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WORLD WHEAT SITUATION AND OUTLOOK
Global wheat trade in 2000/01 is projected to be 107 million tons, up 2.4 million tons from 1999/2000. Lower world production is expected as smaller crops in China, Iran, and North Africa more than offset a record EU crop. Weather in the Northern Hemisphere has been a key factor this year, with a second year of drought in North Africa and Iran at the same time that near ideal conditions prevailed in much of Europe. China’s acreage is down as farmers respond to lower prices and changes in the Government’s procurement policies. Argentina, Australia, and Canada are currently projected at close to the near-record levels of last year.
Global consumption in 2000/01 is expected to grow for a sixth straight year to another record level. Feed demand growth is modest as reductions in China partially offset increased feeding in the EU.
Import demand is forecast up for a second year to its highest level in 8 years. Most of the increase is being driven by the smaller North African and Iranian crops. Iran will likely remain the world’s largest wheat importer, having replaced Egypt last year. China’s imports are expected to rebound from the record low of the previous year. Because of strong import demand in 2000/01, the United States and EU are expected to boost their exports, while Argentina, Australia, and Canada maintain exports at the near-record levels of 1999/2000.
Global stocks are forecast to fall to near 20-year lows, with consumption expected to exceed production for a third consecutive year. The last time stocks approached such low levels was in 1995, when wheat prices hit record levels. This time, however, upward pressure on prices will be mitigated by continued large supplies in major exporting countries.
Exporters
Production in the United States is initially forecast to decline about 2 million tons to its lowest level in 5 years, but abundant stocks will keep supplies relatively large. U.S. exports are projected up 1.5 million tons to 30.5 million tons.
Expanded area and near ideal growing conditions are expected to produce a record European Union crop, which is forecast to jump 9 million tons from 1999/2000. Lower internal prices resulting from the Agenda 2000 reforms and a weak currency may allow for some exports without subsidy as well as boost internal feed consumption. But even with higher projected exports and feed use, the EU likely will build stocks. Combined production levels in Argentina, Australia, and Canada are forecast to drop 4 million tons, but a large carryin is expected to keep exports near the levels of a year ago.
Turkey and Hungary are together expected to increase exports about a million tons as a result of bigger crops. Those additional exports should be easily absorbed by buoyant import demand in the Mediterranean Basin, providing little threat to the EU and other major exporters.
Importers
North Africa
Severe drought has slashed production prospects in Algeria, Morocco, and Tunisia and will raise imports 1.6 million tons to near-record levels. Morocco should see the largest jump in imports. Despite a larger crop, Egypt is expected to boost imports due to low stocks.
Middle East
Iran is expected to import a record 7.5 million tons (up 5 million tons from 2 years ago) because of a second drought-ravaged crop. Continuation of the U.N. oil-for-food agreement with Iraq is likely to keep their imports unchanged from last year. Imports by the United Arab Emirates are expected to decline from last year’s record because of fewer opportunities to export flour.
Asia
While China’s crop is forecast down 8 million tons due to reduced acreage and yields, imports are up less than 2 million tons since stocks remain large. Total use is estimated to decline as farms shift away from lower-quality feed varieties.
Higher imports are expected for Indonesia, Malaysia, and the Philippines due to continuing recovery of those economies from the recent financial crisis. South Korean demand is forecast to be unchanged from last year.
Pakistan’s imports are unchanged from a year ago, with its continued reliance on stocks to fill the balance of its shortfall.
Former Soviet Union
Production in the region is forecast to drop 2 million tons as a much smaller crop in Kazakstan offsets more modest increases in Russia and Ukraine. Imports are expected to drop because of a larger Russian crop, whereas exports are down because of limited exportable supplies in Kazakstan and Ukraine.
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