GRAINS: WORLD MARKETS AND TRADE, PART ONE JUNE 13, 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 327-June 12.
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 July 14
FOREIGN COUNTRIES' POLICIES AND PROGRAMS
WORLD AND U.S. GRAIN OVERVIEW
Despite expectations of marginal decreases in both global
production and consumption, world wheat trade is forecast to rise
over four percent in 1997/98, the second largest increase in a
decade. For many nations, both traditional importers and
exporters, the nominal decline in production follows record
harvests in the 1996/97 season; although down year-to-year, the
1997/98 estimated world production of 579 million tons still
ranks as the third-largest global wheat crop on record. However,
unlike the widely distributed bumper crop of 1996/97, the new
global crop will be characterized by more usual regional
disparities in production. Production likely will exceed
consumption for the second year in a row, allowing for a moderate
rebuilding of severely depleted global stocks. But while global
stocks will rise from the prior year they remain historically
low, keeping prices strong. The global stocks-to-use ratio will
increase to just 20.1 percent from the record-low 19.1 percent
reached during the 1996/97 season.
The forecast of 1997 world rice trade was adjusted from 17.2
to 17.3 million tons this month. Revisions include a 250,000 ton
increase in forecast exports by Vietnam (to 3.0 million) as well
as 50,000 ton increases for both Argentina (to 600,000) and
Uruguay (to 650,000). These increases were partially offset by
reductions in export forecasts for Thailand (down 200,000 to 4.8
million) and Australia (from 800,000 to 700,000 tons). Among
buyers, 1997 import forecasts for Brazil and China were reduced
200,000 tons each (to 1.0 million and 600,000 tons respectively).
Global trade of coarse grains during 1996/97 is forecast at
87.8 million tons, the third lowest level of the last 10 years.
Meanwhile, the 1997/98 preliminary forecast for world trade of
coarse grains is revised up 100,000 tons, to 90.9 million tons, a
marginal increase over the 1996/97 level and the third highest
level of the last 5 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 EU. For 1997/98, the projection was
revised slightly upward, mainly due to a projected larger corn
crop in Indonesia.
Foreign coarse grain stock levels are forecast to rebound
moderately in 1996/97, mostly due to increases in Canadian,
Chinese and EU stocks. It is projected that foreign coarse grain
stocks for 1997/98 will diminish significantly because Chinese
corn stocks are expected to be drawn down from 1996/97 levels.
U.S. stocks are projected to rebuild somewhat in both 1996/97 and
1997/98, but remain at relatively low levels. World stock levels
at the end of the 1996/97 season are forecast to increase 24
million tons to 119 million tons. Levels for 1997/98 are forecast
to rise about 4 million tons, to 124 million tons. The global
stocks-to-use ratio for both 1996/97 and 1997/98 is expected to
rise slightly to 13.6 and 13.8 percent, respectively--the fourth
and fifth lowest levels on record.
FOREIGN COUNTRIES' POLICIES AND
U.S. Grain Producers Have Big Steak in Taiwan's Market
Taiwan is one of the world's largest corn importers, with
purchases averaging well over 5 million tons in recent years. It
consistently ranks among the top three markets for U.S. corn.
Taiwan is also a market where U.S. corn faces only marginal
competition. The U.S. is Taiwan's principal wheat supplier,
accounting for over 80 percent of the near 1 million tons
In late March, a foot-and-mouth (FMD) outbreak was confirmed
in Taiwan's swine sector. The Government of Taiwan has
temporarily banned pork exports, which accounted for over
one-third of the island's pork production. The loss of FMD-free
status will curtail Taiwan's pork exports to all countries
requiring disease free certification, notably Japan, its
principal market, for some time to come. However, rising poultry
production should compensate, to a limited extent, for the
reduction in the use of corn for pork production.
Before the FMD outbreak, the Government of Taiwan had in place
a hog reduction program designed to alleviate pollution problems
on the small, densely populated island. Taiwan officials had
estimated that two-thirds of the island's water pollution
problems had been caused by discharge from hog farms. The hog
reduction program, which was enacted in 1991, had the goal of
lowering hog numbers by one-third by 1997. The program was not
able to achieve this goal because of strong price incentives in
hog farming. It now appears that the FMD outbreak may have
accomplished, at least temporarily, what the hog reduction
program could not.
