October 1999

PRODUCTION BRIEFS

CHINA: NSB ANNOUNCES 1999 SOWN AREA FOR SEVERAL CROPS

According to officials from China’s National Statistical Bureau (NSB), the 1999 planted area for grains dropped slightly from last year to 113 million hectares, but cotton and sugar area declined by 15 percent and 18 percent, respectively. Cotton area is estimated at 3.9 million hectares, the lowest in history, in response to excessive stocks and lower prices, while the reduction in sugar area resulted from economic problems in the sugar industry. In contrast, planted area for rice, corn, and oilseed crops is expected to increase in 1999. Early rice area declined by an estimated 180,000 hectares, but this is more than offset by increased middle and late rice areas. Corn area is estimated at 25.8 million hectares, up 590,000 or 2 percent from last year, and oilseed crops (excluding soybeans, which is considered a grain in China) increased by almost 8 percent to 13.9 million hectares, as planted area for peanuts and rapeseed reached record levels.

CHINA: CORN AREA AND PRODUCTION RISE

China’s 1999/2000 corn production is estimated at 128.0 million tons, up 3.0 million from last month based on a 3 percent increase in area. According to China’s National Statistical Bureau, planted area reached 25.8 million hectares in 1999, up 590,000 hectares from last year. Yield is virtually unchanged this month at 4.96 tons per hectare. However, yield is expected to decline from last year due to excessive rainfall during August in southern China and the lower Yangtze River Valley, while a drought affected yield in the North China Plain, Liaoning and Jilin Provinces. Conditions in Heilongjiang Province were favorable, and moderate rainfall in mid-August improved yield prospects in Shandong and the southern plains. Fair weather in late-September favored maturing corn in the Northeast, although scattered frost in mid-September may have caused minor damage to immature crops. Harvesting on the North China Plain was delayed slightly by late-season rainfall, but the impact on yield should be minor.

KAZAKSTAN: WHEAT YIELD REBOUNDS FROM LAST YEAR

Wheat production is estimated at 7.5 million tons, up 1.0 million from last month and up 2.8 million from last year. According to harvest-progress reports, over 8 million tons of grain had been gathered as of September 23 with one-third of the sown area remaining to be harvested. Weather was generally favorable throughout the growing season in northern Kazakstan, the country’s prime wheat-production region. The preliminary harvest results indicate that locust damage was less severe than earlier official reports had suggested.

THAILAND: CORN OUTPUT INCREASES DUE TO FAVORABLE WEATHER

Estimated corn production in Thailand for 1999/2000 rose 8 percent this month to 4.3 million tons, unchanged from last year. Area is down slightly from last year, but nearly perfect weather this growing season raised yield prospects. The monsoon rains started on time in April and have continued through to the present. While, rainfall diminished for two or three weeks in June, the widespread use of drought-resistant corn varieties kept the overall crop from being damaged. The corn crop is being harvested now and will conclude by the end of October.

VIETNAM: EXPANDING AREA AND IMPROVED YIELDS RAISE RICE ESTIMATES

The 1999/2000 rice crop estimate is revised 2 percent higher this month to a near record 19.8 million tons (milled basis) following an upward revision in the 1998/99 crop. The 1998/99 crop was revised upward 3 percent this month to a record 20.0 million tons following a bumper Spring-Autumn crop. There are 3 crops each year in Vietnam: the 10^th month (Lua Mua) crop harvested September-November in the North and November-February in the South; the main Winter-Spring crop harvested in June in the North and April-May in the South; and the Summer-Autumn crop harvested in August-October in both the North and South. The Spring-Autumn crop is expected to be even larger in 1999/2000, with area and yield increasing from 1998/99. However, overall harvested area in 1999/2000 is forecast to fall slightly, resulting in slightly lower production numbers than 1998/99.

EU-15: WHEAT AND COARSE GRAIN PRODUCTION INCREASES SLIGHTLY

Wheat production in the EU-15 increased marginally to 96.7 million tons this month, but remains 7 percent below last year’s 103.5 million tons. In the United Kingdom, production is up 3 percent from last month to 15.5 million tons due to bumper yield following nearly ideal weather during the filling stage of the crop. Also, wheat production is up slightly in Austria and Portugal, while there is a largely offsetting decline in Danish wheat which is estimated to be down 0.3 million tons from last month at 4.3 million.

