GRAINS: WORLD MARKETS AND TRADE, PART
APRIL 14, 1997
This report provides the data and tables from the current GRAINS: WORLD MARKETS AND TRADE, PART ONE.
This report draws on information from USDA's global network of agricultural attaches and counselors, official statistics of foreign governments, other foreign source materials, and results of office analysis. Estimates of U.S. acreage, yield and production are from the USDA Agricultural Statistics Board, except where noted. This report is based on unrounded data; numbers may not add to totals because of rounding. The report reflects official USDA estimates released in the World Agricultural Supply Estimates -->WASDE 325-April 11.
This report was prepared by the Grain and Feed Division, FAS. Agbox 1048, 14th and Independence Ave. Washington DC 20250. Further information may be obtained by writing to the division, by calling (202) 720-6219, or by FAX (202) 720-0340
The next issue of the Grains circular will be available electronically after 3:30 pm local time on May 13.
FOREIGN COUNTRIES' POLICIES AND PROGRAMS
WORLD AND U.S. GRAIN OVERVIEW
The forecast for 1996/97 world wheat trade stands at 93.8 million tons, a slight increase over last year but still one of the lowest levels of international wheat trade in over fifteen years. Projected global production of 581.6 million tons -- the second-highest level on record -- represents an eight percent increase over last season and for the first time since 1992/93 is anticipated to exceed consumption. In response to the low availabilities and record prices of the previous year, quality was occasionally sacrificed for increased yield in producing this year's bumper crop. While prices have reacted to the abundant harvests by dramatically falling from the record highs reached last spring, they remain historically strong due to uncommonly low stock levels, especially in the United States. This season's additional production will provide an opportunity to increase the world's severely depleted reserves by a slim 3.0 million tons, not be enough to keep the global stocks-to-use ratio from dropping to a record low of 18.8 percent.
Forecast world rice trade in 1997 was raised slightly this month from 17.4 to 17.7 million tons. Estimated 1996 trade was also increased, from 19.0 to 19.3 million tons. Despite these adjustments, 1996 rice trade remains the second highest ever, behind the 21 million tons recorded in 1995, while 1997 is forecast to be the third highest. World rice production in 1996/97 is now estimated at 558 million tons, up from 556 million tons last month.
Global trade of coarse grains during 1996/97 is forecast at 87.5 million tons, the second lowest level of the last 10 years. Global production of coarse grains in 1996/97 is expected to be sharply higher than in 1995/96, due largely to increased corn prospects in the United States, China, and the EU, and expected increases in barley production in Canada, North Africa, and the Brazil. Foreign coarse grain stock levels are forecast to rebound moderately in 1996/97, mostly due to increases in Canadian, Chinese and EU stocks. U.S. stocks, drawn down sharply in 1995/96, are projected to rebuild somewhat in 1996/97, but remain at relatively low levels. World stock levels at the end of the 1996/97 season are forecast to increase 17 million tons to 110 million tons. The global stocks-to-use ratio is forecast to rise slightly to 12.5 percent, the third lowest on record.
FOREIGN COUNTRIES' POLICIES AND PROGRAMS
The EU Considering Next Year's Set-Aside Program
The EU's acreage set-aside program for grains and oilseeds has been an integral part of its 1992 Common Agricultural Policy reform, which was adopted to bring a better balance to the market's supply and demand. The reform was designed to lower export subsidy costs by (1) increasing feed use of grains by gradually cutting internal grain market prices, and (2) reducing production by lowering grain area planted. Initially, in 1993/94, farmers taking part in the program were required to set aside 15 percent of their arable land, for which they received compensatory payments. For the 1997/98 marketing year (the crop now in the ground), the set-aside requirement was put at only 5 percent, reflecting the relatively short EU grain supplies and high internal market prices at the time the set-aside rate was established last year. Despite the record EU grain harvest in 1996, intervention stocks have not built up. The reasons are the sharp rise in internal demand for grain consumed by livestock, which has kept internal market prices above intervention price levels, and a return to the use of export subsidies by the EU.
The set-aside rate for 1998/99 will be 17.5 percent, unless specific action is taken to change it.