General Economic Conditions:
Over the past four decades, Taiwan's economy has been one of
the star performers in Asia, and prospects for its future are
bright. Now a fully developed country, Taiwan's economy continues
to expand at almost 7 percent per year with full employment and
low inflation. Its 21 million people enjoy a per capita GDP of
$13,000, the 25th highest in the world. An expanding democratic
government, strong economic performance, and economic
liberalization shape the Taiwan market.
In contrast to healthy growth in the overall economy, the
agricultural's sector contribution to GDP continued to decline to
3.3 percent in 1996 and is expected to decline further in 1997.
In the "Paddy and Upland Utilization Adjustment
Program", Taiwan plans to reduce guaranteed purchases of
corn, sorghum and soybeans in order to cut the Aggregate
Measurements of Support (AMS) by 20 percent by July 2001.
Taiwan is an island economy with limited land resources for
production agriculture, consequently it relies on imports in
order to feed its 21.5 million people. In 1995, Taiwan's total
agricultural imports grew by 9.5 percent and imports from the
U.S. jumped by 21 percent to $3.4 billion thanks to healthy
growth in both traditional bulk grains, intermediate products and
the newly-emerging consumer-oriented food sector. The U.S.
remains Taiwan's number one agricultural supplier with a nearly
35 percent market share of total agricultural imports. Overall,
Taiwan is the fifth largest market for U.S. agricultural
Taiwan has been actively engaged in bilateral consultations
with contracting parties of the World Trade Organization (WTO).
With an accession goal in mind in the near future, Taiwan is
expected to make additional concessions on agricultural imports.
As the 21st century approaches, Taiwan is targeted to expand
its trade and investment ties in the Asia-Pacific region. Under
its "Southbound Policy" to diversify export markets for
example, its bilateral trade with ASEAN nations has grown to
nearly 15 percent of total exports.
Selected Economic Data (1996):
Area: 35,980 sq. km. (slightly larger than Maryland and Delaware combined)
Land use: arable land (24%), permanent crops (1%), meadows and pastures (5%), forest and woodland (55%), other (15%).
Major agricultural products: vegetables, rice, fruit, tea, livestock
Value of agricultural output: (million US$): 9,486
Total agricultural imports (million US$): 9,704
Major agricultural imports: cereal grains, soybeans, cotton, hides and skins, fish meal
U.S. share of total agricultural imports (percent): 35
Major agricultural exports: pork, seafood, processed vegetables
U.S. share of total agricultural exports (percent): 6
Agricultural trade balance with the U.S. (million US$): -3,033
Population (million): 21.1
Population growth rate (percent): 0.87
Real GDP (billion US$): 279.2
GDP growth rate (percent): 6.2
GDP per capita (US$): 13,046
Inflation (CPI, percent): 3.3
% of imports: 8.1
% of exports: 4.5
% of GDP: 3.3
% of workforce: 16.0
The "Paddy and Upland Utilization Adjustment
Program", to be implemented July 1, 1997, will serve as a
guideline for Taiwan's rice and grain production for the next
four years (1997-2001). The program is targeted to reduce
Taiwan's Aggregate Measures of Support (AMS) by 20 percent by the
time it ends in 2001, whether Taiwan accedes to the WTO or not.
Total agricultural subsidies will be cut over four years from the
current US$16 billion, which includes guaranteed purchases of
rice, corn, and sorghum, to US$13 billion.
Some of the major changes proposed under this program are as
Rice: The land which has been diverted from rice production to
alternative crops will remain diverted and current guaranteed
purchase prices for both the first and second crops will
continue. The rice production target will be based on domestic
demand and the export market, while rice imports will be
permitted only under quota.
Sorghum: The guaranteed purchase price will only apply to the
first crop through the year 2001. Sorghum growers will also
receive a cash compensation for fallowing their land.
Corn: Beginning in 1999, the guaranteed purchase program for
corn will be limited to two crops and to one crop in 2000 instead
of the current three crops. There will be no guarantee purchase
provision for corn when the program ends in the year 2001.