Coarse grain production rose slightly to 101.8 million tons this month, but is still down 3 percent from last year’s 105.0 million tons. In the United Kingdom, production is up 6 percent from 7.0 to 7.3 million tons as favorable weather improved barley yield prospects. Also, coarse grains production is up slightly in Austria, Ireland, and Portugal. These increases were partly offset by a decline in German production due to a decline in mixed grains.

INDIA: RICE PROJECTED AT RECORD; COARSE GRAINS LOWERED

India’s rice production is projected at a record 85.5 million tons, up 1.0 million from last month and surpassing last year’s level by nearly 1 percent. Harvested area is at a record level and yield matches last season’s record. The kharif crop (first season and representing nearly 90 percent of rice production) received beneficial rainfall and near normal temperatures throughout most of the growing season. According to the Indian Meteorological Office, the country as a whole received 96 percent of its average monsoonal rainfall this year making 1999 the twelfth consecutive "normal" monsoon; however, the rainfall was not well distributed or timely in some coarse grain and oilseeds growing areas.

For total coarse grain, production is lowered this month to an estimated 28.5 million tons, down 2.0 million from last month and down 8 percent from last season’s record crop. Millet and sorghum are reduced by 1.0 million tons each to an estimated 8.5 million and 8.0 million tons, respectively, due to reduced area and yield. Drought continued to affect areas of Gujarat and Rajasthan despite recently receiving 10 to 20 millimeters of rain as this proved to be too little and too late to salvage the moisture-stressed sorghum and millet crops. However, these rains along with heavier amounts to the east are beneficial for the upcoming rabi (winter) crops, particularly rapeseed and wheat.

BRAZIL: RICE PRODUCTION ESTIMATED LOWER

Brazil’s 1999/2000 rice production is estimated at 6.9 million tons (milled basis), down 0.3 million or 11 percent from last year due to lower area. Harvested area is reduced 3 percent this month to an estimated at 3.7 million hectares, as planting intentions indicate that producers will sow less rice as a result of generally higher production costs and less favorable rice prices. Planting begins in the Center-South in late October and continues until December.

CHINA: GOOD SOYBEAN OUTPUT FORECAST

China’s soybean production for 1999/2000 is estimated at 14.0 million tons, up 1.0 million or 8 percent from last month, but down 1 million from last year’s revised output of 15.0 million tons. Estimated soybean area was increased to 7.8 million hectares, up 300,000 hectares from last month, based on information from government and trade sources. Estimated yield, at 1.79 tons per hectare, is above the 5-year average but below last year’s record yield. Summer drought stressed the soybean crop in parts of the Northeast and North China Plain, and some areas of central and southern China were unfavorably wet.

Chinese Government sources have unofficially announced that 1998/99 soybean output may have been much larger than previously expected. Previous indications put the crop at around 13.8 million tons, but the latest estimates range from 15.0 to 15.8 million. The main reason for the increase was higher reported yields, which were achieved despite serious flooding in central China and parts of the Northeast last summer, but another reason may be a smaller-than-anticipated reduction in planted area. Final area and production estimates for the 1998/99 soybean crop may be available soon.

ARGENTINA: SOYBEAN FORECAST INCREASED DUE TO BETTER PRICES

Argentina’s 1999/2000 soybean crop is forecasted at 18.0 million tons, up 0.5 million tons or 3 percent from last month but remains 5 percent below last season. The harvested area is forecast at 7.5 million hectares, up 0.25 million hectares from last month and equal to last year’s area. With the planting season set to begin in November, a recent improvement in prices has provided an increased incentive to plant. Soybean yield is forecast to decline year-to-year as a larger area was planted to wheat this year and a larger percentage of the crop is expected to be planted in fields following wheat. Soybeans planted after wheat are typically lower-yielding, shorter-growth-season varieties, that must also contend with reduced soil moisture.

