THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 1/3/2013 GAIN Report Number: Pakistan Grain and Feed Update Grain and Feed December Update Approved By: Richard Todd Drennan Prepared By: Asmat Raza Report Highlights: Initial reports from the field suggest that Pakistan’s wheat planting area in MY 2012/2013 is likely to be at last year’s level (around 8.7 million hectares). For MY 2011/2012, Pakistan has exported around 450,000 tons of wheat and 300,000 tons of wheat flour through December 2012. The government wheat stocks in December were reported to be around 7.7 million tons. Pakistan’s rice export estimates for MY/TY 2011/12 and 2012/13 are adjusted downwards to 3.5 million tons and 3.8 million tons respectively due to less production of basmati rice as a result of reductions in basmati planting area. Post: Islamabad Executive Summary: Wheat Sowing Still in Process Initial reports from field contacts suggest that Pakistan’s wheat planting area is likely to be the same as last year’s - around 8.7 million hectares. Wheat planted area had declined by five percent over the last two years, but is expected to stabilize in MY 2012/2013. This year good soil conditions, widespread winter rains during October and December, and greater availability of irrigation water are key factors in reversing the downward trend. This year floods were milder and only affected wheat planting in a few districts of the province of Sindh in Southern Pakistan. Furthermore, the government’s decision to raise the wheat procurement price, albeit late in the planting season, contributed to some farmers increasing planted area compared to the last two years. The Government of Pakistan raised the support price for the My 2012/2013 wheat crop to Rs1,200 per 40Kg ($312/ton), up 14 per cent over the existing price of Rs1,050 per 40kg ($292/ton). Some areas of Pujab the central wheat growing area continued planting into the last week of December, so an official estimate of planted area will not be available until the end of January 2013. Barter Trade Deal with Iran The Ministry of National Food Security and Research (NFSR) maintains that the negotiations are still ongoing, although rather sporadically. Pakistan in a new offer is considering exporting wheat to Iran in two tranches. The first tranche will be 100,000 tons from government stocks held by the Federal Grain Storage Company, PASSCO, and all subsequent exports will be made by the private sector possibly utilizing wheat released from provincial storage. Officials also state that debt repayment adjustment in lieu of wheat is being considered as a possible option. Previously, both governments were looking at fertilizer and iron ore as barter items. Contrary to the GOP’s statements, trade sources remain skeptical that any wheat exports to Iran will materialize during the current marketing year. Exports to Other Countries Pakistan has exported around 450,000 tons of wheat through December 20, 2012, mainly to Bangladesh, Sri- Lanka, Indonesia, Malaysia, and East Africa. Official data on specific export volumes by country is not yet available. Pakistan has also exported around 300,000 tons of wheat flour to Afghanistan through December 2012. According to trade sources, the rate of exports is declining with sales in December reaching approximately 18,000 tons, down from a monthly average of around 25,000 tons through November. Export destinations include Sri Lanka, the Philippines and Yemen. Export prices for December shipments ranged between $312/ton and $315/ton, FOB-Karachi. The decline in export volume is largely due to reductions in demand and significant quality issues with Pakistani wheat. Stocks Pakistan’s government wheat stocks by the middle of December, 2012 are estimated at around 7.7 million tons. A breakdown of stocks by province is, Punjab 4.00 MMT; Sindh 0.85 MMT; KPK 0.29 MMT; Balochistan 0.12 MMT; PASSCO 2.50 MMT; for a total of 7.76 MMT. Rice Initial reports from field contacts support Post’s production estimate of around 6.8 million tons for the MY 2012/13 rice crop. Export estimates for MY/TY 2011/12 and 2012/13 are adjusted downwards to 3.5 million tons and 3.8 million tons respectively due to less production of basmati rice as a result of a reduction in basmati planting area. Higher local prices and increased competition from India is also adversely affecting rice exports. Farmers are gradually shifting from basmati rice and opting for non-basmati hybrid varieties due to better yields and a shorter growing cycle, which allows for earlier planting of wheat. Basmati planted area has declined about 27 percent over the last three years. The reduction in planted area was more pronounced in Punjab this year, the core basmati growing area. As white rice production increases, it is changing the export matrix of Pakistani rice. The entire rice export regime of Pakistan has traditionally been based on basmati rice, due to a comparative production advantage, which in turn commanded a premium price for its unique aromatic and taste qualities. Basmati exports dropped 25 percent from 1.2 million tons in 2008-09 to 900,000 tons in 2011-12. Production, Supply and Demand for Milled Rice Rice, Milled P 2011/2012 2012/2013 2013/2014 akistan Market Year Begin: Nov Market Year Begin: Nov Market Year Begin: Nov 2011 2012 2013 USDA New USDA New O ficial New Post fficial Post Official P USDA Ofost Area Harvested 1,000 ha. 2,750 2,750 2,600 2,700 Beginning Stocks 1,000 tons 500 500 810 1,000 0 Milled Production 1,000 tons 6,500 6,500 6,700 6,800 Rough Production 1,000 tons 9,751 9,750 10,051 10,200 0 Milling Rate (.9999) 6,666 6,666 6,666 6,666 MY Imports 1,000 tons 60 0 50 0 TY Imports 1,000 tons 50 0 50 0 TY Imp. from U.S. 0 0 0 0 Total Supply 1,000 tons 7,060 7,000 7,560 7,800 0 MY Exports 1,000 tons 3,750 3,500 4,000 3,800 TY Exports 1,000 tons 3,750 3,500 4,000 3,800 Consumption and Residual 1,000 tons 2,500 2,500 2,650 2600 Ending Stocks 1,000 tons 810 1000 910 1400 Total Distribution 1,000 tons 7,060 7,000 7,560 7,800 0 Yield (Rough) tons/ha 3.54 3.8 0. TS=TD 0 0