There is no significant local wheat production in Taiwan.
Wheat imports have risen steadily, approaching 1 million tons during the current and last marketing years. The U.S. dominates the market with its 90 percent share, facing only limited competition from Australia and Canada. The tariff rate on wheat imports remains at 6.5 percent. Wheat imports are administered by the flour millers under government supervision, as described below.
There has been a slow but steady growth in wheat flour
consumption, which was estimated to have reached 32 kgs. per
capita in 1995. Taiwan consumers continue to enjoy wheat noodles
and bread products, while trendy Italian-style restaurants and
sandwich shops are helping to increase consumption. About 8
percent of wheat imports go for feed and industrial uses.
All wheat import purchases are currently handled through the
Wheat Stabilization Fund (WSF), which is administered by the
Taiwan Wheat Millers' Association (TWFMA) under the supervision
of the Council of Agriculture. The TWFMA is the sole
representative of Taiwan's wheat importers and millers and is the
major contact for all wheat suppliers.
The WSF is due to be phased out soon. The approximate US$12.4
million remaining in the WSF will be used as a wheat import
subsidy to help stabilize the domestic market. The WSF will pay
importers the difference between C&F import costs and a base
price of $245 per ton until the fund is depleted.
Some local flour millers, trying to push down costs, are
replacing old milling equipment or expanding production lines,
and some smaller millers are interested in combining forces to
compete with the bigger millers. The 1997 wheat import demand
will increase by those millers who expand their production line.
Three millers who have expanded their supply operations have
formed a buying group to ensure their wheat import supply.
Therefore, Taiwan millers have broken up into two buying groups
from the previous single unit buying group; an action previously
anticipated to happen after the WSF was depleted. However, all
wheat purchases still go through TWFMA owing to the continuation
of the WSF.
Domestic corn production covers only a very small proportion
of Taiwan's requirements. The corn production target set by the
government for both 1996 and 1997 is 250,000 MT, to be grown on
around 60,000 hectares. Beginning in 1998, domestic corn
production is expected to fall dramatically, following the demise
of the current Rice Diversion Program at the end of June 1997.
When its successor, the Rice Paddy Utilization Adjustment
Program, is in place, the current guaranteed purchase of corn,
sorghum and soybeans diverted from rice production will be
limited to two crops in 1999 and one type of grain per year in
2000 instead of the current three crops. There will be no
guaranteed purchase of feed corn when the program ends.
Taiwan has been importing over 5 million tons of corn
annually, with the U.S. the dominant (90-95 percent) supplier;
the bulk of the remainder has come from Argentina and South
Africa. Due to the FMD epidemic this year, corn imports in 1997
and 1998 are expected to decline.
There are no restrictions on Taiwan's corn imports. The tariff
rate for corn is set at one percent.
Annual corn consumption for animal feed is forecast at the
reduced level of 4.6 million tons in the 1997/98 marketing year.
There are two local high fructose corn syrup manufacturers that
consume an additional 300,000 MT.
Mixed feed production in Taiwan was estimated at 9.1 million
tons in 1996, with about 60 percent of the total composed of
corn. A decline in feed production is expected during the next
two years as a result of the FMD outbreak. However, Taiwan's
poultry industry is expected to continue growing, especially with
local consumers switching to poultry meat from pork, at least
temporarily, owing to reduced pork production.
Taiwan's top feed mills plan to continue expansion to increase
price competitiveness. Further industry consolidation is also
foreseen in the years ahead. Some have also made capital
investments to integrate up and down stream industries from feed
milling to broiler breeding to poultry meat marketing.
Barley production in Taiwan is negligible.
Barley imports totaled 198,000 MT in CY 96, with the U.S. supplying 35 percent. This was the first time that U.S. barley has reappeared in the Taiwanese market, after a long absence.
The current tariff rate for barley is 2 percent, but there is
a 15 percent duty on barley malt.
Total annual barley consumption for CY 96 is estimated at
around 230,000 MT divided among the following uses: 74,000 MT for
brewing, 20,000 MT for food uses with the remaining 136,000 MT
for feed utilization. The brewing industry is claiming a growing
percentage of barley use in Taiwan, with new breweries expected
to open soon. Australian and French two-row barley are the more
commonly used varieties, although the U.S. six-row variety has
gained some acceptance there.
