just a few weeks away from the start of planting the Rabi wheat crop that will be harvested in the spring of 2017. Planting in the warmer southern province of Sindh starts in the middle of October and planting slowly moves north to Punjab where most of the planting is done in November. The summer monsoon started early with a wet June, followed by a dry July, a normal August, and an unremarkable September. Overall rains were slightly above normal which will support adequate soil moisture at planting, but Pakistan's wheat crop is dependent on the supply and reaches of irrigation water from canals and pumped ground water for virtually all of its moisture. Total irrigation water availability for the upcoming Rabi season is estimated at 30.9 million acre feet (MAF) against the 10-year average of 36.4 MAF and the year ago availability of 32.9 MAF. This reduction in reservoir levels is not large enough to have a significant effect on planted area or yields. Even when at capacity, Pakistan's reservoirs hold only three to four months of supply and rely on winter rains and snow for replenishment. Many wheat farmers are accustomed to augmenting surface irrigation with ground water when necessary.

No Change in Procurement Price

The Government of Pakistan has not announced a revised wheat procurement price. At $300 per metric ton, the procurement price and the effective price floor that it creates in the commercial market places Pakistani wheat among the most expensive in the world. Wheat continues to be the primary source of calories for Pakistani consumers and the relatively secure income that it provides to farmers makes it a preferred Rabi crop. However, area expansion is limited by the availability of water and area is expected to be largely unchanged from a year ago.

Stocks Rise, Whither Exports?

Following a substantial public-sector procurement of 6.0 million metric tons, the Government of Pakistan has also allowed exports of up to 900,000 metric tons of wheat with an export subsidy of $120 per ton. Despite doubling previous subsidy levels, it appears the subsidies are not large enough to generate commercial interest in Pakistani wheat in markets other than Afghanistan. Talk of government-to-government deals with regional markets arises occasionally, but at this stage there do not appear to be any concrete deals in the offing. With a recent increase in the import tariff from 40 to 60 percent and a still-not-large-enough export subsidy, Pakistan appears to be largely insulated from developments in the international wheat market.

Rice Exports Fall Below Expectations

Pakistan is moving towards another good harvest as monsoon rains this year have been generally good in rice producing areas. Pakistan's rice exports have dropped off during the last quarter from the large volumes that were shipped during the start and middle of the marketing year. Export prices for well-milled 25 percent broken long grain rice are hovering around $320 per metric ton which has reportedly caused some buyers to look elsewhere.

Based on preliminary official data, Pakistan has so far exported around 3.7 MMT during the current marketing year. Hence, Pakistan's export forecast for MY 2015/16 is lowered to 4.2 MMT. Long grain rather than Basmati rice has accounted for the bulk of exports thus far.

Rice, Milled

Market Begin Year

Pakistan

2014/2015

2015/2016

2016/2017

Nov 2014

Nov 2015

Nov 2016

USDA

New

USDA

New

USDA

New

Official

Post

Official

Post

Official

Post

Area Harvested

2850

2850

2740

2740

2800

2800

Beginning Stocks

679

679

1209

1209

829

909

Milled Production

6900

6900

6700

6700

6900

6900

Rough Production

10351

10351

10051

10051

10351

10351

Milling Rate(.9999)

6666

6666

6666

6666

6666

6666

MY Imports

30

30

20

0

20

0

TY Imports

30

30

20

0

20

0

TY Imp. from U.S.

0

0

0

0

0

0

Total Supply

7609

7609

7929

7909

7749

7809

MY Exports

3800

3800

4500

4200

4250

4200

TY Exports

4000

4000

4500

4200

4250

4200

Consumption and Residual

2600

2600

2600

2800

2700

2800

Ending Stocks

1209

1209

829

909

799

809

Total Distribution

7609

7609

7929

7909

7749

7809

Yield

3.63

3.63

3.66

3.66

3.69

3.69