Normally, the European Commission proposes a set-aside rate to the EU Council of Ministers, after consulting with the Member States. The Council of Ministers can accept or amend the Commission's proposal by a qualified majority vote. If the Commission makes no proposal, the set-aside rate will automatically default to 17.5 percent, unless the Council of Ministers can reach unanimous agreement on an alternative rate. Because of the sharp divergence in views among Member States, unanimous agreement on a set-aside rate would be extremely difficult to achieve.
The final outcome on the Community's set-aside deliberations for 1998/99 will depend on how the prospects for the EU and world grain supplies and prices evolve over the coming months. In addition, general budget pressure will play a role in the eventual set aside decision. The Commission has indicated that reduced expenditures in 1997 are necessary to reduce, or at least limit, EU expenditures on agriculture and to offset the high cost of dealing with the BSE crisis. If these reductions cannot be found elsewhere in the budget, the Commission has publicly indicated that a larger grains set aside would likely be necessary to avoid budget-busting stock buildups and higher export subsidies.
Normally, the set-aside rate is finalized during summer, before winter grains are planted. With this year's grain supply situation still unclear, the final decision on 1998/99 set-aside may be delayed. At this early stage, prospects are for another large EU grain crop in 1997, partly due to increased acreage stemming from the reduced set-aside level for 1997/98.
A look at the statistics indicates that the set-aside program has been an effective tool in reducing EU grain acreage, principally for feed grains. Grain yields, however, have increased significantly in the past several years, partially offsetting some of the production impact from reduced acreage. Average yields were probably bolstered by some farmers setting aside their least productive acres, and perhaps increasing inputs on the remaining area planted. To help discourage farmers from taking just the poorest areas out of production, they were required to set aside an additional 5 percent of their acreage if they did not idle land on a rotational basis. This requirement was abandoned in 1996/97. However, farmers still have the opportunity to voluntarily set aside acreage above the mandatory level, equal to as much as 50 percent of the farm's area. This option has been exercised by many farmers, especially in Germany, because of the generous compensatory payments associated with this program. In fact, the effective EU-wide set aside rate has averaged almost 5 percent higher each year than the mandatory rate due to significant enrollment in the voluntary program.
Although the EU set-aside program never was thought to be a panacea for the region's surplus grain production problems, it appears to have had some success. World grain markets will be awaiting with considerable interest the EU's decision on the 1998/99 set-aside program.
Based on reports from the Office of the Agricultural Minister-Counselor, U.S. Mission to the European Union, Brussels. For further information, please call Alan Riffkin at (202) 690-4198.
Proposed New AWB Structure Leaves Single-Desk Export Monopoly Intact
The Australian wheat industry has agreed on a new structure for the Australian Wheat Board (AWB). The proposed new structure is being touted as introducing grower ownership and a more commercial business approach to AWB operations. However, no changes are recommended for the AWB's single-desk export monopoly.
For several years the Australian wheat industry has been debating plans on how to restructure the AWB. One of the primary reasons for the restructuring is that the Government of Australia's guarantee on AWB borrowing expires in 1999, and the Government has stated the guarantee will not be renewed, creating a need for the AWB to secure an alternative financial base. In addition, the Australian National Competition Policy, which is a sweeping program to reform anti-competitive regulation by 2000, has required that statutory marketing authorities such as the AWB must justify that they operate in the public interest in order to continue their monopoly status.
As envisioned by a restructuring working committee made up of industry representatives from the Grains Council of Australia, the AWB, and the Australian Department for Primary Industries, the proposed new financial base would be achieved by converting growers' current equity in the Wheat Industry Fund (WIF) into shares of a grower-owned AWB. (The WIF is financed by producer levies and currently provides the funds for AWB investments.) The working group has recommended a dual class model that would create A and B class shares. The non-transferable A class shares would be issued one per wheat grower, and these producer-shareholders would vote for the majority of the Board directors. The B class shares would be issued based on WIF contributions. The B class shareholders would vote for only two Board members and individual holdings would be limited.
The proposed new structure would retain the AWB as a statutory board, but structure it as a holding company. The holding company would have two subsidiaries, one for running pooling and export operations, and a separate subsidiary for commercial operations such as cash trading and value-adding enterprises. The goal of the separate subsidiaries is to demonstrate transparency between the AWB's state trading operations and commercial activities in anticipation of a review under the National Competition Policy in 1999 or 2000.
The proposal includes a list of objectives for the pooling operations subsidiary, but it appears that there will be no real changes in the AWB's export operations or reason to expect increased transparency or reduction of trade distortion inherent in continued monopoly export power.
