|
|
|
|
|
|
GRAINS: WORLD MARKETS AND TRADE, PART ONE
AUGUST 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 329- AUGUST 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 September 15
SITUATION/OUTLOOK
FOREIGN COUNTRIES' POLICIES AND PROGRAMS
WHEAT
World wheat trade is expected to grow for the third
consecutive year, with global production up more than 10 million
tons for the third year in a row, resulting in an expected
decline in prices. However, unlike the bumper crop of 1996/97,
which saw three of the world's five major exporters harvest
record amounts, most significant production increases in the
current year are centered in China, the former Soviet Union,
India and Eastern Europe. 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 severely depleted
global stocks.
RICE
Forecast 1997 world rice trade was increased this month from
17.6 to 17.9 million tons as the forecast of rice exports by
India was increased from 1.2 to 1.5 million tons. Among
importers, forecast 1997 imports by Nigeria were raised from
550,000 to 700,000 tons and forecast imports by the Philippines
increased from 700,000 to 1.0 million tons. Smaller increases
were posted in import forecasts for Ecuador, Jordan and North
Korea. For 1998, the projection for United States exports was
increased from 2.6 to 2.7 million tons following a 300,000 ton
increase in forecast 1997/98 production (to 8.3 million tons).
Also, projected exports by Thailand were reduced from 5.5 to 5.25
million tons and projected imports by Colombia raised from
100,000 to 150,000 tons.
COARSE GRAINS
Global trade of coarse grains during 1997/98 is projected to
be 90.3 million tons, a marginal 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
moderately from the 1996/97 level, primarily due to expected
decreases in prospects for China, the U.S., Australia, Canada,
and North Africa. World stock levels at the end of the 1997/98
season are forecast to decline about 17.0 million tons to 104.9
million tons. Foreign coarse grain stock levels are forecast to
be sharply lower primarily because of a drawdown in Chinese corn
stocks, while U.S. stocks are also expected to decline in
1997/98. Thus, the global stocks-to-use ratio for 1997/98 is
expected to fall moderately to 11.8 percent--the second lowest
level on record.
Korea's Extraordinary
Economic Strides Lead to Large,
Mature Grain Market
Remarkable economic growth coupled with substantial
deregulation has placed the Republic of Korea among the major
trading nations of the world. As a grain market, it has matured
while working toward liberalizing its trade. Korea has reached
the point where wheat and feed grains can be imported as needed,
and a slight crack has opened in the door holding back foreign
rice purchases. Some phytosanitary problems have arisen regarding
grain imports, but these are being addressed. Competition is keen
in this lucrative grain market, and the U.S. grain industry has
been faring pretty well.
General Economic Conditions
Over the past three decades, the Republic of Korea has
transformed itself from one of the world's poorest economies
(with per capita income below $150 in 1960) to the eleventh
largest economy in the world (with a per capita income over
$10,000 in 1995). Thus, in little over a generation, Korea
literally rose from the ashes to join the ranks of Asia's newly
industrialized economies.
In 1995, the Korean economy experienced rapid growth, driven
mainly by sharp increases in exports and equipment investment. In
1996, the government was expected to achieve its economic goal of
a soft landing with a real GDP growth rate of around 6.8 percent.
A rising current account deficit however has raised concerns that
the Korean government might seek ways to discourage imports.
Agricultural products would be an obvious target since Korea's
trade deficit in this sector is over $7.0 billion. But it is
unlikely that grain imports would be targeted.
U.S. agricultural exports to Korea reached a record-level
$3.71 billion in 1996, a narrow increase over the year before and
should approach $4.0 billion in 1997, making it the third largest
market in the world for U.S. agricultural exports. Major
categories include cereals ($1.5 billion), hides and skins ($624
million), oilseeds ($381 million) and cotton ($291 million).
