EXECUTIVE SUMMARY

SITUATION/OUTLOOK

• Forecast corn exports by the United States were lowered 3.0 million tons this month to 44.5 million, based largely on a 2.5 million ton increase in Argentine exports, now expected to reach 10.5 million tons. Despite lower exports, projected U.S. ending stocks are lower from month-to-month (down from 24.2 million tons to 21.4 million) as forecast domestic consumption was increased from 189 million tons to 195 million.

• The wheat export forecast for Australia was raised 500,000 tons, to 14.5 million tons due to an increase in projected production. At the same time, the wheat export forecasts for Argentina and the European Union are lowered one-half million tons each as exports during the first half of the year have been slow, and competition is expected to increase during the remainder of the year.

• United States rice exports are forecast lower by100,000 tons for both 1997 and 1998. The pace of U.S. rice exports was slower than expected in recent months, and U.S. rice is likely to face strong competition in 1998.

• Corn import forecasts for Thailand, the Philippines, Malaysia and Indonesia were cut by a combined 850,000 tons, as currency devaluations increase the local cost and the risk of incurring losses on forward, dollar-denominated, commitments.

• Wheat import forecasts for Iran and Iraq were lowered by 500,000 and 400,000 tons respectively due to slow import pace to date.

• The 1998 rice import forecast for Indonesia was raised to 2.25 million tons. Low stocks, continued strong consumption, and a late harvest are expected to result in large imports in 1998.

FOREIGN COUNTRIES' POLICIES AND PROGRAMS

• Global wheat export sales got off to a slow start in 1997/98, but have made up since.

• Grain producer subsidies have risen in Turkey, following increased market intervention.

• Grain market infrastructure improvements are increasing Argentina’s competitive stance.

• A number of factors will determine whether India must import wheat during 1998/99.

 WORLD AND U.S. GRAIN OVERVIEW

WHEAT

Global wheat trade is projected at 97.2 million tons, a 500,000 ton increase over the 1996/97 level. Although world production is expected to reach the record level of 608 million tons, export availabilities in Argentina, Australia, Canada, and the European Union are forecast down 15.9 million tons from the previous year. However, the 6.6 million ton increase in the U.S. crop moderately offsets this loss. Global production will exceed consumption for the second year in a row, and the prospective increase in global ending stocks, up 25 million tons from 1996/97, will enable the global stocks-to-use ratio to recover from the past three years.

RICE

Global rice trade in calendar year 1998 is projected at 19.9 million tons, a 1.1 million ton increase over 1997, and the second highest level on record. World production (rough basis) in 1997/98 is forecast to increase by 6.5 million tons over the previous year, to a record 567 million tons. The strong production is expected to be led by record crops in China and India. Thailand and Vietnam are also forecast to increase production in 1998, and as a result are expected to remain the two largest rice exporters. In addition to increasing availability of rice for export, the strong production forecast is also expected to translate into a moderate increase in world stocks. On the importer side, Indonesia is expected to be the world’s largest rice importer in 1998. Extremely dry weather has delayed and is expected to reduce the main crop.

COARSE GRAINS

World trade in coarse grains is estimated at 91.1 million tons for 1997/98, down one-half million tons from last month’s estimate, with reduced corn imports by Southeast Asia the primary factor behind lower trade forecast. In addition to the reduced import levels, substantial changes were made to corn export forecasts for the United States (down 3.0 million tons), Argentina (up 2.5 million tons) and South Africa (down 300,000 tons). Overall coarse grain consumption is projected to reach a record 906 million tons in 1997/98, while global production is forecast at the second highest level on record, at 890 million tons.

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Last modified: Thursday, November 13, 2003