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GRAINS: WORLD MARKETS AND TRADE, PART ONE
JULY 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 328-July 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 August 13.
EXECUTIVE SUMMARY
SITUATION/OUTLOOK
FOREIGN COUNTRIES' POLICIES AND PROGRAMS
WORLD AND U.S. GRAIN OVERVIEW
WHEAT
The world trade in wheat is expected to grow for the third
consecutive year due to a healthy increase in 1997/98 global
wheat production from the near-record 1996/97 level and a
corresponding decline in prices. The increased production is
likely to exceed consumption for the second year in a row and by
a wider margin, allowing for a moderate rebuilding of relatively
low global stocks. While global stocks are expected to rise from
the prior years' level they remain historically low, indicating
that the supplies necessary for maintaining the current
record-setting global use of wheat continue to be dependant upon
the ability to sustain production at near-record high levels.
Unlike the bumper crop of 1996/97, which saw three of the world's
five major exporters harvest record amounts, significant
production increases in the current year are centered in
countries such as China, the former Soviet Union, India and
Eastern Europe.
RICE
Initial projections are released this month for world rice
trade in 1998. Total trade is projected at 18.5 million tons, the
third highest total ever. Given current projected production
levels, world rice market conditions in 1998 look similar to
those of 1997. Ample supplies of low quality rice and increasing
demand for high quality grades will support continued high price
spreads. World rice consumption for 1997/98 is projected at a
record 381 million tons, while global production is projected to
fall from 565 to 562 million tons (rough basis), second only to
last year. Among exporters, increased exports are forecast for
Thailand (from 4.8 million tons in 1997 to 5.5 million), Vietnam
(from 3.0 to 3.5 million), the United States (from 2.4 to 2.6
million) and Pakistan (up from 1.65 million to 1.7 million tons).
Among importers, Brazil and Iran are initially projected to be
the world's largest buyers at 1.25 million tons each. China,
Indonesia and the Philippines are projected to import 1 million
tons each. World rice trade in 1997 is now forecast to reach 17.6
million tons, up from the previous forecast of 17.3 million tons.
Key to this increase were changes in 1997 export forecasts for
the United States (from 2.4 to 2.5 million tons) and Vietnam
(from 3.0 million to 3.25 million tons).
COARSE GRAINS
Global trade of coarse grains during 1997/98 is projected to
be 90.8 million tons, a sharp increase over the 1996/97 level and
the second highest level of the last 5 years. Global production
of coarse grains in 1997/98 is expected down slightly from the
1996/97 level, due largely to expected reductions in corn
prospects in China and Argentina, and expected decreases in
barley production in Canada, Australia and North Africa. Foreign
coarse grain stock levels are forecast to be lower primarily
because Chinese corn stocks are expected to be drawn down from
1996/97 levels. U.S. stocks are projected to continue rebuilding
in 1997/98--to its highest level since 1994/95, but remain at a
relatively low level. World stock levels at the end of the
1997/98 season are forecast to fall marginally to 119.9 million
tons. The global stocks-to-use ratio for 1997/98 is expected to
fall slightly to 13.3 percent--the third lowest level on record.
FOREIGN COUNTRIES'
POLICIES AND PROGRAMS
Indonesia's Grain Import Demand Strong
in Wake of Solid Economic Growth
The consistent growth in Indonesia's economy over the past
decade has resulted in a doubling of the country's per capita
income during the period. Although the
Government of Indonesia (GOI) had hoped to minimize grain
imports, rising demand from increasingly better-off consumers has
caused a higher dependence on foreign supplies. Total grain
imports for 1997/98 are forecast at 6.5 million tons, divided as
follows: wheat 4.5 million tons; corn and rice, 1.0 million tons
each. Imports will make up 15 percent of total grain consumption
requirements. All of the wheat, 12 percent of the corn and 3
percent of the rice consumed in 1997/98 will be imported.
With around 200 million people, Indonesia is the fourth most
populous nation in the world and has become a major force in
global grain markets. It is now established as a large and
growing wheat buyer. Its corn imports have risen to a substantial
level, with the promise of continued strong increases as the
poultry industry expands. And Indonesia has demonstrated that it
still can be a swing factor in the world rice market. Following a
poor, drought-affected crop in 1993/94, imports surged, reaching
3.0 million tons in 1995, making it by far the world's largest
rice importer in that year.