Selected Economic Data (1996):
Area: 98,480 sq. km. (slightly larger than Indiana)
Land use: arable land (21%), permanent crops (1%), meadows and pastures (1%), forest and woodland (67%), other (10%).
Major agricultural products: rice, barley, vegetables, fruit
Value of agricultural output (million US$): 30,500
Total agricultural imports (million US$): 13,640
Major agricultural imports: cereal grains, hides and skins, cotton, oilseeds, meats, wood products
U.S. share of total agricultural imports (percent): 36.8
Major agricultural exports: refined sugar, leather
U.S. share of total agricultural exports (percent): 3.1
Agricultural trade balance with the U.S. (million US$): - 4,930
Population (million): 44.6
Population growth rate (percent): 0.9
Real GDP (billion US$): 501.3
GDP growth rate (percent): 6.8
GDP per capita (US$): 10,800
Inflation (CPI, percent): 5.2
Agriculture, as
% of imports: 7.5
% of exports: 2.4
% of GDP: 6.3
% of workforce: 21
Policies Affecting Grain Imports
Korea is a large import market for most bulk agricultural
commodities, especially grains. For the United States, it is a
prime customer for wheat and corn, and is beginning to offer a
potential for rice imports.
In the past, the special relationship between the United
States and Korea assisted the development of a strong U.S.
position in the Korean grain market. U.S. wheat exports were
boosted first by a PL-480 assistance program and later by a
sizeable amount of export credit guarantees under the GSM-102
program. Corn also benefited from the GSM-102 program. Now that
these export credit programs are no longer used for Korea, its
grain imports have been determined more on the basis of price
competitiveness and commodity availabilities. This has resulted
in some slippage in the U.S. share of the market. Since the
mid-1980's, the U.S. claim on the milling wheat market has
declined as Australia has made inroads. During the first half of
the 1990's, the U.S. position in the corn market was severely
eroded by China, and was only regained in 1995 when China
temporarily suspended corn exports. Korea's feed industry also
has shown an extraordinary flexibility in shifting to other
grains, such as feed wheat and rye, when prices were competitive
with corn.
Domestic production of wheat and feed
grain is relatively insignificant in Korea, so the
milling and feed industries are almost fully dependent on
imports. This made it easy for Korea to commit to reducing import
duties by 40 percent for these commodities over the 1995 to 2004
period, under the terms of the Uruguay Round
(UR) trade negotiations. The import duty on wheat at the end of
the transition period would be only 1.8 percent, and as now, no
quantative import restrictions would apply. The situation for
corn is somewhat more complicated in that there is a tariff quota
set at 6.1 million tons; the duty on corn within the quota will
fall to 1.8 percent, while the current 3 percent duty will apply
to imports above the quota.
Korea's rice sector is an entirely different case. Government
policy calls for self-sufficiency in rice production.
Production goals are set annually, and guaranteed purchase prices
apply. Rice imports were totally banned until recently, when UR
commitments began to take effect. Korea is now required to import
rice under its Minimum Market Access (MMA) quota, which was
agreed to in the UR. Korea's MMA schedule for rice began at one
percent of its annual base-year consumption (51,000 tons), and
will gradually increase to four percent (205,000 tons) by 2004.
As tariff rates and quantitative restrictions on imports have
fallen in Korea, non-tariff barriers have become the chief
concern of U.S. trade policy. Importers commonly have problems
with customs and quarantine clearance procedures and sanitary
regulations have at times impeded the flow of grain imports. In a
development that should help avoid some future problems, the U.S.
Federal Grain Inspection Service (FGIS) began testing wheat for
29 agricultural chemicals for a fee. A new option for U.S. wheat
exporters is to obtain a certificate from the Oregon Department
of Agriculture's Export Services laboratory which will be
accepted in lieu of a certificate from the Korean Food and Drug
food quarantine laboratory, although Korean authorities say they
still maintain the right to randomly sample and test any grain
shipment.
Commodity Highlights
Wheat
Production. There is no significant wheat production in
Korea.
