October 2001

PRODUCTION BRIEFS

Canada: Wheat, Barley, and Corn Estimates Continue to Drop

Canadian wheat production in 2001/02 is estimated at 20.7 million tons, down 0.8 million or 4 percent from last month and down 6.1 million tons or 23 percent from last year. The barley crop is also forecast lower at 11.1 million tons, down 0.4 million or 3 percent from last month and down 2.4 million or 18 percent from last year. Wheat and barley are primarily grown on the prairies of Western Canada. Large parts of the prairies have experienced drought this summer, which reduced Canada’s wheat yields by 23 percent and barley yields by 14 percent from last year. Also due to this year’s drought, the field abandonment rate is above normal, which has contributed to lower wheat and barley production. Canada’s corn crop, grown mostly in Ontario, is estimated to reach 7.5 million tons in 2000/01, down 1.0 million or 12 percent from last month, but up 1.0 million or 15 percent from last year. The year-to-year production increase is entirely attributed to increased planted area, since yields are even lower than the poor yields of 2000/01. Last year, corn yields were held below the 10-year average by cold and wet conditions, and this year they are below average due to dryness and high temperatures while the crop was in its reproductive stages.

Argentina: Heavy Rains Depress Wheat Area

Argentine wheat production for 2001/02 is estimated at 17.5 million tons, down 0.5 million or 3 percent from last month, but up1.0 million or 6 percent from last year. Argentine wheat area in 2001/02 is estimated at 6.8 million hectares, down 0.1 million from last month, but up 6 percent from last season. Heavy rains in southeastern Buenos Aires province delayed planting of this year’s wheat crop and prevented farmers from meeting intentions. Precipitation was higher than normal in September, boosting moisture supplies as wheat was moving into the jointing and boot stages. Flowering typically occurs in early November. The higher-than-normal precipitation has raised concerns for increased outbreaks of fungal diseases. Wheat planting begins in May, is typically 50 percent complete by the third week of June, and is nearly complete by the end of August. Wheat yields are forecast at 2.57 tons per hectare, higher than average. Argentine farmers have increased planting of a French variety "Baguette" which may yield 15 percent more per hectare than other commonly planted varieties.

Ukraine: Wheat Output Doubles

Ukrainian wheat production is estimated at 21.0 million tons, up 1.0 million or 5 percent from last month and up 10.8 million or 106 percent from last year. Barley production is estimated at 10.0 million tons, up 2.0 million or 25 percent from last month and up 3.1 million or 46 percent from last year. Corn production for 2001/02 is estimated at 2.0 million tons, unchanged from last month but down 1.85 million or 48 percent from last year’s bumper crop. The harvest of wheat and barley, Ukraine’s major grain crops, is finished. Officials now estimate total grain production at 40 million tons, up from 24.5 million last year.

China: 2001/02 Corn Crop Larger than Last Year

China’s 2001/02 corn output is estimated at 108.0 million tons, up 3.0 million or 3 percent from last month and up 2 percent from last year. Area is estimated at 23.5 million hectares, up 0.4 million or 2 percent from a year ago. The estimated yield of 4.60 tons per hectare is below the 5-year average but similar to last year’s yield. Planting conditions were unfavorably hot and dry in the Northeast and North China Plain during April and May. The drought reportedly delayed sowing and germination by several weeks in some areas. However, widespread rainfall after mid-June increased moisture levels and improved crop prospects over most of northern and eastern China. Dryness remained a concern in the Yangtze River valley, parts of the southern plains, and western Manchuria throughout the summer, and excessive rainfall may have had a negative impact on yield in southern China. Chinese sources reported that overall, the corn crop grew well this summer despite the weather problems, and production was expected to reach or exceed last year’s output of 106.0 million tons. An early frost (September 20 - 21) caused localized damage to immature crops in the Northeast, especially in Jilin province, according to press reports and FAS analysts who toured the region this month. However, warm and mostly dry autumn weather was favorable for corn dry-down and harvest on the North China Plain.