Since barley imports are relatively small, members of the
Taiwan Barley Industry Association (TBIA) purchase barley
collectively by group tender. Interested U.S. barley suppliers
should contact TBIA directly regarding product sample,
specifications and pricing information. The Taiwan Tobacco &
Wine Monopoly Bureau (TTWMB) however, is the specific contact for
malting barley and malt.
Based on information from the Agricultural Section, American
Institute in Taiwan. For further information, please contact
David Wolf at (202) 720-2897.
Argentina Announces New Wheat Standard
The Government of Argentina recently announced a new
high-quality wheat standard and a separate specification for soft
white wheat. The new standards, which will take effect with the
upcoming 1997/98 crop, are intended to improve the quality and
marketability of Argentine wheat.
The specifications for the new high quality wheat, which will
be known as "trigo plata", are as follows:
|Moisture||13 percent maximum|
|Hectoliter weight||81 kilograms/hl minimum|
|Protein (13.5 percent moisture basis)||13 percent minimum|
|Wet Gluten||32 percent minimum|
|Falling Number||350 seconds minimum|
|Ash||1.7 percent maximum|
The new standards will be in addition to the current specification system which classifies wheat into Grades 1-3, or for feed. The trigo plata standard uses Grade 1 as a base, and then sets more strict tolerances for moisture and weight, and adds specifications for falling number, gluten, and ash. Reportedly, over 70 percent of Argentine wheat exports are Grade 1, with most of the remainder at Grade 2. The new soft white wheat category will be limited to wheat with less than ten percent protein (13.5 % moisture basis), and white color.
The introduction of the trigo plata and white wheat standards
marks a significant step by Argentine government and industry to
improve the quality and image of Argentine wheat in world
markets. Differentiation of wheat by class and grade is seen as
necessary to increase the value of the crop and allow Argentina
to become more competitive in world markets.
For further information, please contact Randall Hager,
Agricultural Attache at the American Embassy in Buenos Aires, at
011-54-1-777-8054; or Linda Kotschwar at 202-690-4134.
Corn Import Restrictions Threaten U.S.
Exports To Venezuela
Responding to disgruntled sorghum producers unable to sell
their crops, Venezuela's Ministry of Agriculture has made corn
imports conditional, based on purchases of domestic sorghum. The
Ministry of Agriculture announced in February 1997 that corn
imports require an import license and that licenses will only be
granted to importers with proof of prior domestic sorghum
The import restrictions stem from and are inextricably tied to
Venezuela's domestic sorghum program which sets a guaranteed
price for sorghum. The problem with the guaranteed price is that
it overvalues sorghum and has effectively priced sorghum out of
the feed market. Rather than acting as a disincentive to
production, though, the domestic program has encouraged
production because farmers are guaranteed profitable returns to
their production. Thus, the market for sorghum was far from its
equilibrium and didn't show any signs of reaching it: farmers
wouldn't accept less than the guaranteed price and buyers refused
to pay it. Instead, feed industry buyers substituted relatively
cheaper imported corn for domestic sorghum. Sorghum producers
brought their plight to the GOV's attention and demanded action.
In response, the GOV announced that corn imports required
licenses and that the licenses would be granted based upon proof
from the importer that they had already purchased domestic
sorghum in amounts equivalent to that bought on average over the
past two years.
The domestic struggle between sorghum producers, feed buyers
and the Government of Venezuela (GOV) developed an international
element when it became clear that import licensing requirements
would impact roughly 1.4 million tons of corn imported by
Venezuela, where the U.S. has held over 50 percent of the import
Meanwhile, corn traders and government officials in affected
countries question whether the corn import licensing policy is
compatible with Venezuela's GATT commitments. Both the
international and domestic tension may ease significantly if the
GOV reduces this year, as it has indicated it will, the domestic
sorghum price from $274/mt to $248/mt, making sorghum more price
competitive domestically. Additionally, in 1998 the GOV has
indicated that it will consider moving away from declaring a set
price and instead opting for a price band mechanism to peg
domestic sorghum and corn prices. This move should alleviate
domestic tension and allow corn to be imported free from any
This article was based on reports received from Larry Senger,
Agricultural Counselor at the U.S. Embassy in Caracas. For
further information please contact Deanna Johnson at (202)
Canadian Grain Marketing Undergoing
Canada is a leading world exporter of wheat and barley, and a
strong competitor of the United States in exporting these
commodities. Canadian wheat and barley is exported by the
Canadian Wheat Board (CWB), one of only a handful of export state
trading enterprises in the world. The CWB enjoys monopoly and
monopsony power over western Canadian wheat and barley for export
or domestic human consumption.