Consumption. Wheat consumption is divided into two
categories: a relatively stable, quality conscious milling wheat
sector (around 2.3 MMT per year) and a price-sensitive feed wheat
sector, which fluctuates widely according to prices. The flour
milling industry is divided into two identifiable utilization
sectors--noodle manufacturing and bread/confectionery items.
Total per capita flour consumption has averaged around 34.5 kgs.
Annual wheat flour production is around 1.6 MMT.
Wheat flour utilization within the noodle sector accounts for
approximately one-half of total flour consumption in Korea.
Australian Standard White Wheat (ASW) flour is strongly preferred
by many noodle manufacturers because its relatively higher starch
content allows for shorter cooking time. Australia has been so
successful in marketing its ASW in Korea that they now refer to
it as the "Korean Noodle Wheat." Bread and
confectionary consumption continue a trend of modest growth,
particularly since the ubiquitous coffee shops are now permitted
to sell baked goods.
Trade. Since the end of the Korean War, the United
States has been the principal supplier of milling wheat. Over the
past decade however, U.S. dominance has receded as Australia
continues to make steady inroads into U.S. market share, which
now stands at around 68 percent vs. Australia's 30 percent.
Canada and India have dominated the lower quality feed wheat
sector.
Until its cancellation in FY96, the GSM-102 program had been
an effective marketing tool in increasing and then maintaining
U.S. wheat exports to Korea, accounting for nearly two-thirds of
total U.S. wheat exports during the lifetime of the program
there. In its place, the Korean government said that a GSM-102
private sector program will be allowed to operate under the terms
offered by the Deferred Repayment Program, an import financing
structure which extends repayment terms up to six months. The
success of the private sector program will depend on the level of
interest shown by Korean feed millers and processors.
The U.S. wheat milling industry has focused its marketing
efforts on regaining lost market share to Australia and
increasing the domestic consumption within the bread and
confectionary sector. Substantial progress has already been made
towards developing a Hard White Wheat (HWW) that matches or
exceeds the characteristics of Australian Soft White Wheat.
Efforts are also aimed at developing new products (e.g.,
wheat-based snack foods, breakfast cereals) and promoting
western-style foods such as sandwiches and cakes. The tremendous
increase in popularity of pizza among Korean consumers has also
led to a rise in imports of high protein U.S. spring wheat.
Corn
Production. Corn production is relatively insignificant
in Korea, averaging less than 80,000 MT over the past five years.
Consumption. Corn consumption in Korea is divided
between a relatively predictable processing sector and a highly
volatile, price-sensitive feed sector in which corn competes with
feed wheat and other feed grains.
Total compound feed production was 15.6 MMT during 1995/96 as
cattle, swine and poultry inventories continued to grow. Feed
production by animal type was as follows: cattle (6.1 MMT), swine
(4.7 MMT), poultry (3.8 MMT) and other (0.4 MMT). Strong demand
for feed is expected in the near-term as livestock and poultry
inventories are expected to increase by an average of 3-5
percent. Over the long-term however, most analysts believe that
there will be a smaller and more consolidated livestock industry
due to market liberalization for many livestock products.
The gradual market opening under the WTO agreement has not yet
had a significant impact on the Korean livestock sector. The
gradual increase in the beef import quota has barely kept pace
with increased consumption while the full liberalization of
frozen pork and poultry imports effective July 1, 1997 is not
expected to have an immediate impact on domestic inventory levels
for either product.
Feed consumption of corn is highly dependent on international
supplies and prices in any given year. The Korean feed industry
is well known for substituting other grains when corn prices
increase. Annual feed use of corn has ranged between 4 and 7.5
million tons during the past five years, while total grain for
feed consumption during the same period averaged around 8 million
tons. Corn consumption in the processing sector is expected to
grow at a steady rate with continued strength in the soft drink
industry. Corn consumption in the dry milling process however is
expected to level off as the rising demand for breakfast cereals
is offset by stagnant demand for corn-based snack foods. The
snack food sector is a much larger and more mature market for
dry-milled corn. Corn wet milling (for starch, syrup, dextrose,
HFCS and others) consumes nearly one million metric tons
annually, vs. approximately 175,000 metric tons used in the dry
milling industry for hominy, grits and flour.