Selected Economic Data (1996):
Area: 1,919,440 sq. km. (about three times the size of Texas)
Land use: arable land (8%), permanent (tree) crops (3%), meadows and pastures (7%), forest and woodland (67%), other (15%).
Major crops: rice, soybeans, palm oil, corn, sugar, cassava, peanuts, cocoa, coffee and tea.
Total agricultural imports (million $US): 5,276*
Major agricultural imports: wheat, cotton, soybeans, animal feedstuffs
U.S. share of total agricultural imports (percent): 20.1*
Major agricultural exports: wood products, rubber, palm oil, coffee, cocoa, spices
U.S. share of total agricultural exports (percent): 17.1*
Agricultural trade balance with U.S. (million $US): (+) 852.3*
Population (million): 200
Population growth rate (percent): 1.53
GDP (billion $US): 221.7
GDP growth rate (percent): 7.5
GDP per capita (US$): 1,116
Inflation (CPI, percent): 8.6
Agriculture, as
% of imports: 11.8
% of exports: 22.2
% of GDP: 17
% of workforce: 55
* Data is for 1995
General Economic Overview
Indonesia has made remarkable economic progress over the past
three decades.In 1967, when President Suharto came to power, it
was one of the world's poorest countries, with an annual per
capita income of merely $70. For 1996, this figure was estimated
at $1,073. Real GDP growth has averaged 7 percent during the past
five years, while inflation has been held in the 5 to 10 percent
range. Like some other rapidly developing countries in Southeast
Asia, Indonesia is struggling to keep its economy from
overheating.
Indonesia's economy is dominated by the private sector, but
the GOI still plays a role through state-owned firms and the
imposition of price controls in certain industries. Public
enterprises account for about 15 percent the GDP, but the GOI is
committed to privatizing many state enterprises such as banks and
state-owned toll road company. Indonesia also has made
considerable progress in trade and investment deregulation. In
mid-1994, the GOI lowered investment barriers, and in May 1995
and June 1996, it unveiled comprehensive tariff reduction
packages which covered roughly two-thirds of imported goods.
These measures have contributed significantly toward the
globalization of Indonesia's economy.
The government still imposes price controls on a number of
products which could be supplied by a competitive market,
including fuels, fertilizer and transport services. It also takes
actions designed to influence the price of a number of
agricultural products, including rice, wheat, sugar and dairy
products.
The agricultural sector, which accounts for about 17 percent
of GDP and employs roughly half of the labor force, remains a top
priority for the government. Self-sufficiency in rice and corn
have been a major focus of the government's agricultural agenda.
Efforts have gone towards improving the quality of extension
services, developing new agricultural areas and building
irrigation networks. Farms are small (0.5 hectare on average) and
a high percentage of farm crops are consumed on or near the farm.
The private sector has been busy in the agribusiness area.
Indonesia's wheat milling industry is expanding at 8-10 percent
per year and the animal feed industry at an estimated 7-10
percent rate. Growth in both sectors is among the fastest in the
world. Likewise, the food industry is developing rapidly to meet
the demand for more high-quality food products in the domestic
and export markets.
Commodity Highlights:
Wheat:
Production: Indonesia does not produce wheat.
Consumption: Total wheat consumption is forecast at 4.5
million tons in 1997/98, almost three times the level just a
decade ago. This phenomenal growth is due mainly to increased
instant noodle consumption. Higher per capita income,
particularly among low and middle income earners, and the
changing dietary patterns of the high income population, are the
main factors behind the increase in the demand for wheat-based
foods. In spite of these increases, Indonesia's per capita still
lags far behind levels in Japan, Korea, Taiwan, China and
Malaysia, indicating a great deal of room for further expansion.
It is the policy of the GOI to encourage wheat consumption as
a means of diversifying the people's diet, which is highly
dependent on rice. Since the government controls all wheat and
rice trade, it is in a position of considerable influence.
Industry sources claim that consumption of instant noodles is growing by as much as 20-30 percent a year. The wet noodle industry consumes about 30 percent of total wheat flour production, instant noodle manufacture consumes approximately 20 percent, bread making around 12 percent and the remainder is used to make snack foods, cakes and other baked goods.
