Regular spring rainfall has improved harvest prospects

• Despite high prices for wheat and wheat flour and continued high demand for imported foods, income sources in Tajikistan were seasonally normal or increasing slightly. Remittances in March 2013 were at a record high for March at 221.8 million U.S. dollars, supported in part by a higher level of outmigration in 2013.

• With regular spring rains from late February into April expected to continue and with the slight increase in planted area, prospects for the 2013 wheat harvest in Tajikistan are good. The harvest is likely to be average to above average.

• Prices of wheat and wheat flour are likely to fall following the wheat harvest in Tajikistan and also following the replenishment of Kazakhstan’s wheat stocks when the harvest starts in northern Kazakhstan in August. This should significantly increase regional wheat supply.

Income sources have been seasonally normal in most of Tajikistan. In February and March, as winter stocks become exhausted, households increasingly depend on the market for food, which they access either through credit to be paid back later in the year or through income earned through other livelihood strategies. In March, unofficial estimates of remittances were at 221.8 million U.S. dollars, marking the 22nd consecutive monthly high record. In all monitored reference markets, both skilled and unskilled urban casual labor rates were steady between February and March, according to data collected by the World Food Program (WFP). Meat prices also remained at seasonable, though relatively high prices, indicating livestock may be sold for similar seasonable, but relatively stable prices. Livestock prices in March were expected to have increased somewhat as demand increased for Nowruz celebrations on and around March 21, but the impact on monthly meat prices appears minimal.

While total cumulative rainfall since the beginning of the wet season in October may still be somewhat below average, rain and snowfall have been falling regularly in Tajikistan in late February and through March, and the volume of spring rain has been steady in March and April. Regular storm systems continue to move through Central Asia at a similar, fairly regular pace, which is expected for the remainder of the spring rainy season into May with rain shifting into the northern areas of Tajikistan in the Ferghana Valley.

Planted area put under winter wheat from August to November 2012 was a slight increase compared to the 2011 to 2012 growing season. All signs indicate that the winter wheat harvest, which will begin in June, is expected to be near average to somewhat above average. The Normalized Difference Vegetation Index indicates better than average vegetation growth in the populous wheat- and cotton-producing areas in Khatlon Oblast in southern Tajikistan with gradually greening of vegetation also occurring in the northern agricultural areas in Sugd Oblast that are located in the Ferghana Valley.

Despite good harvest prospects and strong supply from last year’s above average wheat harvest, wheat and wheat flour prices continue to be high in Tajikistan. Starting in May 2012, prices rose in reaction to international price trends, primarily as the price of wheat and wheat products rose in Kazakhstan, the primary source of Tajikistan’s imports. In nominal terms, the local currency prices of wheat flour of various grades and of wheat are at or very near record levels. However, average to above average local production is likely to dampen the rise and place downward pressure on prices starting in June.

While planting in Kazakhstan does not typically start until May, early indications are for a better season than last year due to better soil moisture in northern Kazakhstan from fall rains and winter snow. Early estimates indicate wheat production is still likely to be slightly above the five-year average according to USDA/FAS and slightly above the three-year average according to FAO. Once the harvest starts in August, there is expected to be more competition from Russia on the northern export route, so sales to points south of Kazakhstan, including Tajikistan, Kyrgyzstan, and Afghanistan, should pick up in August and September. In anticipation of the better season than last year, wholesale export prices in Kazakhstan already started to ease slightly (Figure 2). This trend is expected to continue through September as harvest expectations become clearer. With fewer international market options and increased production, the cost of wheat grain and flour from Kazakhstan should reduce the cost of imports in Tajikistan, placing downward pressure on prices.