In terms of non-traditional uses for corn products, the Korean
government is giving serious consideration to developing local
industries for the manufacture of gasohol and biodegradable
plastics.
Trade. The Korean feed milling industry typically
imports U.S. No.3 yellow corn, or an equivalent from non-U.S.
suppliers, with total annual corn purchases ranging from 4-8 MMT.
The U.S. has been the major supplier, with smaller quantities of
corn coming mainly from China and Argentina. In the past, U.S.
competitiveness was assisted by the GSM-102 credit guarantee
program. Although this government-to-government program has now
been terminated by the Korean government, they will permit a
private sector GSM program beginning in FY97; how this will
affect U.S. corn exports is unknown at this time.
Under the terms of the Uruguay Round agreement, Korea has a
Current Market Access (CMA) total corn import quota of 6.1 MMT,
with a 2.7 percent in-quota tariff rate on feed corn and 3
percent on processing corn. At the request of the industry, the
tariff rate for feed corn was reduced to zero percent for the
first half of CY97 and it appears likely this will be extended
for the second half of the year. For processing corn, the rate is
set at 1 percent for all of CY97.
The Korean Government limits access to the CMA quota to two
local associations, which leads to a highly restrictive
allocation system. The Korean Feed Association (KFA) typically
receives a 4.3 MMT quota allocation while the Korean Corn
Processors Industry Association (KOCPIA) receives a 1.8 MMT quota
allocation. These levels are routinely expanded at the request of
either organization. Access to some corn-related products (e.g.,
corn grits) is also highly restricted, further limiting U.S.
exports.
Rice
Production. In spite of the government's efforts to
ensure rice self-sufficiency, rice acreage has been declining
steadily. There is strong competition from more lucrative cash
crops for the country's limited arable land.To offset the trend
in declining rice acreage, the government has focused efforts on
developing high-yielding hybrid rice varieties. During the past
six years, rice production has not kept up with consumption
requirements, and Korea's rice stocks have been reduced by around
a million tons (or by half). The government sets production
targets for rice and depends mainly on extension programs to
encourage planting. There also are guaranteed prices for rice
procured by the government, but procurement price and quantity
are restricted by Korea's Aggregate Measurement of Support (AMS)
commitment negotiated under the UR. This is because the AMS is
based on a value ($1.672 billion in 1996). To stay within the
AMS, government procurement was reduced to 1.24 million tons in
1996, or about one-fourth of total production. However, the
procurement price was set about four times higher than world
market levels. The producer price of rice marketed outside state
procurement is also very high, insulated from the world market by
the government monopoly on imports, which keeps out competition.
Consumption. After reaching a peak of 135 kg in 1979,
annual per capita table rice consumption has declined by an
average of 2-3 percent. This trend is expected to continue for
the foreseeable future. A recent Korean Rural Economic Institute
(KREI) study projected per capita table rice consumption at 84 kg
in 2004, compared with 105 kg in 1996. This translates to total
table rice consumption of 4.5 million tons in 2004, which would
represent an 80,000 ton annual decline.
Around 350,000 tons of rice was used in food and beverage
processing in 1993. This figure declined to about 100,000 tons in
1996. The resulted from reduced availability of lower quality
government stocks, which have been supplied to processors at
attractive prices. Beverage processors are no longer being given
access to state rice stocks, in an official move to whittle away
at rice consumption, and perhaps support self-sufficiency.
