As per latest update from United States Department of Agriculture (USDA), Pakistans MY 2017/18 wheat crop is now estimated at 26.5 MMT in accordance with the Government of Pakistans latest estimate. This makes the current harvest the highest on record. In spite of a marginal decrease in area, generally good weather and expanded fertilizer use supported yields.
The Government of Pakistan has set the wheat production target at a 26.5 MMT for the 2017 Rabi (winter) crop that will be harvested in April and May of 2018 and marketed through 2019. According to this target, Punjab is expected to produce 20 MMT; Sindh, 4.2 MMT; Khyber Pakhtunkhwa, 1.36 MMT; and Baluchistan, 900,000 tons. Reports from the field suggest that farmers have completed the sowing of wheat across Pakistan.
Wheat area is not expected to change significantly from a year ago. Good spells of rain across the wheat producing areas in November and December helped in the sowing and germination. Ninety percent of the crop is irrigated and irrigation water availability for the upcoming Rabi season is estimated at 29.5 million acre feet (MAF) against the 10-year average of 36.4 MAF and the year ago availability of 30.9 MAF.
This reduction in reservoir levels is not large enough to have a significant effect on planted area or yields. With a high tariff and high domestic prices, Pakistan continues to be isolated from the international wheat market. The domestic market is insulated from imports by a 60 percent “regulatory duty.” The tariff is well below Pakistans bound tariff rate (the maximum tariff rate Pakistan can establish) for wheat of 150 percent.
Consequently, Pakistan is not likely to import any significant quantity of wheat during MY 2017/18. Pakistan is expected to maintain the procurement price of $310 per metric ton for the MY18/19 crop. 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.
Pakistans most reliable export market is Afghanistan, where wheat flour is typically exported via close relationships between traders on either side of the border. However, recent closings of a number of border crossings and the high price of wheat in Pakistan appear to be curbing the flow of flour into Afghanistan. Wheat equivalent exports to Afghanistan are estimated at 400,000 MT and total exports are estimated at 600,000 MT, other exports are likely to be to regional trading partners