Uzbekistan wheat production in MY 2007/08 is estimated at 5.7 million tonnes, nearly the same the previous year’s crop but slightly less than earlier forecasts, according to a US Department of Agriculture attache report posted Friday on the Foreign Agricultural Services Web site.

About half the crop is considered to be of milling quality. Both wheat and wheat flour from Kazakhstan enter Uzbekistan through official and unofficial channels. Wheat, wheat flour, and bread prices have all risen sharply in the past few months, presumably in keeping with rising prices in Kazakhstan and a possible crackdown on unofficial border transit.

WHEAT

Production

Uzbekistan’s MY07/08 wheat harvest was completed in July. Estimated planted area of 1.3 million ha equaled that of the previous year. Of this, irrigated land was approximately 1.02 million ha. Final official statistical data by regions is not yet available, but according to preliminary official figures, MY07/08 grain production totaled 6.25 million tonnes (MMT), about 95 percent wheat and the remainder barley.

Some independent experts and observers, however, estimate this year’s total grain production at 6.1 MMT. State agencies reportedly procured more than 2.2 MMT of wheat. The remaining wheat will be left at private farms’ disposal. Only an estimated 50-55 percent of the wheat is suitable for food use. The remainder is used for feed and other purposes. Many private bakers prefer using Kazakh wheat flour, which is imported both officially and unofficially.

Local wheat prices

At the beginning of 2007 the price of locally produced third grade soft wheat was USD 87.30/ton. By the end of August it had increased to USD 102.10/ ton.

(Current exchange rate: UZS 1279.00 = USD 1.00)

Wheat flour production and prices

According to the data from the Statistics Committee, in the first six months of CY 2007 wheat flour production equaled 742,200 tonnes, 8.7 percent more than in the same period in 2006. According to official sources, wheat flour production is forecast to increase further in the second half of 2007.

This year wheat flour prices increased continuously from the beginning of the year. In January the price of the highest grade of wheat flour was Uzbek Sums (UZS) 380/kg; by August it reached UZS 455/kg, a 17 percent increase. Imported Kazakh wheat flour now retails at UZS 800-1,200/kg, depending on grade, compared to 400-700/kg a few months ago. This has increased the demand for local wheat flour. (USD 1=UZS 1,279)

In spite of this year’s good crop, over the last three months Uzbekistan has been experiencing some local shortages of wheat flour. Consequently, bread prices have risen considerably.

Some analysts attribute these shortages to the decline in official imports of Kazakh wheat flour, which is mainly used by the many small and medium bakeries for local bread production. Because a significant share of Kazakh wheat flour is imported into Uzbekistan unofficially, only rough estimates of volume are available. Kazakh official data indicates 143,000 tonnes of wheat were exported to Uzbekistan in 2006/07, but an additional 100,000-150,000 tonnes of flour is presumed also to have moved across the border.

Two factors may be responsible for a reduction in flour movement from Kazakhstan to Uzbekistan in recent months; First, the government of Kazakhstan may have cracked down on unofficial border transit, and second, Kazakh wheat prices increased sharply, from $160/ton in May up to $260/ton in October, and wheat flour prices from $500/ton in May up to $900/ton. Nevertheless, many Uzbek bakeries remain willing to pay the higher prices.

Trade

According to trade related sources MY06/07 Uzbekistan’s wheat exports are estimated at 200,000 tonnes of lower grades. The export destinations were reportedly Iran, Afghanistan and a few CIS countries. In MY07/08 Uzbekistan’s wheat exports are forecast at 100,000 tonnes.