Trade. After achieving self-sufficiency in the early
1980's, Korea imported only negligible quantities of rice until
the recent implementation its UR/MMA commitments. The commitment
for 1995 was met with 51,000 tons of rice imports (milled basis)
from India, which actually did not occur till 1996; the
commitment for 1996 was realized with 64,000 tons of Chinese
rice. The MMA for 1997 is 77,000 tons, and will increase to
205,000 tons in the year 2004. Given Korea's trend in reduced
rice acreage and the reasons behind it, one could well imagine
that additional rice imports beyond the MMA commitment will be
required to meet consumption needs in the years ahead.
Based on reports from the Office of Agricultural Affairs,
American Embassy, Seoul. For further information, please contact
David Kiefner at (202) 720-6233.
Surge in Wheat Imports
by Several Nations
Offset China and Russia Declines
Aggregate wheat imports by India, Iran, Iraq, Pakistan and
Turkey more than doubled from 1995/96 to 1996/97 and are expected
to remain strong in 1997/98, adding approximately eight million
metric tons of demand to the global wheat trade over the two year
period. Although the reasons behind this swift increase vary by
nation, generally imports by the group are seen maintaining
higher levels over the long term than they have in the recent
past, thus serving to offset a large portion of the trade lost
due to the absence of China and the former Soviet Union from the
world market.
Demand from these five nations for imported wheat has stepped
up significantly in the past 12 to 24 months and, while not
expected to revisit the peak experienced in 1996/97, is likely to
remain at a new, higher level. The need to maintain per capita
consumption while undertaking significant stock building -- and
rebuilding -- will keep demand high in Iran and Pakistan
(although continued financing must be secured for further imports
by Pakistan). India and Turkey, both net exporters of wheat in
recent years, each became a net importer during the past 24
months and neither appears likely to return to a net supplier
position any time soon. Finally, the modern and growing milling
industry in Turkey, along with the exploding population of
oil-rich Iran, both require not only steadily increasing
quantities of wheat, but reliable sources of high quality wheat
as well to supplement inconsistent or poor quality domestic
crops.
India
Near the beginning of 1996 India began a full-scale wheat
export program after five consecutive record harvests had
resulted in a rapid buildup of stocks. By the end of the 1995/96
trade year India had become a significant supplier of wheat to
the world, exporting almost 1.5 million tons, nearly all of it
during the last six months of the July-June year.
As the 1996/97 trade year began, however, internal prices for
wheat had begun to rise as India was suddenly faced with concerns
of domestic shortages following the first production decline in
six years. In September, 1996, exports of wheat and wheat
products were banned. In December the government-run State
Trading Corporation suddenly bought over one million tons of
foreign wheat under a new purchase authorization which would
ultimately allow for the import of up to four million tons. By
the time the domestic harvest began in April, 1997, India had
taken delivery of 1.5 million tons, with over one million tons
still to be shipped after July.
For at least the past three decades India repeatedly has
bounced back and forth from a position of net wheat importer to
that of a net exporter. In this latest transition India switched
from a net export position of nearly 1.5 million tons in 1995/96
to a forecast net import position of one million tons in the
current year. Despite a larger than expected crop and an
apparently successful domestic procurement for the 1997/98 season
there is no expectation that India will return as a significant
exporter anytime soon.
Iran
The government of Iran traditionally has considered it
advisable to ensure that the nation's 65 million people have
access to a plentiful and inexpensive supply of the long, flat
loafs of good quality bread which comprise the staple diet.
Iranian consumers demand high quality and, as the world's third
largest exporter of crude oil, the government is in a position to
deliver it. The best wheat is imported from the world's major
suppliers and high bread subsidies are easily maintained even as
the country's population grows at a consistently healthy rate of
over two percent annually. Typically, imports of approximately
3.5 million tons per year have been required to bridge the
shortfall between domestic production and local consumption.
