May 2002

Key 2002/03 Production Briefs	Key 2001/02 Production Briefs
World: Oilseed Production Forecast to Rise Despite Lower U.S. Output	Brazil: 2001/02 Corn Crop Reduced Due to Drought
European Union: Wheat and Barley Production Expected to Rebound	Indonesia: Palm Oil Production Revised Upward
China: Corn Area and Yield Expected to Increase
China: Wheat Prospects Boosted by Good Weather
Russia: Grain Yield Forecast Lower than Last Year, But Above Average
Canada: Wheat Production Forecast to Increase
Ukraine: Grain Area Stable, Yield Forecast to Drop
Kazakhstan: Wheat Production Forecast to Drop Slightly
Argentina: Corn Production Expected to Decline
Brazil: Corn Crop Expected to Stage a Recovery
Australia: Barley Production Forecast Decrease
Romania: Extremely Dry Weather Drops Wheat Production

Key 2002/03 Production Briefs

World total oilseed production for 2002/03 is forecast at 331 million ton, up 7 million or 2 percent from 2001/02. The United States is expected to go against trend and decline by 2.3 million tons, to 87.6 million. Lower loan rates and changing public farm policies are expected to favor grain crops relative to soybeans. Total foreign output is forecast at 243.4 million tons, up 9.2 million or 4 percent from 2001/02. Expansion of soybean production in South America is expected to contribute to the larger world output as will palm kernel production in Southeast Asia. Sunflowerseed and rapeseed production are expected to rebound from the relatively low levels of 2001/02, while foreign cottonseed output is expected to decline.

The European Union’s (EU) 2002/03 wheat crop is forecast to be nearly 107.0 million tons in 2002, an increase of 15 million or almost 17 percent from the 91.7 million produced in 2001. The year-to-year change is due to an 8 percent increase in harvested area, from 16.5 to 17.9 million hectares, and an improvement in yield, from 5.55 to 5.96 tons per hectare. The EU’s five largest wheat-producing members are France, Germany, United Kingdom, Italy, and Spain. These five countries account for 86 percent of the total EU production, with the largest prospective year-to-year improvements coming from France and the UK. Better winter crop planting conditions encouraged farmers to increase plantings. Overall moisture supplies are adequate suggesting that the wheat crop is in good condition.

The EU’s 2002/03 barley crop is forecast to increase 1.6 million tons, to 49.7 million. A slight year-to-year improvement in yield, from 4.51 to 4.66 tons per hectare is expected to be responsible for the increase, since harvested area is forecast to be similar to the previous year at 10.7 million hectares. The five largest barley-producing members in the European Union are Germany, France, Spain, United Kingdom, and Denmark, and they are expected to account for 81 percent of the production in 2002. Production increases in France and Spain are expected to offset decreases in the other three major producing countries, although the Spanish barley crop is notorious for dramatic changes due to variable weather in the spring. Spanish barley production in 1999 was 11.3 million tons, but only 6.3 million in 2000 due to adverse weather.

China’s 2002/03 corn production forecast is 120.0 million tons, up 10 million or 9 percent from last year. The estimated area of 24.0 million hectares is up 0.5 million or 2 percent from last year and is based on a planting intentions survey conducted by the National Bureau of Statistics (NBS). The forecast yield of 5.0 tons per hectare is slightly above the 5-year average and assumes normal weather in 2002. Planting started in Northeast China in April and will continue through mid-May. The fall and winter of 2001/02 were much drier than normal in the Northeast, particularly Jilin, China’s most important corn-producing province. Soil moisture dropped to very low levels and there were concerns in March that drought could be a major problem for the summer crop season in 2002/03. However, above-normal rainfall since April 1 in the Northeast has provided abundant surface soil moisture for planting, and sub-surface moisture reserves are slowly increasing. Heavy rain in late-April may have caused minor planting delays, and local flooding could occur if above-normal rainfall continues through May. On the North China Plain, the main (summer) corn crop will be planted in June following the winter wheat harvest. Rainfall has been close to normal for the month of April, and moisture conditions are currently favorable for planting. Growing conditions are also mostly favorable in Sichuan and Southwest China.

China’s 2002/03 wheat crop is forecast at 96.0 million tons (winter wheat - 89.0 million, spring wheat 7.0 million), up 2 million or 2 percent from last year. Favorable spring rainfall and mild temperatures are expected to boost 2002/03 yield to 3.84 tons per hectare, higher than last year’s drought-reduced crop and close to the 5-year average. Wheat area is estimated at 25.0 million hectares, down slightly from last year, based on data from an area survey conducted by the National Bureau of Statistics (NBS). Winter wheat area has been dropping for several years due to lower support prices, higher irrigation costs, and more favorable returns from other crops. Spring wheat area is also expected to drop in 2002/03 due to low prices and poor demand.

The weather was dry in fall 2001 for winter wheat planting, but widespread precipitation in December provided adequate moisture for the dormant crop. The weather was unusually warm and dry from January through March, and the crop came out of dormancy several weeks earlier than normal. Timely and abundant rainfall, since April 1, has relieved dry conditions on most of the North China Plain. Satellite imagery has indicated that the crop appears to be growing well. Yield potentials could increase given continued favorable weather in May. In the Yangtze River Basin, a minor wheat-growing region, excessive spring rainfall may have hurt crop quality or caused yield losses. Heavy showers in April provided abundant moisture for spring wheat planting in the Northeast and Inner Mongolia, and temperatures are favorably warm for germination and growth.

