EXECUTIVE SUMMARY

SITUATION/OUTLOOK

• World wheat trade in 1998/99 is projected largely unchanged at 98.7 million tons, while trade in coarse grains is forecast to rise 1.6 million tons to 88.1 million.

• U.S. 1998/99 corn exports are forecast up 2.5 million tons, at 40 million, but will be limited by prospects for continued heavy exports from Argentina and China.

• China’s wheat production is forecast at 118 million metric tons in 1998/99. Although 6 million tons lower than the previous year, the crop will be the second largest on record; imports are expected to be maintained at a modest 2 million tons.

• Despite the expected 2.3 million ton jump in 1998/99 EU coarse grain exports, to 8.4 million, ending stocks will continue to climb for a third consecutive year, to 25 million tons.

• Combined exportable supplies of wheat among the major foreign exporters (EU, Argentina, Australia, and Canada) are forecast down 2 million tons from 1997/98. As a result, U.S. exports are projected up 3 million tons to 31 million tons.

• The Coarse grain imports by East and Southeast Asia are forecast to decline 1.0 million tons in 1998/99, as feed demand is expected to remain sluggish.

• 1998/99 world coarse grain production is forecast at the second highest level ever (907 million tons), while consumption rises to a record 903 million tons. Global ending stocks are projected to rise for the third consecutive year, to 131 million tons.

• Japan has announced plans to provide 500,000 tons of rice aid to Indonesia. The 1998 Japanese rice export forecast is increased accordingly.

• After emerging as a major supplier in 1997/98, corn exports from Eastern Europe are expected to fall by more than 50% in 1998/99, but barley exports from the Black Sea region are forecast to continue strong.

• The 1998 rice export forecasts for Argentina, Uruguay and Guyana are lowered by a total of 275,000 tons due to weather-related production declines.

• The estimate of 1997/98 U.S. corn exports is lowered 1.5 million tons (to 37.5 million) as China, whose exports are forecast at 6.0 million tons, resumed export sales after a four month hiatus.

• The 1997/98 wheat export forecast for the United States is reduced by 500,000 tons, to 28 million tons because of sluggish export sales registrations over the past 3 months. Estimated EU wheat exports in 1997/98 are raised 500,000 to 15.5 million tons based on large amounts of grain and flour export licenses awarded over the past few weeks.

• The forecast for 1998 U.S. rice exports is raised from 2.8 to 3 million tons due to increased demand from Latin America.

FOREIGN COUNTRIES' POLICIES AND PROGRAMS

• Cut rate competition from the Ukraine beginning to affect world grain markets.

• U.S.-Canada agricultural trade rose again in 1997.

 WORLD AND U.S. GRAIN OVERVIEW

WHEAT

Global wheat trade in 1998/99 is projected at 98.7 million tons, relatively unchanged from the 1997/98 level. World production is forecast to be 597 million tons, down 14 million tons from the 1997/98 record. Significant crop decreases are expected to occur in the United States and Argentina. Production in Australia and Canada is projected near the 1997/98 levels, while the European Union is expected to harvest a record-breaking crop. Production is up in several key import markets, including most of North Africa, Pakistan and Iran, while the wheat crop in the former Soviet Union is expected to return to a more normal level. Global consumption is forecast to reach record levels and for the first time in three years, is projected to exceed production, drawing down ending stocks by 2.3 million tons. The global stocks-to-use ratio is expected to be slightly lower at 22 percent.

RICE

Global rice trade in calendar year 1998 is forecast at a record 22.2 million tons, a 3.4 million ton increase over the 1997 level. The high level of trade is due to strong import demand from Indonesia, the Philippines, and much of Latin America. Adverse weather attributed to El Nino has led to significant production declines in these regions. Despite the surge in demand, world supplies should be sufficient. Record crops in Thailand, China and India will allow these countries to respond with increased exports, and Vietnam is expected to ship a record quantity. U.S. exports are expected to be strong in response to the Latin American demand, and Japan has announced plans to donate rice from its large stockpile to Indonesia.

COARSE GRAINS

The initial projection for total 1998/99 coarse grains trade, at 88.1 million tons, is 1.6 million tons higher than estimated 1997/98 trade. Trade in corn, barley and rye is forecast at 61, 16 and 1.9 million tons respectively, a decrease of 1 million tons for corn and increases of 2 million tons for barley and 1 million for rye. Trade in sorghum and oats are projected steady at 6.4 and 2.3 million tons respectively. Overall U.S. exports are projected to increase marginally to 46 million tons (from 44 million in 1997/98), with corn exports increasing from 37.5 to 40 million tons but exports of barley and sorghum slightly lower.

While many of the 1998/99 crops have yet to be planted, initial projections are for a 10 million ton increase in worldwide coarse grain production, to 907 million tons, the second largest crop ever. Global coarse grain consumption is also expected to rise, to a record 903 million tons. 1998/99 is projected to be the third consecutive year of increasing coarse grain stocks, with total ending stocks of 131 million tons. Nonetheless, the stocks-to-use ratio of 14.5 percent is still relatively low by historical standards.

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Last modified: Thursday, November 13, 2003