In January, 1997, Iran's Commerce Ministry requested, and
received, approval from the nation's budgetary panel for special
wheat import purchases in January and February so as to take
advantage of favorable prices on the world market. The Commerce
Ministry apparently undertook these special purchases for a
number of reasons:
There has been speculation as well toward the possible
smuggling or transshipment of wheat from Iran to surrounding
Central Asian nations. However, because the government of Iran
subsidizes bread, exports of wheat and wheat flour are strictly
prohibited. Even if such trade were to be conducted it would have
to be by truck and therefore limited, although the recent opening
of a new rail link between Iran and Turkmenistan may lower
transportation costs and thus boost exports to more meaningful
amounts.
The many diverse reasons behind Iran's recent wheat purchasing
activity suggest that the full measure of the unusual early-1997
imports represented a momentary surge of accumulation as
insurance against possible supply disruptions. A decline in both
the quality and quantity of the domestic crop also necessitated a
temporary increase in wheat imports. However, additional
coincident long-term factors dictate that, while not expected to
maintain the new highs, neither will import amounts settle back
to usual past levels. The recent industrialization of the
domestic baking process likely will result in a greater feeding
and waste of wheat in the form of stale bread while the new
availability of expanded storage facilities is expected to prompt
a gradual buildup in stock levels. Per capita consumption may
rise slightly as well, as the increasingly younger population
migrates more into the cities. Even a flat to marginal per capita
increase in a nation which is growing by well over three percent
each year will result in large and steady annual increases in
demand.
Iraq
Iraq's 1990 invasion of neighboring Kuwait and the
international sanctions which followed largely closed off access
to this previously three million tons annually wheat import
market. The United Nations' "Oil for Food" arrangement,
first implemented in December, 1996, has begun to restore that
access and wheat imports have risen sharply, from approximately
600,000 tons in 1995/96 to a forecast three million tons in the
current year. Providing for the continuation of the "Oil for
Food" arrangement (upon which ongoing imports are wholly
dependant), wheat imports by Iraq could maintain or increase this
annual amount for a number of years as the nation attempts to
return to normal consumption levels.
Pakistan
On March 27, 1997, Pakistan's new Prime Minister sealed the
country's borders in a belated attempt to stop the reportedly
widespread smuggling of wheat into neighboring nations,
particularly Afghanistan. Impending national shortages of wheat
and flour, caused as much by the excessive release of wheat from
government stocks to domestic flour mills during the previous
year as by the smuggling, had been evident for some months and
additional imports had been authorized in December, 1996, to
stabilize rising domestic prices. However, by April, 1997, the
shortages had reached Karachi, where uncommonly long lines and
sporadic looting marred a mid-April Moslem festival as thousands
spent the first day waiting for bread. Flour, already available
at only a few small mills, doubled in price.
Despite the third consecutive year of near-record high
production, Pakistan has made clear its immediate need for nearly
twice its approximately 2.5 million tons annual wheat import
amount. Historically, Pakistan has relied on credit to purchase
wheat on the world market. However, a large outstanding credit
burden has severely hampered efforts to secure any significant
increase in credit to Pakistan from traditional suppliers. While
the need to meet rising consumption and at the same time rebuild
severely depleted stocks has pushed domestic demand up to a new
plateau, the government's success in meeting this higher demand
depends upon its ability to obtain financing.
Turkey
An increasingly modern milling industry, combined with an
ineffective domestic wheat sector, has made Turkey both a
significant importer and exporter of wheat and flour,
respectively. Turkey's growth into the world's second largest
flour exporter helped turn its wheat and flour balance of trade
positive and the nation became a net supplier for a number of
years. However, Turkey swung from net exports of 1.4 million tons
in 1994/95 to net imports of 1.1 million tons in 1995/96 and has
remained a net importer ever since.