Indonesian milling capacity is expanding and is expected to
reach approximately 5.75 MMT by the end of 1997. The milling
industry has been dominated by one major group, but two new
relatively small mills from outside the group are just coming on
stream. This will allow a little competition, and may influence
somewhat the types and origins of wheat being imported.
Trade: Indonesia's wheat imports are expected to reach
4.5 million tons in 1997/98, about triple the level of just a
decade ago. Australia and Canada are the dominant suppliers of
wheat to Indonesia, with small amounts coming from Argentina and
the United States. Australia, of course, enjoys a great
geographical advantage and delivers mainly white wheat. Canada
recently signed a Memorandum of Understanding with Indonesia
calling for the purchase of 1.5 million tons annually, or about
double recent levels. Although Indonesia is eligible to purchase
wheat under the GSM-102 program, it hasn't done so.
The GOI and private companies have started joint ventures to
upgrade port facilities to guarantee that the country can absorb
higher levels of bulk commodity imports, including wheat. Flour
mills are also anticipating increasing wheat imports and are
building additional production capacity and storage facilities.
BULOG, the National Logistics Agency of Indonesia, remains the
sole legal importer of wheat and approves all purchases. No plan
has yet been devised to phase out this state trading entity.
Corn:
Production: Corn production is forecast to increase to
a record level of around 7 million tons during 1997/98, based on
higher yields. Corn acreage has not increased noticeably for
several years due to the better returns received from rice
cultivation. The GOI continues to push for increased use of
hybrid corn to boost production. It has established a
"partnership program" which requires feed millers to
purchase corn from local producers through their trading
partners, ie. the central village unit cooperatives. Some feed
mills then provide the farmers the relatively expensive hybrid
seed and credit facilities. The program has not met with
universal success. Some farmers still prefer to market their
products privately, regardless of the benefits offered by the
millers, while village cooperatives have not always been reliable
suppliers of corn to the feed mills. Although minimum corn prices
are not set by the government, BULOG is authorized to intervene
in the market if it perceives prices to be too low. Since there
are no longer any import restrictions on corn imports, local
prices generally reflect world market levels.
Consumption: Just a decade ago, feed use of corn was
estimated at only 1.5 million tons and accounted for less than a
quarter of total corn consumption. But while food use has
stagnated at around 3.0 million tons, feed use more than tripled
to around 5.0 million tons. Rapid growth in Indonesia's poultry
industry has been the propellent. All imported corn is used by
the feed industry. Feed milling capacity in Indonesia is around
6-7 million tons, but expansion of existing facilities and the
introduction of new companies should push milling capacity to 10
MMT within the next several years. Many of the feed plants are
relatively new and some of the larger ones are integrated with
broiler and egg-laying operations. The expansion of the feed
milling industry has been financed partially by foreign capital,
facilitated by recent investment deregulation measures.
Trade: Until only five years ago, Indonesia was a
rather small importer of corn. With production lagging behind the
rapid growth in consumption, the country has become an attractive
market for foreign suppliers. The GOI recently liberalized the
import of corn, and there is no import duty. The United States
has been the dominant supplier, but there are indications that
some local feed millers prefer deep yellow/orange corn kernels,
the type most readily available from Argentina. Recent deepening
of ports to accommodate panamax vessels should help the
competitive stance of U.S. corn. The GSM-102 program is available
to corn importers but to date, no sales have been made using
credit guarantees. The logistics of smaller vessel shipments and
market proximity still makes Chinese corn attractive.
Rice:
Production: Self-sufficiency in rice production has
long been a primary goal of the Indonesian Government. Once the
world's largest importer, the country appeared to have achieved
an ability to grow enough rice to meet domestic needs, at least
on trend, alternating between modest imports in one year and net
exports in another. But during the past three years, production
has not kept up with rising domestic needs. Indonesia's milled
rice production is forecast at around 33.5 million tons for
calendar 1998, equal to the previous year's record crop, but
below the estimated 35.5 million ton consumption requirement for
1997/98. Several factors have assisted in an upward trend in rice
production: development of new rice areas, use of high yield and
improved quality seed, intensified construction of rural
irrigation systems and improving post-harvest management. The GOI
also has supported rice production by maintaining favorable floor
prices for domestic rice procurement.