Canada and the CWB have taken a number of proactive steps to
ensure a continued place in the world grain market. Canada
heavily promotes the quality of its wheat and malting barley, and
has made particularly strong efforts to target the fast-growing
Asian market. The Canadians have also negotiated a number of
long-term trade agreements with importing nations to help ensure
markets for their grain. Participation in regional trade
agreements such as NAFTA and a recently negotiated free trade
pact with Chile will also help assure Canadian access to these
Despite these efforts, changes in Canadian domestic
agricultural policy could alter Canada's medium- and long-term
competitiveness in grain exports. As a result of both WTO
commitments and domestic budgetary pressures, Canadian support
programs have shifted from explicit freight subsidies and
expensive revenue insurance, to voluntary, income safety net
programs. The elimination of freight subsidies in particular has
strong potential to alter the economic attractiveness of
exporting bulk grains from interior locations.
Canada at a Glance
The Prairies where most of Canada's grains and oilseeds are
grown have a frost-free period of about 110 days. This climate
limits grain production to spring sown wheats, barley, and
oilseeds such as canola. Eastern Canada is more temperate in
climate, which allows for production of corn, soybeans, and
Wheat is by far the dominant field crop produced in Canada.
However, area devoted to oilseeds has expanded in recent years,
and changes in agricultural support policies are likely to bring
about some further production shifts. (See Government Involvement
Canadian Grain Production
(Local Marketing Years, in 1,000 MT)
Government Involvement in Agriculture
The CWB is the dominant factor in Canadian grain exports. As a
state trading enterprise (STE), the CWB enjoys support from the
Government of Canada in the form of its single desk status, as
well as financial support in the form of government-backed
The CWB has been under intense scrutiny in recent years as the
international grain trading community and Canadian producers
themselves have begun to question the role of STEs. State Trading
was left relatively undisciplined under the Uruguay Round
Agreement, leaving nations such as the United States concerned
that the lack of transparency of STEs provides cover for unfair
trade practices. On the home front, some Canadian producers have
also questioned the monopoly power of the CWB, calling for
In an attempt to settle the issue , the Western Grain
Marketing Panel (WGMP) was established in July 1995 by Minister
of Agriculture and Agri-Food Ralph Goodale to conduct a
comprehensive examination of western grain marketing issues. Not
surprisingly, the Panel found that the major issue of concern
among Prairie farmers was the fundamental question of whether
wheat and barley should continue to be marketed through the CWB's
The WGMP made a number of recommendations regarding operations
of the CWB, some of which were incorporated into legislation
introduced last fall by Minister Goodale. The legislative package
included provisions for a number of changes that were intended to
grant the CWB more flexibility and provide more accountability to
producers. However, the legislation generated intense debate, and
did not pass before the recent Canadian elections were called and
Parliament disbanded. Reportedly, the legislation will be
re-introduced this fall.
Unlike the CWB, Canada's other agricultural support programs
have evolved in recent years, shifting from explicit freight
subsidies and expensive revenue insurance programs to voluntary,
income safety net programs. In 1995, two freight subsidy
programs, the Western Grain Transportation Act and the Feed
Freight Assistance Program, were terminated; and in 1996, the
Gross Revenue Insurance Program was ended. The dramatic shift in
policy has come about as a result of both WTO commitments and
domestic budgetary pressures, and is likely to have a ripple
effect on Canadian agricultural production and marketing.
"Value-adding" has become the buzzword across the
prairies as producers in interior locations must re-evaluate the
economic attractiveness of moving bulk grains to export position
without the benefit of subsidized transportation. In some cases,
the end of the subsidy (and subsequent transition payments) is
likely to provide incentive for the development of infrastructure
to facilitate local utilization and processing.