The proposal is awaiting approval by the Minister of Primary Industries and Energy. If approval is forthcoming, the first stage of reforms are expected to begin by mid-1997.
For further information, please contact Linda Kotschwar at (202) 4134.
Egypt Struggles to Contain Grain Import Demand
Egypt is a nation with only a small area suitable for agricultural production, but a population growing rapidly at about 2.3 percent per year. In spite of plans to increase food self-sufficiency, the country still relies heavily on imports. Today, Egypt is among the world's largest wheat importers. Its corn imports are also becoming quite significant, mainly due to growth in the country's poultry industry. United States grain producers have benefited, supplying the lion's share of both the wheat and corn imported by Egypt. Developments in the country's economy would suggest that Egypt will continue as an important grain market in the years to come.
General Economic Conditions
In 1996, following the appointment of the new government of Prime Minister El Ganzouri, Egypt continued its strides toward implementing an ambitious economic reform program aimed at fostering privatization, reducing red tape and promoting exports. The economic reform program, which started in 1991, has scored notable successes in the financial and fiscal areas. However, the current GDP growth rate, estimated at 4 percent, is not sufficient to reduce persistently high levels of poverty and unemployment. Consumer price inflation also appears headed upward again after falling each of the previous two years. While Egypt has lowered the maximum tariff on imported goods to 70 percent, it has fallen behind on its WTO commitment to further lower that rate to 50 percent by the end of 1996.
Selected Economic Data (1996)
Area: 1,001,450 sq. km. (slightly more than three times the size of New Mexico).
Land use: arable land (3%), permanent crops (2%), meadows and pastures (0%), forest and woodland (0%), other (95%).
Major agricultural products: cotton, rice, corn, wheat, beans, fruit, vegetables, livestock.
Total agricultural imports : $ 4,871 million
Major agricultural imports: wheat/flour, corn, sugar, soymeal, palm oil
U.S. share of total agricultural imports: 31 percent
Major agricultural exports: cotton, rice, potatoes
U.S. share of total agricultural exports: 2.3 percent
Agricultural trade balance with the U.S. : -$1,298 million
Population : 60 million
Population growth rate: 2.3 percent
Real GDP : $153.7 billion
GDP growth rate : 4.0 percent
GDP per capita : $2,553
Inflation (CPI): 9.3 percent
Agriculture, as percent of:
- imports: 43
- exports: 14
- GDP: 16.5
- workforce: 36
The Agricultural Sector
The growth in agricultural production has been relatively slower than for the rest of the economy, at slightly greater than 2 percent annually. The agricultural sector currently accounts for 16.5 percent of GDP and more than one-third of total employment. Although yields for many agricultural crops in Egypt are among the highest in the world, total arable land is only 3.3 million hectares. However, because existing cropping patterns far exceed the prescribed norm by approximately 185 percent (due to double cropping), the total production base is actually much higher, around 6 million hectares. With a population of over 60 million people, there is tremendous and constant pressure to produce more on what is otherwise a very limited resource base. By necessity, agricultural development is dependent on the Nile water system, which services a far-reaching network of wells and irrigation canals. Major crops include cotton, rice and corn in summer; wheat, berseem clover and beans in winter. Citrus and vegetables are also important crops and are produced in sufficient quantities to create some annual surplus for export.
During 1995/96, weather conditions were favorable for most crops although wheat area was down somewhat due to dry weather on the northern coast. Meanwhile, there has been a recent substantial increase in agricultural trade; in 1995, the value of total agricultural imports increase by about 40 percent to an estimated $4.9 billion, while U.S. agricultural exports, mainly wheat and corn, scored the largest expansion ever, 53 percent, reaching a total of $1.3 billion. Egyptian agricultural exports also grew more than 50 percent during the same period to around $730 million; exports to the U.S. were nearly unchanged at $17.0 million.
Local wheat production has grown from 4.4 million MT in 1994 to an estimated 5.7 million MT in 1996. Total planted area increased by about 130,000 hectares during this period to more than 1 million hectares due mainly to an increase in government procurement prices. Traditional irrigated lands comprise the bulk of production areas; the remainder is marginal rain-fed and newly reclaimed lands. Except for a small area of durum, all wheat production in Egypt consists of soft wheat.