The Indonesian Government is also engaged in a massive project
to develop one million hectares of new agricultural areas in the
remote peat bogs of Central Kalimantan (formerly Borneo). This
long-term project, which presents a great challenge to the GOI,
will stress rice production.
Consumption: Growth in per capita rice consumption may
be easing somewhat as higher income consumers alter their diets
toward more wheat-based, easy to prepare foods like instant
noodles and baked goods. But the rapid rate of population growth
keeps the pressure on supplies and will once again require
imports during 1997/98 to satisfy consumption needs.
Trade: Rice imports and exports are strictly controlled
by BULOG, the same state trading agency with monopoly authority
over wheat imports. When substantial rice imports have been
required in the recent past, Indonesia has turned to nearby,
cheap suppliers such as Vietnam, Thailand and China. Small
amounts of high-quality U.S. rice have been purchased by the
high-end retail and hotel trade.
Based on reports from the Office of Agricultural Affairs,
American Embassy, Jakarta. For further information, please
contact Kenneth L. Murray at (202) 690-1252.
Value-Enhanced Corn Exports Provide
Growing Niche Market for U.S. Producers
The market for U.S. corn exports historically focused
exclusively on traditional feed corn but in recent years has
forayed into the value-enhanced (also known as speciality crops)
market. Through biotechnology and plant breeding technology, seed
companies are able to produce plants with gene-specific
characteristics. Among the most common value-enhanced corn (VEC)
types are: high oil, white, waxy and high-amylose corn. Each of
these types of VEC offers enhanced quality attributes that add
value to the corn. The long-run trend for value-enhanced corn
reflects the long-run trend of its parent bulk corn exports --
and the future looks bright for U.S. producers and exporters.
U.S. corn exports are forecast to increase 5.5 million tons in
1997/98 from the current year based on high demand in Asia, Latin
America (especially Mexico), and the Middle East. This positive
short run trend mirrors both the long-run trend for corn and for
VEC. With respect to U.S. VEC, demand in Asia has been driving
this new niche market. Like the traditional corn market, industry
sources forecast growth in VEC trade in the long run and expect
usage to expand beyond Asia. In fact, Mexico is already a market
for VEC, which is used primarily for food use. Unlike the
traditional corn market, though, VEC use is in its infancy and
growth will be slow.
Importers are just discovering the variety of specialty corn
products available to them and the benefits derived by purchasing
VEC. Foremost is the end-user's ability to purchase inputs
specially-designed for his/her needs. VEC targets non-grade
quality attributes not measured in the standard grades but which
have a substantial impact on the corn's value for a particular
user. For example, feed manufacturers value high protein levels
and oil content while dry millers are more interested in corn
with large, uniform kernels and hard vitreous endosperm.
Marketing efforts aimed at educating importers as well as
producers to the benefits of VEC have yielded results. In Japan,
the U.S. Feed Grains Council, a non-profit producer and industry
organization that promotes U.S. feed grain exports worldwide, has
been actively and successfully promoting VEC corn and has
established itself as a leading authority on specialty feed
grains. VEC exports to Japan, the world's most sophisticated
importer, were approximately 3 percent of total imports in
1995/96.
With respect to production, the predominant obstacle to large
scale U.S. exports are small supply and the associated high cost
of segregating specialty grains within a system organized to
efficiently move large quantities of relatively generic commodity
over long distances. VEC production represents only 4 to 5
percent of total corn production in 1996/97 according to the U.S.
Feed Grains Council. Most producers have been wary of shifting to
specialty crops like high-oil corn that have a short track record
and high cost of production. However, as demand picks up and
producers realize that buyers are willing to pay a premium (4
cents to $1 per bushel depending on the type) for specialty corn
production should increase in the long term. For example,
production of high-oil corn grew from virtually zero acres in
1993 to approximately 1 million acres planted in 1997.
This report was compiled using information obtained from the
U.S. Feed Grains Council. For further information please contact
Deanna Johnson at (202) 720-4204.