The Western Grain Transportation Act (WGTA, or also known as
the Crow's Nest Subsidy) had been identified as an export subsidy
subject to reduction commitments under the Uruguay Round
Agreement. The reduction commitment, combined with the pressure
of a large domestic budget deficit, led the Canadian government
to eliminate the program. The Government of Canada provided
direct payments totaling nearly US$1.2 billion to farmers to
compensate them for the loss of the subsidy, with the final
payment made in September 1996.
The second freight subsidy terminated in 1995 was the Feed
Freight Assistance (FFA) program. The FFA had provided freight
subsidies to livestock producers in feed-deficit regions,
primarily in British Columbia and the Eastern provinces. As with
the WGTA, federal transition payments were provided to ease the
Another significant freight-related change in 1995 occurred
when the CWB changed its eastern pooling point for wheat and
barley from Thunder Bay to the lower Saint Lawrence. The returns
that a Canadian wheat or barley producer receives from the CWB
are net of costs such as elevation, dockage and freight, with
freight being calculated basis Vancouver in the west or lower St.
Lawrence in the east. Movement of the pooling point has resulted
in an increased freight deduction for eastern Prairie farmers,
thus lowering the returns they receive for delivering grain to
the CWB. As a result, livestock production has been on the
increase in Manitoba, and shipment to the United States has
become a more attractive alternative.
Canada is also in the midst of restructuring ownership and
allocation procedures for rail cars, adding further upheaval and
uncertainty to the Canadian transportation system. The Canadian
transportation system as it currently operates is highly
regulated, with most hopper cars owned by the federal or
provincial governments or the CWB. Rail cars are currently
allocated by the Canadian Allocation Policy Group (CAPG), which
is an interim structure in place while the entire rail car
ownership and allocation system is being reviewed.
With the elimination of freight subsidies and possible
deregulation of the transportation system, Canada's federal
agricultural support is currently focused on income
stabilization, with crop insurance and the Net Income
Stabilization Account (NISA) being the primary programs. In
contrast to U.S. farm programs which have traditionally taken a
commodity-specific approach, Canadian domestic programs generally
use a whole farm income approach.
NISA is a voluntary program intended to help producers
stabilize their income by providing incentive to save during
"good" years to provide a source of funds for lower
income years. Producers may deposit money into interest-earning
NISA accounts and receive matching contributions from the federal
and provincial governments. Funds may be accessed when income
falls below established trigger levels.
The Canadian crop insurance program is a provincially
delivered program to which the federal government contributes.
Coverage is based on a producer's historic average yield, with
premiums shared by the producer, federal and provincial
It should be noted that the current crop insurance program is
different than the Gross Revenue Insurance Program, or
"GRIP", which was a voluntary revenue insurance plan
that was terminated last year due to high government costs and
low farmer participation. GRIP shielded producers from both price
and yield variability by guaranteeing participating producers a
certain level of gross revenue through a combination of market
returns, insurance payments, and a form of income deficiency
Canada typically exports 70 to 80 percent of its wheat
production, with Asia being one of the most important
destination. Over the past ten years, nearly half of Canadian
wheat exports have gone to Asian destinations. Primary customers
include China, Japan, Indonesia, and Korea. As such, Canada has
taken steps to target Asian customers and capture premium prices
for their wheat by developing varieties suited to end products
typical of Asian diets and providing special pools of those
wheats to ensure the quality and characteristics.
In stark contrast to wheat, the vast majority of Canadian
barley production is used domestically as feed. Over the past
five years, domestic feed use has averaged around 70 percent of
total Canadian barley production. Feed barley is often used in
the growing areas of central Alberta, and also regularly flows
into the feedlot cattle production areas of southern Alberta. Hog
operations across the south central tier of Manitoba are also
large domestic consumers of feed barley.
