U.S. and Canadian officials met on February 20, 2002, for grain trade consultations as provided for under the Record of Understanding and Action Plan agreed to between Canada and the United States. Since January 1999, the two sides meet quarterly to exchange information on grain market developments and prospects.

Officials reviewed the global market situation, including bilateral grain trade flows, projections for the current year, current issues of concern and discussed a number of other measures that could affect trade, including the recent U.S. Section 301 investigation results and the upcoming U.S. Farm Bill. Each participant's projections are based on current and anticipated market conditions and may be revised as markets evolve.

Current projections for 2001-02 indicate that overall Canadian wheat exports will decline slightly reflecting the smaller drought-affected crop in Western Canada and reduced area seeded in Ontario. Exports of wheat to the U.S. will, however, rise marginally as a result of smaller U.S. wheat supplies and also reflecting stronger demand for durum. Canadian durum shipments to the U.S. are projected to increase in 2001-02 after two years of reduced shipments. Although the 2001-02 Canadian durum crop was down sharply, carryover stocks from 2000-01 are being blended with the very high protein 2001 durum harvest to ensure sufficient supplies. Canadian malting barley exports are projected to be smaller than in 2000-01, both overall and to the U.S., due to reduced production. U.S. corn exports to Canada are expected to equal or exceed the record level of 2000-01. Feed grain demand in Western Canada will draw in large imports of U.S. corn as supplies of other feed grains are down significantly from the previous year. A decline in U.S. corn exports to Eastern Canada will be offset by significantly higher exports to western provinces. (tables attached*).

The projections, which were discussed, are each participant's views of how markets are likely to evolve and are not commitments.