Uzbekistan Struggles to Cover Wheat Requirements in Wake
of Post-Soviet Disruption
Uzbekistan is a landlocked nation of 23 million people, slightly
larger than California in size and sandwiched mostly between
Kazakstan to the north and northeast and Turkmenistan to the west
and southwest. Despite a hot, dry climate and limited, though
intensely cultivated and irrigated, river valleys, Uzbekistan was
the Soviet Union's primary producer of cotton and still ranks as
one of the world's largest cotton exporters today. However, with
the collapse of the USSR and the consequent disruption of
traditional trade links which supplied the nation with most of
its bulk commodities, Uzbekistan has had to take land out of
cotton in order to diversify its agricultural production.
Wheat is a staple food in Uzbekistan and, for the time being,
a vital import commodity. Wheat consumption is estimated to be
four million tons annually and is not expected to decline anytime
soon. Even as new products enter the marketplace, inflation will
continue to erode consumer purchasing power, keeping bread and
other wheat products at the center of the local diet. Wheat also
is widely fed in Uzbekistan, as imports of other feedstuffs have
been scarce since independence.
In recognition of this, Uzbekistan's agricultural policy calls
for self-sufficiency in wheat production. Toward this effort
wheat has been shifted to more and better land, mainly irrigated
cotton areas, in an attempt to increase historically low yields.
Nevertheless, while the area planted to wheat has grown
significantly over the past few years, production remains below
the government-set target. Part of the reason for this may be the
government's own order for 50 percent of the crop and the low
procurement price it pays to obtain it. The existence of a State
order combined with a low procurement price rarely provides any
incentive to boost production. Post-collapse shortages of
machinery, fertilizers and other inputs are another cause of low
production, as is unfavorable weather which has growing areas
receiving the lowest amounts of precipitation recorded this
century. Even with a doubling of the procurement price and a 90
percent prepayment on signed contracts for the 1997/98 season the
government is not likely to meet its wheat production and
procurement goals.
With a forecast production shortfall of approximately 1.2
million tons in 1997/98, Uzbekistan is likely to remain an
importer of wheat for the foreseeable future. While Kazakstan
would be the logical sole supplier of wheat to Uzbekistan,
Kazakstan has been unable to fulfill all of its agreements due to
its own difficulties related to the collapse of the Soviet Union.
Thus, in recent years Uzbekistan has turned to the European
Union, the United States and Russia to meet the balance of its
wheat import needs.
For further information, please contact James Gartner on (202)
690-4130.
Wheat Import Liberalization Under
Discussion in Sri Lanka
Sri Lanka is considering the allowance of private-sector wheat
imports, in response to calls for liberalization. However, in a
country where the pricing and distribution of flour are
controlled, and there is a monopoly flour mill, a number of other
policy issues would have to be addressed to make wheat import
liberalization a viable alternative.
Currently, all wheat imports are made by the Cooperative
Wholesale Establishment (CWE) through regular tenders. Wheat
imported by CWE is supplied to the country's sole flour mill,
which does the processing under a contract with the government.
After processing, the flour is distributed at fixed prices by the
Food Commissioner, using a network of cooperative outlets
throughout the country.
The World Bank and other international organizations have been
urging the liberalization of wheat imports for a number of years.
Sri Lanka's Central Bank also has recently recommended abolishing
the CWE and freeing wheat imports. But it's obvious that if wheat
import liberalization is to be effective, it must be accompanied
by decontrolled flour prices and distribution .
While rice consumption is the staple food in Sri Lanka, wheat
consumption has been growing significantly, and bread is now an
established part of the Sri Lankan diet. No wheat is grown, so
all flour requirements must be met through imports. Sri Lanka
imported nearly 900,000 MT of wheat in 1996, slightly over half
of which came from the United States. Wheat flour demand remains
strong, although the Government of Sri Lanka (GOSL) increased
flour issue prices by 40 percent during 1996. Flour subsidies are
gradually being phased out, but flour issue prices remain
somewhat below world market levels.
Based on reports from the Office of Agricultural Affairs,
American Embassy, New Delhi, India (which also covers Sri Lanka).
For more information, contact David Wolf at (202) 720-2897.
SITUATION AND OUTLOOK:
COMMENTARY AND CURRENT DATA
WORLD WHEAT SITUATION AND OUTLOOK
Global production estimates surged over 8 million tons this
month based on preliminary harvest data from Northern Hemisphere
producers. Indications that the current crop will meet or exceed
last year's bumper production have sent prices tumbling.