Typically 15 to 20 percent of the Canadian barley crop is
selected for malting. All malting barley marketing is handled by
the CWB, and most malting barley is ultimately exported, whether
as barley or as malt. Most of the Canadian barley selected for
malting is two-row, which is preferred by most maltsters in
Canada and throughout the world. In Manitoba, however, over half
of malting barley delivered is six-row, which is favored by some
U.S. maltsters. The United States is the top export destination
for Canadian malting barley, and rising world beer consumption
bodes well for Canadian malting barley and barley malt export
potential to other destinations.
Grain Trade with the United States
The volume and value of trade between the United States and
Canada has increased in nearly all grain and grain product
categories since the two countries entered into the U.S. - Canada
Free Trade Agreement in 1989. However, since 1993 the U.S. has
run a grain trade deficit with Canada. Canadian grain and grain
products shipped to the U.S. grew to over $1.5 billion in 1996, a
nearly three-fold increase from 1990. While growth has occurred
in nearly all grain and grain product categories, the most
visible and controversial source of the growth has been in the
increases in bulk Canadian wheat, flour, oats, and barley
shipments to the United States. This issue continues to be a
trade irritant between the two countries.
Shipments of Canadian wheat to the U.S. surged from just under
560,000 tons in calendar year 1991 to nearly 1.5 million tons in
1992, in part due to unusual production and market conditions.
Barley shipments experienced a similar increase in 1994,
rocketing from 575,000 tons in 1993 to 1.9 million tons in 1994.
While the initial surges appear to have been driven in part by
market conditions at the time, the export volume has not dropped
off to pre-1994 levels. During calendar year 1996, Canada shipped
1.285 million tons of wheat and 788,934 tons of barley to the
On the other side of the ledger, the value of U.S. grain and
grain products exported to Canada rose to over $1 billion in
calendar year 1996, an 85 percent increase since 1990. U.S. grain
and grain-related exports to Canada have been led by bulk corn
and value-added products such as feed and miscellaneous consumer
products. The U.S. shipped nearly 860,000 tons of corn to Canada
in 1996 valued at over $136 million. Nearly 80 percent of the
total value of U.S. grain and grain products exports to Canada is
comprised of value-added products such as flour, feed
ingredients, pet food, and grain-based consumer goods such as
bread and breakfast cereals.
For further information, please contact Linda Kotschwar at
SITUATION AND OUTLOOK: COMMENTARY AND CURRENT DATA
WORLD WHEAT SITUATION AND OUTLOOK
World trade is forecast to reach its highest volume in four
years despite the fact that two of the world's largest
traditional importers, China and the former Soviet Union, are
expected to remain all but absent from the global market for the
second year in a row. Overall production is estimated to decline
4.2 million tons to 579 million tons, still the third-largest
global wheat crop on record. However, the small aggregate change
masks significant production swings in a few pivotal regions. The
pick-up in trade can be partially attributed to an extended
period of hand-to-mouth buying by importers seeking price
advantages during the unusually competitive 1996/97 season. This
may indicate that pipeline stocks are running low and in need of
replenishing at the same time that overall global stocks (as a
percentage of consumption) must stage a recovery from all-time
lows. Prices therefore are expected to stay historically high,
reflecting the fact that world stocks remain uncommonly low while
import demand continues to be strong.
Imports by Egypt in 1997/98 are expected to
reach 6.7 million tons, a slight increase over the 1996/97 import
forecast and the highest level of the 90's. While not a record
import level for Egypt, this increase in projected Egyptian
imports, coupled with drought in Algeria, Morocco, and Tunisia
has propelled the North African region to a new record for
imports at 15.6 million tons. Expectations for continued
consumption growth in 1997/98, coupled with prospects for a
6-million ton year-to-year crop reduction have resulted in the
record import projection for the region.
Forecast 1996/97 imports by South Africa are
up to near-record levels, while 1996/97 imports by Nigeria
are now expected to reach the highest level in a decade. In
Nigeria, the increased imports are expected to result in the
highest consumption levels since the Nigerian Government imposed
a wheat import ban. South African wheat consumption has set
consecutive records for each of the past five years, fueled
largely by a growing import program.
WORLD RICE SITUATION AND OUTLOOK
The international rice market exhibited substantial price
fluctuation during the month of May. However, by the second week
of June quoted price levels in Thailand, Vietnam and the United
States were essentially unchanged from those of early May. Only
in Pakistan was there a significant difference in price levels.
