Central Asia Wheat Supply and Market Outlook

Wheat production in Central Asia for the 2021/22 marketing year (MY) was affected by below-average cumulative precipitation (Figure 1). Regional harvests are expected to reach 67 million metric tons (MMT), six percent below the previous year and three percent below the recent five-year average (Figure 2). Regional opening stocks are above 2020/21 levels, but thirteen percent below average. As a result, the region’s aggregate net supply is expected to remain positive but will be 11 percent below 2020/21 levels and 43 percent below average.

Given regional supply trends, recent political transitions, and global price trends, trade flow patterns to date in 2021 have differed from previous years. Year-to-date exports from Kazakhstan have declined; amounts of exported and re-exported wheat grain and flour from Uzbekistan have expanded; and Pakistan has switched from a structurally surplus to a structurally deficit posture. Afghanistan’s aggregate imports through July were like past years while imports in August and September were below average. These atypical trade flows are expected to persist in 2022. Imports by Afghanistan (both the costs and volumes) will depend on the country’s exchange rate, the extent to which financial resources, which are largely USD-based, are available to support imports from the region, and the level of risk traders working with and in Afghanistan are willing to take on.

Markets in Central Asia remain directly and indirectly integrated with international markets, on which wheat prices have been elevated since 2020. Prices in Central Asia are currently over 20 percent higher than 2020 levels and approximately 40 percent above average. Prices are projected to remain above average throughout the region. Elevated prices in Kazakhstan will mirror global reference market trends and will be transmitted to deficit countries in the region. Prices in Afghanistan will be affected by the strength of the AFN, import levels, and household purchasing power which is currently heavily constrained.