Prospects for larger world production helped to drive the overall
world trade forecast down. Still, world trade is forecast to
reach its highest volume in three 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. 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.
Exporters
The 1997/98 production estimate for the United States
was revised upward by 3.5 million tons to reflect the robust
harvest currently being brought in from the fields. Due to
increased availability and resulting lower prices, the 1997/98
export forecast was increased by 500,000 tons.
For 1996/97, slowing shipments necessitated a drop of 500,000 tons in the export estimate for Argentina. Lowering of the 1997/98 production forecast led to a 500,000 ton reduction in the 1997/98 export estimate for Canada. Reduced import demand from India led to a 500,000 ton reduction in forecast exports by Australia. Projected imports by the European Union were pushed up by 200,000 tons for both 1996/97 and 1997/98 even as a slow start to the 1997/98 season prompted a 500,000 ton decline in projected exports. Reductions of 500,000 tons from Kazakstan(in response to Russia's increased production) and 250,000 tons out of Romania (attributed to lower production) round out this month's export forecast changes.
Importers
Continued strong purchasing activity by Egypt provides for import estimate increases of 400,000 and 500,000 tons for the prior and current years. Surges in imports prompted additional multi-year increases for Taiwan and Cuba, while similar activity led to increases in just the 1996/97 import forecast only for Tunisia, Pakistan and Turkey.
Reports of significantly higher than anticipated production
and a successful government procurement suggest a two million ton
reduction in the 1997/98 import prospects for India.
Increased production in Russia, Uzbekistan
and Georgia prompted drops of 500,000, 200,000
and 50,000 tons, respectively, in the export forecasts for these
former Soviet republics as well.
WORLD RICE SITUATION AND OUTLOOK
Despite significant movement in world rice prices during the
month of June and into July, prices in most markets ended the
month at or near their initial levels. In late May/early June,
export prices in Vietnam increased by approximately $25 per ton
in response to large sales. Prices have remained unchanged since,
as new sales activity has been limited. In Thailand, export
quotes rose steadily on the basis of heavy loadings, especially
for Iran and Nigeria, before falling during the first week of
July in response to devaluation of the Thai Baht. Thai prices
ended about $5 per ton higher by the second week of July. Prices
in the United States firmed in late June before easing on revised
estimates of U.S. production area for 1997/98; ending down about
$5/ton by early July. In Pakistan, increasing scarcity of
export-quality rice led to a rise in export quotes through the
first half of June. By July many exporters were unwilling to
offer prices for Pakistani rice.
Exporters
The calendar year 1997 export forecast for the United
States was increased this month from 2.4 to 2.5 million
tons. While many in the U.S. rice industry expected 1997/98 rice
acreage to decline under the new agricultural support system,
planted area increased significantly thanks to current strong
prices for U.S. rice. The initial projection for calendar year
1998 is for exports to reach 2.6 million tons, making the U.S.
the world's third largest exporter for the second year in a row.
While ending stocks are forecast to increase marginally in
1997/98 it is expected that the United States will once again end
the season with little more than pipeline supplies.
Initial projections for 1998 rice exports by the worlds'
largest exporter, Thailand, are for shipments to
reach 5.5 million tons, a 700,000 ton year-to-year increase.
Normal growing conditions in Northeastern Thailand should help to
boost export levels by increasing supplies of fragrant rice.
After several years of strong growth, lower 1996/97 production
and attendant high prices have severely limited fragrant rice
exports, curtailing total exports to growing markets in Southeast
Asia.
In Vietnam, 1997 rice exports are
now forecast to reach a record 3.25 million tons. After poor
January-April exports, May-June exports totaled approximately 1.0
million tons, bringing year-to- date exports close to 2.0 million
tons. With continued strong production, Vietnam is expected to
once again increase exports in 1998, to 3.5 million tons. Vietnam
will remain the world's second largest exporter. Projected yields
and harvested area for 1997/98 are both at the second highest
levels ever.
Rice exports by Pakistan are expected to
reach 1.7 million tons in 1998, slightly greater than forecast
1997 exports of 1.65 million tons. While 1997/98 rice production
is expected to increase only marginally, domestic consumption is
projected unchanged.