The GOE continues to advocate a policy of self-sufficiency in wheat production because of its strategic importance in the Egyptian food supply. The current estimate of self-sufficiency is 45 percent and the government's goal is to raise that level to 55 percent within the next several years, to be achieved by using more high-yielding varieties capable of producing 11-12 MT per hectare and by stabilizing or reducing per capita consumption of wheat. Total wheat area is not expected to increase significantly in the next several years due to the limited resources of both land and water.
At over 180 kilos per capita, wheat consumption in Egypt is one of the highest in the world. This has been encouraged by the government's subsidization of bread consumption.
Total consumption of wheat for 1996/97 is forecast at 11.2 million MT, more than half of which is being supplied by imports. About 4.5 million MT of imported wheat, and up to 1 million MT of domestic production is processed by public sector mills into 82% extraction flour which has been used for the production of highly subsidized baladi bread. This is Egypt's most widely consumed bread. The government recently introduced a new type of unsubsidized, "improved" baladi bread in the hopes of reducing the costs of bread subsidies.
About 1.8 million MT of imported wheat is processed, mainly by the private sector, into 72% extraction flour, the only type of flour the private sector is allowed to produce; it is used to make European type breads, pasta, pastries, etc. These products are not subsidized by the government.
Egyptians import mainly two types of wheat: soft white wheat, which is used in making baladi bread and hard red winter wheat, which is used in French-style breads and pasta. Imported French wheat compares closely to U.S. soft red winter; Australian wheat is similar to American soft white.
The Egyptian milling industry has adequate capacity to meet current domestic flour demand. Most of the industry is controlled by the government, which owns seven large companies operating a total of 130 mills. Total milling capacity is over 20,000 MT per day. The budding private sector milling industry is comprised mainly of a few large mills rented from public sector companies, but construction of a number of wholly privately-owned mills is rapidly getting underway.
When these new mills become fully operational, the private companies leasing facilities from the public sector will be at a distinct disadvantage because of their higher operating costs. The rapidly developing over-capacity for 72% flour is also going to put pressure on prices and could lead to an early shake-out in the industry while privatization is still in its early stages.
The government continues to experiment with breads made from corn and wheat flour blends. The objective is to reduce the subsidy cost on baladi and shami breads by substituting about 2 million MT of all-wheat flour with the wheat-corn flour blend, thereby reducing consumption of flour made from imported wheat. Many do not give the experiment much hope of success, mainly for quality reasons: shelf-life, taste and texture.
Policy Changes in the Milling Sector:
Within the last year, there has been an important change in policy affecting wheat flour as the government continues its efforts towards de-subsidization and liberalization of the agricultural and food sector. The GOE has removed the subsidy on the 76% extraction rate wheat flour (used to make shami breads); at this time the 82% extraction rate flour is the only kind still subject to a direct government subsidy. It is estimated that a loaf of baladi selling for LE .05 ($0.015) actually costs around LE .18 ($0.054) to make. On the other hand, while the importation of wheat and wheat flour has been opened up to the private sector since 1993, the government still sets a maximum price which private sector companies cannot exceed when they sell their flour. Reportedly, the maximum price for 82% flour is considerably below production costs and most private sector millers reportedly are currently losing money.
Price, quality, and the availability of the EEP and GSM-102 credit guarantee programs have been the major factors underlying the success of U.S. wheat exports to Egypt. The EEP program especially, allowed the U.S. to maintain its position as the largest supplier of wheat and flour to the Egyptian market.
As a result of the high U.S. wheat price levels which prevailed in the beginning of MY 1996/97, combined with tight U.S. domestic stocks and large exportable supplies from Argentina, Australia and France, U.S. market share declined from over 90 percent in MY 1995/96 to about 35 percent during the first eight months of MY 1996/97. U.S. wheat exports to Egypt should recover significantly next year.
Conversely however, imports of U.S. flour are expected to shrink further as a direct result of the increase in wheat imports. The price of imported flour is sufficiently higher than the cost of local flour (through high customs duties and other import service charges) to make the imported product uncompetitive.
The FY 1997 GSM-102 Credit Guarantee Program for Egypt totals $200 million and is available to private sector importers only. The commodity allocation includes wheat and wheat flour, among other items, but in fact has been used mostly to cover sales of feed rather than food grains.