Russia: Spring Grain Harvest Benefits from Favorable Weather

Russian wheat production for 2001/02 is estimated at 43.5 million tons, up 2.0 million or 5 percent from last month and up 9.1 million or 26 percent from last year. Barley production is estimated at 17.5 million, up 1.5 million or 9 percent from last month and up 3.4 million or 24 percent from last year. Rye production is estimated at 6.5 million, unchanged from last month, but up 1.1 million or 19 percent from last year. Oat production is estimated at 7.0 million, up 1.0 million or 17 percent from last month and up 1.0 million or 17 percent from last year. Corn production is estimated at 0.8 million, unchanged from last month, but down 0.8 million or 48 percent from last year. According to harvest results released by the Ministry of Agriculture, Russian farms had harvested 82.2 million tons of grain (bunker weight, prior to cleaning and drying) as of October 1, compared to 63.5 million by the same date last year. The harvest campaign in the spring wheat region of Western Siberia is progressing unusually well; yield potential is high following favorable weather throughout the growing season, and farmers have taken advantage of excellent harvest conditions.

China: Rice Production Forecast to Decline in 2001/02

China’s rice crop is forecast to decline for the fourth consecutive year in 2001/02 due to lower area and below-average yield. Production is estimated at 181.0 million tons (rough basis), down 2.0 million or 1 percent from last month and down almost 4 percent from a year ago. According to preliminary Chinese government statistics, the early rice crop fell by almost 10 percent to about 34.0 million tons, and the single and late rice crops are expected to be similar or lower than last year. Total rice area for 2001/02 dropped by 3 percent from last year to an estimated 29.2 million hectares in response to low grain prices and government polices designed to reduce the supply of poor-quality rice. Another factor was unusually dry weather in northern China during the planting season, which may have forced some farmers to plant alternative crops that use less water. The estimated yield of 6.2 tons per hectare is slightly lower than last year and below the 5-year average due to less than favorable weather during the growing season. The problems included drought in parts of northern and central China, excessive rainfall in southern China, and unseasonably cold weather in the Northeast during September. Current conditions are generally favorable for single rice harvesting and late maturing rice.

Mali: Cotton Production Nears Record Levels

Mali’s 2001/02 cotton production is estimated at 1.1 million bales, up 0.1 million from last month and up 0.2 million from last year. Planted area is estimated at 0.5 million hectares, up 0.3 million from last year and 90,000 hectares above the five-year average. Mali’s higher cotton production is attributed to favorable weather, few pest problems, and increased planted area. Typically, Mali is West Africa’s leading cotton producer and Africa’s second largest producer after Egypt. However, output in 2000/01 was lower than the five-year average as some farmers shifted away from cotton due to low prices. Farmer’s confidence with cotton was restored this year and Mali’s 2001/02 cotton production is forecast at near-record levels.

Brazil: Cotton Area and Production Expected to Fall in 2001/02

Brazil’s 2001/02 cotton crop is currently estimated at 3.3 million bales, down 0.45 million from last month and down 0.8 million or 20 percent from last year’s record harvest. Production is estimated lower because of a decline in forecast crop area and yield. As the planting season is getting underway in Brazil, currency and commodity market conditions are heavily favoring soybean cultivation; as a result, the diversion of land away from corn and cotton is expected to be widespread. USDA currently forecasts 2001/02 cotton area at 0.73 million hectares, down 70,000 from last month and down 123,000 or 14 percent from last year. A 30 percent devaluation of the Brazilian Real since last year, and the consequent rise in the cost of imported fertilizers and pesticides will significantly increase cotton’s cost of production. Meanwhile, the financial incentives to produce soybeans have strengthened, because it is an export commodity and it has lower input cost requirements. Preliminary surveys of growers planting intentions by Government and private sector agencies show in general that the national cotton area will decline between 10 and 25 percent. A significant amount of this swing acreage is forecast to shift from cotton to soy in the major producing state of Matto Grosso. The falling international cotton prices and rising input costs are also expected to lead to a decline in crop input use. This reduction of crop input use when combined with an expectation of a return to normal weather during the growing season is expected to result in lower average crop yield. USDA currently forecasts 2001/02 cotton yield well above average, but below last year’s record level.

Argentina: 2001/01 Cotton Production to Decrease

Cotton production for 2001/02 is forecast at 555,000 bales, down 200,000 or 27 percent from last month and down 185,000 or 25 percent from last year. Argentine cotton area is estimated at 300,000 hectares, down 100,000 from last month and last year. In the northern province of Chaco, where the cotton production is concentrated, soybean and sunflower area is expected to increase at the expense of cotton due to more favorable returns for soybean and sunflower. Continued high costs of production for cotton have negatively affected cotton planting intentions. Wheat area has increased in the main-cotton growing areas as well. Wheat area in Chaco increased more than 80 percent compared to last year. Cotton planting typically begins in late October, reaches 50 percent complete by the end of November and is nearly complete by late December.

