EXECUTIVE SUMMARY

SITUATION/OUTLOOK

• Wheat exports by the United States in 1998/99 are projected at 28.5 million tons, 1.5 million tons lower than last month’s estimate due to lower global imports and expectations that food aid shipments to Russia and other countries will extend beyond the 1998/99 marketing year.

• Russian wheat imports in 1998/99 are forecast at 3.7 million tons, 1 million tons lower than last month due to the delay in U.S. and E.U. food aid shipments.

• Argentine wheat exports in 1998/99 are forecast 500,000 tons higher (7.5 million tons) due to larger-than-expected production prospects. At the same time, Canadian wheat exports are forecast 500,000 tons lower based on slow export sales pace to date.

• E.U. wheat exports are lowered 1.5 million tons, to 16.5 million tons based on expectations of smaller flour and product exports as well as delays in the Russian food aid program.

• The 1998 rice export estimate for China is raised to 3.7 million tons due to stronger than expected shipments in December.

• The estimate for 1998 rice exports from India is revised upward to 4.7 million tons on larger than previously estimated shipments to Bangladesh.

• The outlook for United States corn brightened with forecast exports in 1998/99 up by 500,000 tons this month to 44.0 million tons, due to an expected increase in imports by key U.S. markets -- Japan and South Korea.

• Due to a recent sale of Government stocks, projected Polish rye exports for 1998/99 are raised from zero to 100,000 tons.

FOREIGN COUNTRIES' POLICIES AND PROGRAMS

• U.S. Soft Red Winter wheat exports have dwindled with the loss of the few big, past markets.

• Highly dependent on foreign wheat supplies, Bolivia strains to overcome market difficulties.

• Low wheat prices in the EU cause feed use to surge to new record level during 1998/99.

• In its effort to conserve water, Egypt has not succeeded in limiting irrigated rice acreage.

• The United States faces increased competition in the Japanese rice market.

 WORLD AND U.S. GRAIN OVERVIEW

WHEAT

Global wheat trade in 1998/99 is projected at 95.8 million tons, 4.5 million tons lower than the 1997/98 level. World production is forecast to be 586 million tons, down 23 million tons from last year’s record. A decrease of 4 million tons is expected in Argentina, while Canada’s crop is forecast unchanged from the previous year. A record harvest (over 103 million tons) is expected in the European Union while Australia’s crop is projected up almost 2 million tons and production in the United States is forecast to exceed last year’s bumper harvest by 2 million tons. Lower import demand is mostly attributed to higher production in several key import markets, including most of North Africa, Iran, and Pakistan. 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 9.6 million tons. The global stocks-to-use ratio at 21.5 is down nearly 2 percentage points from a year earlier.

RICE

Global rice trade in calendar year 1999 is forecast at 21 million tons, a 6.3 million ton decline from the record level of 1998. The reduced level of trade is primarily due to lower demand from Indonesia, the Philippines, and Brazil. After El Niño-reduced crops led to record demand from these key importers in 1998, a return to "normal" weather is expected to dramatically reduce import needs in 1999. However, world production is forecast to fall to 559 million tons (rough basis), a nine million ton decline from the record level of 1997/98. The decline in global production is mainly due to smaller crops in China and India. The smaller crops in these two countries, coupled with their heavy export programs of 1997/98, is expected to reduce their stock levels by a combined 6.8 million tons, leading global rice stocks to decline to the lowest level in 16 years.

COARSE GRAINS

Forecast global coarse grain trade for 1998/99 is nearly 89.0 million tons, an increase of 2.4 million tons over the 1997/98 level. Global consumption of coarse grains is expected to increase 1.5 million tons in 1998/99, to 874.9 million tons. Global production, however, is expected to decrease to 880.8 million tons in 1998/99, a marginal reduction from 1997/98. Production rebounds in the U.S. and China offset the 30.0 million ton slump in coarse grain production across the former USSR. Global stocks are forecast to expand by 6.0 million tons in 1998/99, to 141.3 million tons.

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Last modified: Thursday, November 13, 2003