Business | General
Saudi wheat output may drop 30 per cent
Kingdom began cutting production by 12.5 per cent a year in 2008 to conserve depleting water supplies
- Zawya Dow Jones
- Published: 00:00 March 6, 2010
Dubai: Saudi Arabia's wheat production is expected to drop 30 per cent to 700,000 metric tonnes in the 12 months ending June 2011, from one million tonnes in the previous period, the US Department of Agriculture's Foreign Agricultural Service said yesterday.
The kingdom decided in January 2008 to reduce wheat production by 12.5 per cent a year, abandoning a 30-year-old programme to grow its own, having achieved self-sufficiency but at the high cost of depleting the desert kingdom's scarce water supplies.
Changing trend
It produced 1.72 million tonnes of wheat in the 12 months ending June 2009, the US attache said in a report posted on the USDA website.
The Arab world's largest economy which imports the bulk of its food needs, is expected to import two million tonnes of wheat in 2010-11, compared with 1.64 million tonnes a year earlier, it said.
Saudi Arabia consumes around three million tonnes of wheat a year and has a policy of maintaining a quantity of wheat equivalent to at least six months' domestic consumption as a reserve stock at any given time.
The current stock level at state-run General Organisation for Grain Silos and Flour Mills is estimated at more than two million metric tonnes of wheat.
The body has a plan to increase the wheat storage capacity from 2.5 million metric tonnes to 3.5 metric tonnes in the next few years.
Barley imports by Riyadh, the world's top buyer of the grain, fell 11 per cent to 7.3 million metric tonnes in 2009 from a year earlier, the US attache said.
Barley imports
In 2008, the country, which produces less than 30,000 metric tonnes of barley, said it will reduce its imports of barley by subsidising feedstock mixes, which are made of barley, corn, soya and other components.
According to the US department, Saudi Arabia's rice imports are forecast to rise 4 per cent to about 1.1 million metric tonnes in 2010 compared with last year.
The kingdom doesn't produce rice and imports it mainly from India, Thailand, Pakistan and the US.
Banks likely to stage strong recovery in 2011
Nomura has forecast 2011 to be a strong recovery year for Saudi banks, backed by a rise in interest rates and higher lending activity.
The brokerage said it expected the banks to see an increase in their net interest margins next year, along with loan growth, supported by their high liquidity positions and an improvement in demand.
For 2010, however, the brokerage said it does not see Saudi banks posting a significant boost to their profitability, with banks continuing to book high provisions for bad loans.
"Top-line revenue growth is likely to remain weak amid sluggish volume growth and pressured margins," Nomura said in a note to clients.
The brokerage said asset quality at the banks was likely to continue deteriorating — mainly originating from the corporate segment — and expected weak growth due to a lack of demand from the private sector.
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