Quotes for Pakistani rice increased about $10 per ton during the
month, as supplies of rice for export are becoming scarce. In
Thailand, prices rose by $10 per ton by mid-May, following
substantial sales to Iran and Nigeria. A lack of buying interest
at these higher price levels provoked a subsequent fall in
prices. In Vietnam, harvest of a huge winter-spring crop led to
strong pressure on prices, but by the end of May combined monthly
sales and exports in excess of 1 million tons had led to a
rebound in price quotes.
Forecast 1997 rice exports by Vietnam have
been raised this month to 3.0 million tons, up from 2.75 million
tons a month ago. Recent sales and exports, combined with a 1.2
million ton increase in estimated 1996/97 production, have
drastically changed the outlook for Vietnam's 1997 export
campaign. The Government of Vietnam has officially increased the
1997 export target to 3.5 million tons. In the absence of
unexpected, new demand this target appears unlikely to be
The forecast of 1997 rice exports by Thailand
was lowered this month to 4.8 million tons, the lowest level
since 1994. January-May exports of about 1.9 million tons lag
significantly behind the export pace seen in both 1995 and 1996.
With prices still generally uncompetitive for most grades, any
sudden increases in nearby exports looks unlikely.
An increase in forecast production has led to 50,000 ton
increases in the export forecasts for both Uruguay and
Argentina, now expected to reach record levels of 650,00
and 600,000 tons, respectively. With record production of 1.2
million tons (rough basis) Argentina has this year increased both
harvested area and production at least 25%. Uruguay has also
harvested a record 1996/97 crop, but for the first time ever
Argentina's production substantially exceeds that of Uruguay.
The 1997 export forecast for Australia was
lowered this month as Australian exporters have failed to record
substantial sales in traditional medium-grain markets despite the
pressure of a record harvest.
The calendar year 1997 rice import forecast for the United
States was raised this month to a record 350,000 tons.
First quarter imports, anchored by record monthly imports of
40,000 tons in March, totaled 99,000 tons.
The 1997 import forecast for Brazil was
lowered this month from 1.2 to 1.0 million tons following a
revision to estimated 1996/97 production (up from 9.1 to 9.6
million tons). This lower import level, combined with the
increase in forecast exports by both Uruguay and Argentina make
substantial imports from Asia appear unlikely. Depending on the
size of Argentine and Uruguayan sales to extra-regional markets,
imports from outside the MercoSur may be limited to 100,000 tons
The 1997 import forecast for Peru was lowered
this month from 400,000 to 300,000 tons. A recent tariff
increase, a phytosanitary ban on rice imports from several Asian
suppliers and heavy carry-over of imported rice from 1996 have
combined to dampen import demand.
The forecast of 1997 rice imports by China
was lowered this month to 600,000 tons. The small size of the
1996/97 fragrant rice crop in Thailand and attendant high prices
appear to have played a major role in reversing the recent trend
of increasing Chinese imports of high quality rice.
WORLD COARSE GRAINS SITUATION AND
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 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 in 1996/97--for the first time since 1994/95 (the
onset of its export ban) -- of 2.5 million tons. U.S. export
opportunities for 1996/97 in Asia are expected to diminish
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 1996/97 sorghum import forecast for
Israel is expected to be up 150,000 tons, to 450,000 tons, and
the 1997/98 sorghum import projection for Israel was also raised
100,000 tons, to 400,000 tons, likely due to its more favorable
price. For 1996/97, this is the largest import level in eleven
years. The United States is expected to benefit from these
increases in imports, where, historically, an overwhelming
majority of sorghum imports has come from.
The 1996/97 corn import forecast for Turkey
was revised up 200,000 tons, at 600,000 tons, due to projected
increases in demand from the beef and dairy cattle and poultry
industries, and the corn starch and high fructose corn syrup
industries. This is the third largest import level on record.
Since most corn imports have come from the U.S., it is likely the
U.S. will benefit from the expected upsurge in importing.
ENDNOTES TO GRAIN: WORLD MARKETS AND
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
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 5-97 May 1997. For further details on the world grain production, see World Agricultural Production, Foreign Agricultural Service Circular WAP 6-97 June 1997.