Tariffs, Taxes, and Fees:
The various costs associated with importing wheat are as follows:
5% customs duty based on the CIF value
10% sales tax
1% commercial and industrial profit tax
1% service charge
3% discharging and transportation fees
2% to open L/C
Wheat shipments are routinely fumigated because of Ministry of Agriculture (MOA) quarantine determinations concerning the presence of prohibited or unknown pests in the cargoes. The presence of insects unknown in Egypt or classified as being of quarantine risk and whether found dead or alive, is sufficient for quarantine officials to reject the shipment or demand that it undergo special fumigation and handling procedures, the costs of which must be borne by the importer.
The GOE decontrolled wheat imports in 1993; as a result, both public and private sector companies may now freely import wheat and flour. Price is the main factor determining the sourcing of wheat imports, as was shown early this year when Egypt imported wheat mainly from France, Australia and Argentina. The price and quality of U.S. wheat however, backed by trade and technical assistance, have made it the leader in this market.
Egypt's total annual corn production is running somewhat above 5.5 million MT from slightly less than 900,000 hectares. Previously, only white corn was cultivated, but there has recently been a shift in favor of yellow corn. High local prices for meat, poultry and milk products, combined with high imported corn prices, continue to reinforce the commercial value of corn as a feed grain, and to make it one of the most profitable crops grown in Egypt. Most of the crop is grown on "old land" vs. newly reclaimed desert land. All production inputs are sold at market prices except for water which is provided by the government free of charge.
Historically, corn used to be the staple food of Egypt's rural population. However, with urban migration and the widespread availability of subsidized bread, wheat replaced corn as the preferred food grain. Today, corn is used mainly for animal feed, with perhaps only 1.5 million MT actually used for food purposes. Most of the domestic corn crop is consumed on-farm. Large and commercial end-users of corn must rely on imports to meet their requirements.
Feed demand continues to rise because of expansion in the poultry industry and increased importation of live cattle. The expansion of the National Buffalo Project has also helped strengthen demand. Growing demand for corn-based food products and increased demand for corn oil are also factors behind the increased demand for corn.
U.S. corn exports to Egypt rose to 2.6 million MT in MY1995, with smaller amounts imported from Argentina and France. Egyptian importers prefer U.S. and Argentine corn over French corn, in spite of a $5-10 price disadvantage. The U.S. should continue to be the dominant corn supplier because U.S. exporters are well-equipped to meet product specifications and requirements. The availability of GSM credit guarantees also appears to have reinforced the demand for U.S. corn vs. corn from other destinations.
Based on reports from the Office of the Agricultural Counselor, American Embassy, Cairo. For further information, please contact David Kiefner at (202) 720-6223.
Asia's Tigers Appear Hungry For Grain
From 1993/94 to 1994/95 China underwent a drastic conversion, from being the world's second largest exporter of coarse grains to the world's fourth largest importer. Similarly, in 1995 China was the world's second largest importer of rice after being the fourth largest exporter the previous year. Many food policy analysts felt that the sudden reversal of China's net grain-trade position was a harbinger of things to come: Population growth of more than 10 million per year, loss of agricultural lands to industry and increasing grain consumption all pointed to the inevitability of rising Chinese demand. Some analysts indicated this rising demand would overwhelm world grain markets.
In fact, China's food imports were nothing new. China has been a net grain importer in all but three years since 1960. While normally an exporter of coarse grains and rice, these exports represented about 1% of Chinese rice production and 12% of Chinese coarse grain production in 1992/93 and 1993/94. In 1994/95 production of rice fell by 1% and that of coarse grains by 2.5%. These seemingly modest crop shortfalls were a major reason for China's entrance into a world grain market already drawn tight. Although China's imports totaled less than 10% of world trade, combined with the absence of Chinese exports they helped to exacerbate price increases in international grain markets.
China's production of both coarse grains and rice has increased substantially in each of the past two years. In recent months China has even begun to reenter the export market with sales of both corn and rice. Contrary to the dire warnings of some analysts, China has not consumed all the world's exportable grain supplies, but has once again demonstrated their ability to increase domestic grain production in response to rising demand.
Lost in the uproar over China's possible influence on the international grain market has been the continued development of another grain importer; a market whose grain consumption is now almost double that of South Korea, Japan and Taiwan combined. Although only one-fourth the size of the Chinese grain market, imports by the nations of Southeast Asia are growing at a much faster and more regular pace. In addition, not only are the economies of countries such as Indonesia, Malaysia, the Philippines, Thailand and Vietnam growing at rates comparable to growth rates in China, but population growth rates are considerably higher.