In 1998, rice exports by India are expected
to rebound slightly to 1.5 million tons. Initial projections are
for an increase from 121 to 122 million tons in India's 1997/98
rice production (despite fears that India's production may be
affected by the developing El Nino weather pattern, preliminary
crop projections for India- as for all countries- are based upon
the assumption of normal weather patterns). India's rice
consumption is also projected to rise slightly, to a record 80
million tons. Increased exports depend on continued development
of major parboiled markets such as South Africa, Saudi Arabia and
Nigeria where India's exporters have established a strong
presence over the past two years.
Exports by MercoSur members are expected to increase slightly
in 1998. Uruguay is projected to increase
exports from the current record level of 650,000 tons to 675,000
tons. Argentina's exports are projected to
remain steady at 600,000 tons. Once again, these two exporters
should have a ready buyer in Brazil, while ample supplies allow
exporters to continue efforts to diversify markets.
Exports from China are projected to reach
500,000 tons in 1998. China is expected to continue its recent
trend of importing high-quality and exporting low-quality rice.
Lower domestic production in 1997/98 combined with ample supplies
of low-quality rice in Vietnam and Pakistan should limit the
price competitiveness of rice from China.
Calendar year rice exports from Burma are
projected to increase four-fold in 1998 (from 25,000 to 100,000
tons) as production is projected to rise by 500,000 tons (to 17
million tons, rough basis).
Rice exports from Australia in 1998 are
projected at 650,000 tons. 1998 exports by Guyana
are projected to decline to 200,000 tons, as Guyana's exporters
seek out marketing opportunities in the Caribbean basin following
imposition by the EU of limits on rice imports from OCT
countries.
Importers
North America
Regional imports are projected to fall from
870,000 tons to 850,000 tons in 1998 as regional production
increases by 200,000 tons (to 8.3 million- rough
basis) and consumption increases by only 50,000 tons.
Mexico is projected to import 275,000 tons in
1998, down from 300,000 in 1997 and 1996. A thirty thousand ton
(rough basis) increase in Mexican rice production should allow
for continued modest gains in consumption despite these lower
imports, and should directly affect demand for rough rice from
the United States.
Rice imports by the United States are
projected to be unchanged at 350,000 tons. While consumption of
imported specialty varieties is expected to continue recent
growth, increased U.S. production is expected to reduce demand
for imports of broken rice.
Latin America
Regional imports are projected to increase 320,000 tons in
1998 to 2.7 million tons. Regional consumption is forecast to
continue growing, regional production is projected unchanged at
18.9 million tons.
The 1997 import forecast for Peru was lowered
this month from 300,000 to 250,000 tons. Year-to-date imports
have been slow and increases in tariff levels have combined with
new phytosanitary restrictions to limit imports. Meanwhile, 1998
imports are projected to rebound to 350,000 tons as lower 1997
imports will result in a drawdown in Peruvian stocks,
necessitating strong imports in order to maintain consumption.
Rice imports by Brazil are projected to
increase from 1.0 to 1.25 million tons in 1998, making Brazil one
of the world's top two importers. While consumption growth is
expected to be minimal, 1997/98 production is expected to fall by
more than 200,000 tons (rough basis). Rice area is projected to
rise marginally after declining steadily for the past half dozen
years. Limited credit availability for growers in southern Brazil
has been cited as the main cause of this decline. While imports
rise, production in neighboring Argentina and Uruguay has
expanded, limiting the impact of Brazilian purchases on the
international rice market.
Middle East
Regional rice imports are projected to increase from 3.2 to
3.4 million tons in 1998, the highest level since 1995. Rice
production in the Middle East is projected flat at 3.1 million
tons (rough basis) while consumption grows from 5.4 to 5.6
million tons.
Due to delays in execution of contracts made under the U.N.'s
Oil-for-Food plan, the calendar year 1997 import forecast for Iraq
was lowered this month from 750,000 to 600,000 tons. In addition,
the 1998 import projection for Iraq stands at 600,000 tons,
assuming continuation of imports under U.N. auspices.
The 1998 import projection for Iran, the
world's foremost importer of high quality rice,
is 1.25 million tons; making Iran one of the world's top two
importers. Production in Iran is projected to match last year's
record 2.4 million tons (rough basis) while consumption growth
continues strong.