The initial reversal was caused by a drop in 1995/96 export
demand for that year's uncommonly low-quality flour (the result
of dependence on an inconsistent domestic wheat crop), a related
increase in imports for blending and the rebuilding of unusually
low stock levels. However, a quick succession of failed national
governments gave the reversal staying power. The lack of a stable
agricultural policy has led to uncertainties in planting
decisions among Turkish farmers, who recently warned that the
continuation of current conditions in the domestic production and
marketing of wheat would force Turkey to remain a net importer
for years to come. Meanwhile, the low quality flour milled from
domestic wheat can be sold only at a loss in border trade and
Turkey's gradual privatization of the overall wheat trade
continues to promote among the large, sophisticated mills
increased market competition for reliable sources of quality
wheat imports to be used for blending. Even the government's
recent tax hike on milling wheat and durum, while likely to slow
imports in the near term, is not expected to be enough to reverse
the nation's wheat balance of trade
For further information, please contact James Gartner at
(202) 690-4130.
WORLD WHEAT SITUATION AND OUTLOOK
Global production estimates surged up another 9.6 million tons
this month as a seven million ton increase in China and a five
million ton increase in the former Soviet Union were more than
enough to offset an aggregate 5.3 million ton drop in Argentina,
Australia and Canada. However, it is expected that the bulk of
the increased production will not enter export channels. Still,
world trade is forecast to reach its highest volume in three
years despite the fact that China and the former Soviet Union are
expected to remain all but absent from the global market. 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 another 2.7 million tons as the winter
wheat harvest continues to exceed earlier expectations.
The 1996/97 export estimate for Canada was raised by one-half
million tons based on trade done so far. However, Canada's
1997/98 export estimate, as well as those for Argentina
and Australia, declined by 500,000, 300,000, and
1.5 million tons respectively on drops in production. A 1.5
million ton increase in production prospects for Kazakstan
resulted in a 500,000 ton increase in expected exports.
Importers
Recent trade data indicates that Iran took
delivery of enough imported wheat in 1996/97 to raise the
estimate by 500,000 tons, equaling the seven million tons
imported by Egypt. The recent hike in import duties on wheat in Turkey
is expected to reduce imports by 500,000 tons to 1.5 million
tons, resulting in a year-to-year reduction in wheat consumption.
Record yields have resulted in record 1997/98 wheat production
in China, which is now projected at 121 million
tons. This, coupled with nearly non-existent forward import
purchases, has resulted in a one million ton reduction in
estimated imports. Imports are now projected at the lowest level
in 20 years- 2.5 million tons. Overall consumption is only
expected to increase one million tons in 1997/98, asper capita
consumption of wheat has been relatively flat in recent years.
WORLD RICE SITUATION AND OUTLOOK
International rice prices showed mixed trends during the month
of July and into August. In the United States, export quotes
declined steadily during the past month as the 1997/98 harvest is
set to begin. Prices entering the second week of August were
about $30 per ton lower than prices prevailing in early July. In
Vietnam heavy export commitments for August combined with
uncertainty about the size of the summer-autumn harvest and fears
about the potential impact of early flooding to support prices.
Export price levels established in early July held unchanged into
the second week of August. Export quotes in Thailand began the
month of July with a $10 per ton drop in response to devaluation
of the Baht and lack of forward commitments. After stabilizing
through most of July, export prices fell another $10-15 per ton
during the last week of the month and dropped a further $20
during the first week of August. In all, export values for high
quality Thai rice fell by more than $40 per ton between late June
and the second week of August.
Exporters
Calendar year 1998 exports by the United States
are now projected at 2.7 million tons, up from 2.6 million the
previous month. U.S. production in 1997/98 is now forecast to
reach 8.3 million tons, increased from the previous forecast of
8.0 million tons.
The calendar year 1997 rice export forecast for India
was increased this month from 1.2 to 1.5 million tons. While
export volumes have fallen dramatically from 1995 and 1996,
exports have continued to high-quality parboiled and basmati
markets. Given the concentration of India's exports in the
higher-quality spectrum of the market, it is expected that-
barring government restrictions on rice exports- foreign sales
will continue at current levels despite some concerns about lower
1997/98 production.