While China appears to be approaching- or to have already reached- a stage of development where food use of grains stabilizes and new consumption growth is concentrated in feed use of grains, in Southeast Asia growth in human consumption of grains is booming. What's more, it appears that rapid growth in Southeast Asia's grain consumption may be outstripping its capacity for increasing production.
The immensity of China's grain market means that in any given year crop shortfalls may lead to tremendous pressure on world grain markets. For those seeking the next great importer, though, it would be wise not to forget the markets to the south. If the nations of Southeast Asia follow the model established by countries such as Taiwan, Japan and South Korea, opportunities for export to this region will grow substantially.
For further information, please contact Morgan Perkins at (202) 720-2231.
SITUATION AND OUTLOOK: COMMENTARY AND CURRENT DATA
WORLD WHEAT SITUATION AND OUTLOOK
The forecast for 1996/97 world wheat trade stands at 93.8 million tons, a slight increase over last year but still one of the lowest levels of international wheat trade in over fifteen years. Projected global production of 581.6 million tons -- the second-highest level on record -- represents an eight percent increase over last season and for the first time since 1992/93 is anticipated to exceed consumption. In response to the low availabilities and record prices of the previous year, quality was occasionally sacrificed for increased yield in producing this year's bumper crop. While prices have reacted to the abundant harvests by dramatically falling from the record highs reached last spring, they remain historically strong due to uncommonly low stock levels, especially in the United States. This season's additional production will provide an opportunity to increase the world's severely depleted reserves by a slim 3.0 million tons, not enough to keep the global stocks-to-use ratio from dropping to a record low of 18.8 percent.
A record-setting pace has caused the export forecast for Australia to increase by 500,000 tons to 17.0 million tons, a full one million tons above the previous record. It is anticipated that the unexpectedly strong global demand which arose during the second half of the year will allow Canada to export an additional one million tons as significant amounts of wheat begin to move out of the country following winter-long weather delays, while in the United States a net trade increase of 700,000 tons over last month's forecast is projected. A 750,000 ton drop in Russian import needs has prompted a corresponding decrease in forecasted exports from principal supplier Kazakstan.
As the season moves into its final months it has become evident that in some nations the plentiful wheat crops harvested in 1996/97 came about at the expense of quality, while in other countries local producers, mindful of the spectacular run-up in price which followed the 1995/96 harvest, have been reluctant to bring their wheat to market. Partially as a result, international import demand has been somewhat stronger than generally envisioned at the season's outset as governments and private purchasers turn from domestic producers to the more favorable pricing and quality supplies available on the global market.
In Iran, a low government procurement price and heavy on-farm feeding of the second poor-quality wheat crop in as many years has resulted in an import level which is forecast to reach a record 6.5 million tons, up another one-half million tons over last month's increase and more than twice the prior year's amount. As increasingly anticipated, Iran now is expected to become the world's top importer of wheat for the 1996/97 season.
A reduced demand for feed coupled with an increased demand for high quality milling wheat in Poland led to heavy imports as buyers sought to take advantage of the favorable opportunities available in the international market ahead of an expected tariff reinstatement this past January. As a result, the import forecast has been increased by 800,000 tons, to 1.8 million tons. The substantial imports will allow Poland to boost its level of operational reserves and stabilize domestic prices.
The low amount of purchases so far and slow development of new business this late in the year has prompted a reduction in the import forecast for China to 3.5 million tons, a 500,000 ton decrease. Opposite conditions have had the opposite effect in Turkey, where continued heavy international purchasing activity due to a low quality domestic crop has pushed the import forecast up by 500,000 tons to two million tons.
WORLD RICE SITUATION AND OUTLOOK
The international rice market has experienced a brusque fall in prices during the past month. nominal price quotations for Thai rice have dropped at least $50 since the end of February, to their lowest level since May of 1995. In addition, price quotes from Vietnam are $25 per ton lower over that same time period. In Vietnam, a record winter-spring crop is being harvested. Light exports during the months of January and February left large main-crop stocks, reducing demand for the rice currently being harvested and driving paddy prices down at least 25% below the Government of Vietnam's paddy target price. Meanwhile, in Thailand, light export demand during the months of January through March also failed to bring down main crop stocks and the current fall in export prices has been cause at least partially by liquidation of those stocks in anticipation of a record second-crop. In the United States long grain prices remain unchanged since February and now command a premium of more than $125 per ton compared to similar Thai grades. Medium grain prices in the United States have eased by as much as $50 per ton as exporters anticipate heavy competition from Australian exporters in the coming months.