Calendar year 1998 imports by Turkey are
projected to match 1997 levels at 250,000 tons. 1998 imports by
the other major medium grain buyers in the Middle East are
projected at 150,000 tons in Syria and 90,000
tons (up from 75,000 in 1997) in Jordan.
Other Africa
Regional rice production is projected to decline for the
fourth out of the past five years, down from 10.6 to 10.3 million
tons (rough basis). Likewise, regional consumption is expected to
decline for the second straight year, off 200,000 tons to 9.6
million. With ample availability from traditional exporters of
low quality rice, regional imports are projected to increase to
3.1 million tons, from 2.8 million in 1997.
Nigeria is projected to be the top African
rice importer in 1998, with imports reaching 600,000 tons- the
highest level in more than a decade. Despite the increase in
imports, from 550,000 tons in 1997, declining local production
will result in lower total consumption for the second consecutive
year.
Record imports in 1996 depressed local prices in Senegal
in early 1997, leading to a slowdown in imports (400,000 tons vs.
700,000 in 1996). With import volumes now returning to normal,
1998 imports are projected to reach 500,000 tons. Imports by South
Africa are projected to hold steady at 500,000 tons in
1998.
Other Asia
Regional rice production is projected to fall from 353 million
tons (rough basis) in 1996/97 to 350 million tons in 1997/98,
mostly due to falling production in China. Consumption in the
area is projected to rise to a record 234 million tons, an
increase of 4 million tons versus 1996/97. Regional imports are
initially projected to rise from 4.2 to 5.3 million tons, the
largest level since 1995.
Calendar year 1998 rice imports by China
are projected to rebound to 1.0 million tons. Key to this
projection is the assumption that normal growing conditions in
Thailand will allow for a recovery in fragrant rice production
after lower than normal production in 1996/97. Rice production in
China is projected to fall in from 195 million tons in 1996/97 to
191 million in 1997/98.
Indonesia is projected to import 1.0 million
tons of rice in 1998. Continued strong growth in Indonesian
consumption combined with flat production should result in both
the increase in imports and a drawdown in national stock levels.
With current stock levels higher than they have been in years and
the pace of imports slowing, the 1997 import forecast for
Indonesia was lowered this month from 1.0 million to 750,000
tons.
After emerging as one of the world's major rice importers in
1996 and 1997, the Philippines are projected to
import 1.0 million tons in 1998. Consumption growth in the
Philippines continues strong while production area has stayed
relatively stable during the past two years.
WORLD COARSE GRAINS SITUATION AND OUTLOOK
The initially projected tight situation for world coarse
grains in 1997/98 is expected to be eased slightly, due
to continued strong production levels. However, demand is still
forecast to climb to record levels--specifically due to corn. It
is anticipated that U.S. coarse grains trade will increase
significantly in 1997/98, largely due to increasing demand and
lower competition.
World corn trade in 1997/98 is expected to
increase significantly from 1996/97 levels. U.S. corn exports in
particular are expected to regain some market share, with 52.0
million tons of exports, mainly due to less competition from
other feed grains. World corn stocks, while projected to increase
from 1996/97 levels, to the fourth highest level in nearly a
decade, will still be below levels observed three years ago. U.S.
export opportunities are expected to continue strong in Asia,
particularly Japan, South Korea, and Taiwan.
World trade in barley can expect a marginal
decrease in 1997/98, mainly due to a decline in imports by Saudi
Arabia, the largest feed barley importer. World stocks of barley
are expected to be significantly lower than the 1996/97 level, at
the third lowest level in 15 years. Asia continues to be a
significant growth market, primarily for malting barley, as their
barley imports are projected to continue to increase to record
levels in 1997/98.
Importers
North America
Mexico is expected to import 4.5 million tons of corn in
1997/98, the third largest level on record, due to increased
local feed consumption and the lowest carryin stocks level in
nearly 10 year. The U.S. will likely be the beneficiary of this
expected upsurge in imports, as it has historically captured
virtually all of the Mexican corn market.
ENDNOTES TO GRAIN: WORLD MARKETS AND
TRADE
REGIONAL TABLES
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.
OTHER NOTES
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 6-97 June 1997. For further details on the world grain production, see World Agricultural Production, Foreign Agricultural Service Circular WAP 7-97 July 1997.
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