INDIA: SOYBEAN AND PEANUT PRODUCTION ESTIMATES LOWERED

Indian 1999/2000 peanut production is estimated at 6.0 million tons, down 0.9 million or 13 percent from last month and down 19 percent from a year ago. Rains which arrived the last week of September were too late for the Gujarat peanut crop, and an estimated 70 percent of the state’s crop was lost. Rains in other producing areas have been erratic and those areas are not expected to make up for the decline in Gujarat. Travel in soybean producing areas revealed that low prices resulted in a greater reduction of area than was previously estimated. Soybean harvested area is estimated at 5.8 million hectares, down 0.2 million from last month, while production is estimated at 5.5 million tons, down 0.2 million from last month and 0.5 million below last year.

MEXICO: EMERGENCY COTTON SUPPORT PROGRAM ANNOUNCED

Due to the drastic fall of international cotton prices, the Mexican Secretary of Agriculture announced on September 21 an emergency assistance of 1,200 pesos per hectare (roughly US$126/ha) for cotton growers. The new support will be applied to the total cotton area planted in 1999/2000 of approximately 160,000 hectares. According to government officials, this support encompasses 900 pesos per hectare (US$95/ha.) from the federal budget and 300 pesos/hectare (US$32/ha.) from the state governments. This support is additional to the current PROCAMPO payments of 708 Pesos/hectare (US$75/ha.) and the payment of 550 pesos per hectare (US$58.5/ha.) to support and encourage cotton production. Official sources explained that the international cotton prices decreased from US$0.72 per pound a year ago to US$0.51 currently, due to ample supplies of Chinese cotton in the international market.

The objective of the new subsidy is to provide an incentive for farmers to plant cotton instead of other alternative crops which currently are more profitable than cotton. During 1999/2000, government officials expect cotton production to decrease to approximately 600,000 bales from nearly 1.0 million bales a year ago, mainly because of water shortages in the main cultivated regions. Additionally, planted area declined from around 230,000 ha. in 1998/99 to just over 150,000 hectares for the current year. Official sources said that promoting domestic cotton production is indispensable, as the textile industry's demand for cotton continues to grow. The new cotton subsidy has a budget of 133.6 million pesos (approximately US$14 million) and is effective immediately. Officials pointed out that total government support (PROCAMPO payments and the Payment to Support and Encourage Cotton Production) with the new subsidies is equivalent to US$0.15 per pound of lint.

ARGENTINA: 1999/2000 COTTON AREA DOWN

Cotton production for 1999/2000 is forecasted at 900,000 bales, unchanged from last month and from last year. Area is forecasted at 500,000 hectares, unchanged from last month, but 23 percent below last season. Three consecutive poor crops and little government support have left farmers in a tight financial situation. So far this season, the cotton region has experienced dry weather since May. In the main cotton-producing province of Chaco, about 100,000 hectares intended for sunflower seed were not planted, leaving the possibility that the area could be planted to cotton, soybeans or remain not planted. The final area cotton area will depend on how several factors develop over the planting season which starts soon and continues until December. These factors include price, the availability of economic support from the government, the financing capacity of the private sector and the weather.

CHINA: COTTON AREA DROPS TO RECORD LOW LEVEL

China’s 1999/2000 cotton area is estimated at a record-low 3.9 million hectares, down 600,000 hectares from last year. The Chinese government has been trying for several years to encourage farmers to reduce cotton area through lower support prices and other polices, as a way to cut cotton production and reduce the financial burden of excessive stocks. Production in 1999/2000 is expected to reach 19.0 million bales (4.14 million tons), down 8 percent from last year and the lowest since 1993/94. Yields are forecast at a record 1061 kilograms per hectare, the result of favorable weather, the use of improved cotton varieties, and the elimination of marginal cotton fields. Southern and central cotton-growing provinces were wetter than normal, but flooding was minor compared to last year and mostly dry weather in August benefitted boll development. The North China Plain experienced periods of drought this summer, but increased rainfall in August improved moisture levels. Conditions were normal in Xinjiang Province, where about 30 percent of China’s cotton is grown.