The calendar year 1998 export forecast for Thailand
was lowered this month from 5.5 to 5.25 million tons. Drought
throughout much of central and north-central Thailand has led to
a lowering of projected 1997/98 production (from 21.5 to 21.2
million tons).
Importers
Latin America
The 1997 rice import forecast for Ecuador was
increased this month from 0 to 50,000 tons. Torrential rains are
reported to have seriously damaged main season crops and are
impairing planting of second crop rice. While the full impact of
these adverse conditions is not yet clear, sources agree that a
minimum of 50,000 tons in imports will be necessary in the coming
months.
Projected 1998 imports by Colombia were
increased this month from 100,000 to 150,000 tons. A slowdown in
informal imports from Ecuador is expected to increase demand for
official imports early in the year.
Other Africa
The 1997 import forecast for Nigeria was
increased this month from 550,000 to 700,000 tons. Exports from
India and Thailand have skyrocketed during the past two months,
driving January-July departures for Nigeria to more than 350,000
tons.
Other Asia
The calendar year 1997 import forecast for the Philippines
was increased this month from 700,000 tons to 1.0 million.
January-July imports were slightly above 700,000 tons and the
National Food Authority (NFA) has recently been granted approval
to import an additional 350,000 tons. While no new imports have
been contracted, it is widely anticipated that NFA will import
rice later in the year to bolster stocks and guarantee its
ability to forestall possible increases in retail prices.
The 1997 rice import forecast for North Korea
was increased this month from 250,000 to 300,000 tons based on
estimated shipments-to-date.
WORLD COARSE GRAINS SITUATION AND
OUTLOOK
World corn trade in 1997/98 is expected to
increase somewhat 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 corn exporters. World corn stocks are projected to fall
moderately from 1996/97 levels. U.S. export opportunities are
expected to expand in Asia and Latin America, due to the reduced
presence of China and Argentina in those markets.
World trade in barley is expected to somewhat
decline in 1997/98, due to lower production in major exporting
countries. 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.
Exporters
This month, the 1997/98 export estimate for EU barley
was raised one-half million tons, to 6.8 million tons--the
highest level of the last 5 years. This increase can be primarily
attributed to the highest stocks level expected since 1993/94,
coupled with an expected decrease in local feed demand for barley
in favor of wheat, particularly in France and the United Kingdom.
It is likely that the EU will capture some of the market share
lost by Australia and Canada--major competitors--whose export
prospects are projected down on drought-reduced production.
China's corn harvest in 1997/98 is projected
to be 110 million tons, 17.5 million tons below the 1996/97
record harvest. Despite the reduction in corn prospects, China is
expected to achieve a seventh year in a row of record feed use of
corn, largely by drawing down what is anticipated to be a record
stocks carryout from 1996/97. Rather than being centered in one
particular region, which would create additional stress on
China's already overtasked grain transportation infrastructure,
crop conditions are poor throughout much of the corn growing
area. Furthermore, momentum from the record harvest in 1996/97
and the catena of record carryin stocks for 1997/98 appears to be
dominating China's export activity, as recent sales to South
Korea at very competitive prices would indicate. However, more
than one market source indicates that the corn moving in these
sales may have been purchased several months ago, when internal
corn prices were below current levels. While exports in 1996/97
are projected marginally higher this month at 2.75 million tons,
projected exports in 1997/98 are cut in half to one million tons.
Additionally, China is expected to import 250,000 tons in
1997/98; these imports will likely come during 1998, as stocks in
grain-deficit regions begin to feel the pinch of the reduced
harvest.
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 7-97 July 1997. For further details on the world grain
production, see World Agricultural Production, Foreign
Agricultural Service Circular WAP 8-97 August 1997.
Principal portions of this circular are available on the World
Wide Web via the Foreign Agricultural Service Home Page. The
address is:
http://www.fas.usda.gov
|
|