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WORLD WHEAT SITUATION AND OUTLOOK
Global
wheat trade in 2002/03 is projected to be 105.7 million tons; 1.5 million tons
lower than 2001/2002. World
production is expected to rise by more than 15 million tons as smaller crops in
the United States, FSU, Eastern Europe, and North Africa are more than offset by
larger crops in Australia, Argentina, China the EU, India, and Middle East.
The Middle East is expected to recover somewhat from drought conditions
experienced over the past few years. Meanwhile,
the EU is expected to have the largest production rebound, 15 million tons, with
a record crop resulting from increased plantings and higher yields.
Global consumption in 2002/03 is expected to rise by about 8.5 million tons to a record level. This growth is attributed to increases in food and feed use, which is expected to rise as a result of continued abundant supplies of low quality wheat.
Import demand is forecast marginally lower than 2001/02. Higher imports are expected in China as a result of dwindling stocks and demand for better quality wheat. Additionally, imports are seen rising in Tunisia and Morocco because of smaller crops. These gains will be largely offset by the EU’s return to traditional import levels.
Argentina, the EU, Turkey, India, and Kazakstan are all expected to boost exports while Australia, Russia and the Ukraine should remain significant exporters. Meanwhile the United States, Canada, and Eastern Europe are expected to export less, because of reduced exportable supplies.
After falling for three consecutive years, global stocks are forecast nearly identical to 2001/02 as production is expected to match consumption. Despite a continued drawdown in China, global stocks are flat largely due to increases in the exporting countries of India, the Ukraine, and EU.
Exporters
Production in the United States is initially forecast to decline by nearly 2 million tons to its lowest level since 1988/89 because of lower area and yield. Stocks will be drawn down maintaining some support for prices and making U.S. wheat less competitive. This coupled with a recovery in major competitor supplies and continued abundant and low-priced wheat from non-traditional suppliers is expected to result in U.S. exports falling 2.5 million tons to 24 million, the lowest in more than 30 years.
Larger planted area combined
with improved growing conditions, are expected to result in a much larger European
Union crop. With greater supplies, EU prices should be more competitive but
the Commission will have to subsidize exports to compete with very cheap FSU
supplies. Therefore, exports are
seen recovering by 2 million tons from the lowest level in more than 20 years.
Expanding acreage in Argentina will mean increased exports. Brazil remains the major buyer of Argentine wheat but with more expected to be shipped to destinations outside of South America. Canada is expected to produce a larger crop than last year’s drought reduced level. However, reduced carry in stocks will drop total supplies and result in exports falling by 1 million tons. Australia is forecast to increase production by 500,000 tons which, combined with large carry in stocks, is expected to lead to exports unchanged form 2000/01 at 18 million tons.
Increased production in India, combined with government’s attempts to relieve burdensome stocks, will stimulate subsidized exports. Although the government’s stated goal of 10 million tons is highly unlikely, a reported better quality crop and cleaning facilities at ports are expected to lead to exports of 4 million tons.
Due to large exportable supplies, Kazakstan is expected to increase exports by 500,000 million tons. These exports will be facilitated by an improved grain transportation system, especially to Iran and buyers in the Caucuses region. Meanwhile, Russia and Ukraine will continue to be significant exporters to markets in North Africa and the Middle East.
Importers
North Africa
Drought is again hindering crops in Morocco and Tunisia leading to even greater imports than 2001/02 while Egypt and Algeria are expected to experience similar production and imports to a year earlier.
Middle East
Iran is forecast to import 1 million tons less than 2001/02, as greater moisture availability boosts crop prospects. 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 current year’s near-record levels because of an abundance of low-priced Indian wheat as well as opportunities to export flour.
Asia
China’s crop is forecast up 2 million tons due to better grain conditions. Nevertheless, imports are expected to increase as consumption continues to outpace production thereby drawing down stocks. In addition, China’s entry into the WTO creates the opportunity to import better quality wheat likely to be used for blending with domestic supplies.
Higher imports are expected for South Korea and the Philippines as supplies of low-priced wheat, most destined for livestock feeding, will be available from Ukraine and India.
Former Soviet Union
Although production is expected to fall by 10 million tons, it will remain well above the five-year average. Stocks held by Kazakstan, Russia and Ukraine are expected to remain large. Imports in the region are consequently expected to remain low.
European Union
Much larger production, combined with higher import duties, is expected to reduce imports dramatically. However, abundant supplies of FSU wheat, greater access to duty-free Eastern European wheat, and continued imports of high protein and durum wheat from the United States, Canada, and Australia are expected to lead to imports of 4 million tons.
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