The forecast of calendar year 1997 rice exports by the United States was increased this month to 2.4 million tons, up from 2.3 million tons. Despite tight supplies and high price levels, U.S. export sales have been robust in recent weeks.
Estimated 1996 rice exports by Thailand were revised to 5.28 million tons this month upon receipt of final 1996 export data.
Likewise, official calendar year export data received from both Argentina and Uruguay led to adjustments in estimates of 1996 exports by the two Mercosur partners. Uruguayan exports totaled a record 596,000 tons while Argentinean exports also reached record levels at 365,000 tons.
WORLD COARSE GRAINS SITUATION AND OUTLOOK
World trade in corn in 1996/97 is expected to fall slightly from 1995/96 levels, primarily due to increased competition from other feed grains. The 1996/97 forecast for U.S. corn exports of 46.5 million tons are six million tons lower than 1995/96 exports and 12 million tons less than in 1994/95 exports. China, once the world's second-largest exporter and a net importer of nearly 1.2 million tons in 1995/96, is expected to be a net exporter of roughly 2.5 million tons in 1996/97. U.S. export opportunities for 1996/97 in Asia are expected to diminish moderately.
World trade in barley is expected to increase significantly in 1996/97. World stocks of barley, while projected to increase from 1995/96 levels, will still be below levels observed three years ago. Projected imports by the Middle East, particularly by the largest feed barley importer, Saudi Arabia, are expected to rebound sharply, due to increased feed demand. Asia continues to be a significant growth market, primarily for malting barley, as their barley imports are projected to increase to record levels in 1996/97.
The forecast for China's corn exports continues to rise in 1996/97, with a 1.5 million ton increase, to 2.5 million tons--the largest level since 1993/94, before the onset of its export ban. South Korea is expected to be the primary destination. It is expected that this year, along with becoming a net exporter for the first time since 1994/95, China will set a new record for production, consumption, and ending stocks.
The 1996/97 corn import forecast for Taiwan was lowered one-half million tons, to 5.5 million--the lowest level in three years, due to an expected slowdown in demand from the feed industry. The discovery of an outbreak of Foot and Mouth Disease (FMD) on some Taiwanese hog farms has significantly impacted feed imports, specifically from the United States, as Taiwan is one of the top three export markets for U.S. corn.
ENDNOTES TO GRAIN: WORLD MARKETS AND TRADE
1) Includes Canada, Mexico, and the United States.
2) Includes Central America, the Caribbean, and South America.
3) Includes Azores, Cyprus, Iceland, Malta & Gozo, Norway, and Switzerland
4) Includes Albania, Bulgaria, Czechia, Hungary, Poland, Romania, Slovakia, and former Yugoslavia.
5) Includes Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, Turkey, United Arab Emirates, and Yemen.
6) Includes Algeria, Egypt, Libya, Morocco, and Tunisia.
7) Includes all other African countries except North Africa.
8) Includes Afghanistan, Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka.
9) Includes all other Asian countries except South Asia.
10) Includes Australia, Fiji, New Zealand, and Papua New Guinea.
Unless otherwise stated, stock data are based on an aggregate of differing local marketing years and should not be construed as representing world stock levels at a fixed point in time.
Current and historical data on the European Union in this issue refers to the EU-15.
Consumption statistics reflect total utilization, including food, feed, seed, and differences in marketing year imports and marketing year exports.
This circular was prepared by the Grain and Feed Division, Commodity and Marketing Programs, Foreign Agricultural Service, USDA, Washington DC 20250. Information is gathered from official statistics of foreign governments and other foreign source materials, reports of U.S. agricultural attaches and Foreign Service officers, results of office research, and related information. Further information may be obtained by writing the division or telephoning (202) 720-6219.
Note: The previous report in this series was the Grain: World Markets and Trade Foreign Agricultural Service Circular FG 3-97 March 1997. For further details on the world grain production, see World Agricultural Production, Foreign Agricultural Service Circular WAP 4-97 April 1997.