Australia: 2001/02 Cotton Production Forecast Drops

The 2001/02 cotton output is forecast at 3.1 million bales, down 0.1 million or 3 percent from last month based on a recently lowered forecast by the Australian Bureau of Agricultural and Resource Economics (ABARE). Output is forecast down 0.4 million or 12 percent from last year. Estimated area is 0.43 million hectares, down 0.07 million or 15 percent from last year. The drop in national area is primarily due to extremely low cotton prices and a shift to sorghum and sunflowers as returns for feed grains and oilseeds have improved relative to cotton. Additionally, potential lower irrigation supplies in Queensland, where nearly 25 percent of the cotton crop is planted, are having a negative impact on producers’ planting decisions.

Brazil: Soybean Plantings Expected to Rise Substantially

Brazil’s 2001/02 soybean crop is currently estimated at a record 41.5 million tons, up 2.5 million from last month and up 3.1 million or 8 percent from last year’s bumper harvest. Production is estimated higher as a result of a significant upward revision in forecast crop area. USDA currently forecasts 2001/02 soybean area at 15.5 million hectares, up 0.5 million from last month and up 1.5 million or 11 percent from last year. As the planting season is getting underway, Brazil’s currency has depreciated 30 percent since last year, and domestic corn and international cotton prices have fallen from last year’s levels. As a result, the diversion of land away from corn and cotton is expected to be both widespread and substantial. A significant amount of this swing acreage is forecast to shift from corn to soy in the traditional southern growing areas of Rio Grande do Sul, Parana, and Santa Catarina. In addition, the enhanced profitability of soybeans is expected to spur land conversion and the growth in soybean cultivation in the frontier regions of the center-west, north, and northeastern states. These robust pre-season estimates for planted area are bolstering the likelihood that a third consecutive record harvest will be achieved, with substantial increases in output in every region.

Argentina: Soybean and Sunflower Area to Increase

Argentine soybean area in 2001/02 is estimated at 10.7 million hectares, up 0.4 million or 4 percent from last year’s area of 10.28 million. Soybean production is estimated at 27.0 million tons, up 0.5 million or 2 percent from last year. Sunflower area is estimated at 2.1 million hectares, up 0.2 million or 10 percent from last year. Sunflower production is estimated at 3.7 million tons, up 0.5 million or 16 percent. Expected returns favor soybeans and sunflowerseed compared to alternative crops. Soybean and sunflower areas are expected to increase at the expense of corn in the main growing areas of southern Santa Fe and northern Buenos Aires provinces. In northern Argentina, Chaco province is expected to increase soybean and sunflower area at the expense of cotton area. In areas of southern Buenos Aires province where rains prevented wheat planting, sunflower area is expected to increase. Sunflower planting has begun in northern Argentina and has reached 14 percent of completion as of September 28. Soybean planting begins in November for the single-crop soybeans and in December for the double-crop soybeans.

Malaysia: Lower Palm Oil Estimates Partially Offset by Increases in Indonesia

Malaysia palm oil production for 2000/01 is estimated down 0.2 million to 11.9 million for 2000/01 and down 0.4 million tons to 12.2 million for 2001/02. The declines from previous estimates are credited to the biological yield cycle of palm trees; furthermore, excessive rains from November 2000 through January 2001 may have reduced the pollination of fruit bunches which are currently being harvested. Output is expected to be limited for several months surrounding the change in marketing year, which runs from October through September, to about what it was a year earlier, despite the strong trend of increasing output.

Partially offsetting the decreases, Indonesia palm oil output for 2000/01 is estimated higher this month, up 0.1 million tons to 7.6 million and up 0.3 million tons to 8.1 million for 2001/02. Discussions with people from plantations and traders indicated higher yields based on favorable weather, and better security at plantations. Additionally, starting around June, world palm oil prices increased and the Indonesian rupiah declined against the U.S. dollar. This increased the incentive to harvest more carefully and to apply inputs to get as much oil as possible from trees that are currently producing.

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