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WORLD WHEAT SITUATION AND OUTLOOK
Global wheat trade in 2001/02 is projected to be 107.6 million tons, up 2 million tons from 2000/2001. Lower world production is expected as smaller crops in the United States, EU, and South Asia more than offset larger crops in Australia, Argentina, Eastern Europe, and the FSU. Decreased plantings and unfavorable weather conditions have reduced crops in the EU, United States, and South Asia. Lower internal prices in China have prompted producers to decrease acreage but overall Chinese production will be up marginally as yields rebound from last year’s drought.
Global consumption in 2001/02 is expected to rise by about 2.5 million tons to a record level. The growth is attributed to not only food use but also feed use as a result of abundant supplies in countries which traditionally export low quality wheat.
Import demand is forecast up marginally this year. Part of the increase is due to expected higher import needs in Pakistan resulting from a reduced crop. Though importing less, Brazil will likely remain the world’s largest wheat importer, with Iran a close second due to continued drought. Australia, Argentina, and Canada are expected to boost exports. Ukraine and India are also forecast to be significant exporters. Meanwhile, the United States, EU, and Turkey are expected to export less mainly because of smaller crops.
Global stocks are forecast to fall year to year as consumption is expected to exceed production for a third consecutive year. Despite lower global stock levels, which are forecast at a 23.6 % stocks to use ratio down from 26.9 %, increased prices will be limited by relatively large but declining supplies in major exporting countries.
Exporters
Production in the United States is initially forecast to decline by about 7 million tons to its lowest level since 1988 because of lower seedings, higher abandonment, and lower yields. Relatively large stocks will be drawn down putting upward pressure on prices and making U.S. wheat less competitive globally. This, coupled with abundant exportable supplies in other major exporting countries, is expected to result in U.S. exports falling 3.0 million tons to 27 million.
Less planted area along with wet and cool growing conditions are expected to result in a smaller European Union crop. With potentially tighter supplies of good-quality, milling wheat and strong domestic demand for lower-priced feed-quality wheat, the Commission is likely to limit exports especially in the beginning of the season. The concern over potential rising prices could push exports to a 6-year low of 14 million tons.
Expanding acreage and more production in Argentina will mean increased exports to other destinations more than compensating for the weaker demand in Brazil. Canada is expected to produce another large crop leading to a 1 million ton increase in exports. Australia is forecast to increase production by 2.5 million tons which, combined with large carryin stocks, is expected to lead to exports of 2 million tons more than the previous year.
The government of India has indicated a need to reduce burdensome stocks by again encouraging exports. Though 5 million tons has been stated as the 2001/02 export goal, shipping constraints and concerns over quality are expected to limit exports to 3 million tons.
Due to improved crop prospects Ukraine is expected to increase exports nearly 2 million tons, largely to markets looking for competitively priced feed grains.
Importers
North Africa
Although drought is again hindering crops in Algeria, Morocco, and Tunisia, there has been some recovery in production prospects which is expected to lead to slightly fewer imports than last year’s near-record level. Egypt imports are expected to fall slightly as production is forecast up while consumption remains stagnant.
Middle East
Iran is forecast to import the same amount as last year, which is up 4.5 million tons from just 3 years ago, because of a third drought-impacted crop. Continuation of the U.N. oil-for-food agreement with Iraq is likely to keep their imports unchanged from a year earlier. Imports by the United Arab Emirates are expected to increase from the previous year’s near-record despite uncertainty over opportunities to export flour.
Asia
China’s crop is forecast up 2 million tons despite reduced acreage. Nevertheless, imports are expected to increase as consumption continues to outpace production thereby drawing down stocks. Total use is estimated to remain unchanged from last year.
Higher imports are expected for Indonesia and Malaysia due to continuing recovery of those economies from the recent financial crisis and availability of low-priced Indian wheat. Imports by South Korea and the Philippines are forecast up marginally from last year.
Pakistan’s imports are expected to jump as consumption will outpace a lower more normal production level. Stocks are expected to fill the balance of the shortfall.
Former Soviet Union
Production in the region is forecast to increase nearly 8 million tons as a slightly smaller crop in Kazakstan is more than offset by larger crops in Russia and Ukraine. Imports in the region are consequently expected to fall by about 700,000 tons with Russia accounting for the majority of the drop.
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