Russian wheat production for 2002/03 is forecast at 41.0 million tons, down 5.9 million or 13 percent from last year. Estimated wheat area dropped slightly from last season, from 23.8 to 23.5 million hectares, with an increase in winter wheat area partially compensating for a forecast reduction in spring wheat area. Wheat yield is estimated at 1.74 tons per hectare, down from the exceptional 1.97 tons per hectare last year, but 15 percent above the average of the past five years. Barley production for 2002/03 is forecast at 16.0 million tons, down 3.5 million or 18 percent from last year, with area forecast to increase from 10.2 million hectares to 10.5 million. Yield is estimated at 1.52 tons per hectare, versus 1.91 tons per hectare last year and an average of 1.41 tons per hectare. The U.S. agricultural attaché in Moscow reports that supplies of fertilizer and chemicals have improved from last year, but it is unlikely that there will be a repeat of last season’s nearly ideal weather which resulted in bumper yields for both wheat and barley.

Canadian wheat production for 2002/03 is forecast at 24.0 million tons, up from 21.3 million in 2001/02. Despite a decrease in estimated harvested area in 2002, down from 11.1 million hectares in 2001/02 to 10.5 million, production should increase because of substantially improved yields from last year’s drought reduced levels. The average wheat yield this year is estimated to be 2.29 tons per hectare, up dramatically from 1.92 tons in 2001. In general, moisture conditions continue to be dry on the Canadian prairie, which could create problems if the trend continues into the growing season. Typically, over half of the wheat in Canada is grown in the central prairie province of Saskatchewan, where spring crop planting is behind schedule this year, due to cold temperatures. Spring wheat accounts for over 90 percent of the total wheat produced in Canada.

Ukraine wheat production for 2002/03 is forecast at 18.5 million tons, down 2.8 million or 13 percent from last year. Area is estimated at 7.0 million hectares, nearly unchanged from last year’s 6.9 million. Barley output is forecast at 9.0 million tons, down 1.2 million or 12 percent from last year, with area estimated to increase by 0.1 million hectares, to 4.0 million. Yields are forecast at slightly above-average levels, based on favorable spring weather, but lower than last year’s outstanding harvest. Corn production is estimated at 3.7 million tons from 1.2 million hectares, virtually unchanged from last year, when output was reported at a surprisingly high 3.6 million tons despite severe drought in the country’s main production region.

Kazakhstan wheat production for 2002/03 is estimated at 11.0 million tons, down 1.7 million or 13 percent from last year. Area is estimated at 11.0 million hectares against 10.7 million last year, and yield is forecast slightly above the 5-year average at 1.0 ton per hectare. According to the U.S. agricultural attaché in Almaty, fertilizer use has increased slightly over the past two years but remains below optimal levels, and farmers continue to struggle with an increasing shortage of planting and harvesting machinery. Wheat yield in Kazakhstan typically hinges largely on the amount of precipitation received from June through August.

Argentina’s 2002/03 corn production is estimated at 11 million tons, down 2 million or 15 percent from the revised estimate of 13 million tons of 2001/02. Harvested area is forecast at 2 million hectares, down 0.25 million or 11 percent from last season. Yield is forecast at 5.5 tons per hectare. Corn planting for Argentina’s 2002/03 crop will begin in September 2002 and is expected to be 50 percent complete by the third week in October.

Corn area is expected to decrease 11 percent from last season. The high inflation combined with the 20 percent corn export tax, are expected to dampen the benefits engendered by the devaluation. As a result, total crop area is not expected to increase significantly. It is highly unlikely that significant credit will be available from the local banks or input providers and this lack of credit will result in a shift to lower cost crops (wheat, soybeans and sunflower) and away from higher cost crops (corn and peanuts). Hence, a reduction in the amount of fertilizer and chemicals applied to corn is expected as well, which would result in lower than average corn yields.

Brazil’s 2002/03 corn crop is currently forecast at 38.5 million tons, up 3.5 million or 10 percent from the drought-affected harvest in 2001/02. Harvested area is estimated at 13.0 million hectares, up 1.0 million or 8 percent from 2001/02. Crop yield is estimated slightly above the 5-year average at 2.96 tons per hectare, and up slightly from 2001/02. The planting period for the main season 2002/03 Brazilian corn crop is six months away. Initial estimates are extremely tentative and assume that 2001/02 winter corn production will be reduced by drought, setting the stage for continued strong domestic corn prices through the 2002/03 planting period. Total corn area is forecast to rebound to near-normal historical levels, erasing much of the soybean expansion that occurred in key southern states last year. The bulk of increased acreage is currently forecast to occur during the main summer crop, which normally represents about 85 percent of total production. Current corn production forecasts also assume a return to more favorable weather in 2002/03, which will benefit crop yields in both summer and winter growing seasons. This compares to 2001/02 when severe regional droughts affected crops in key producing zones in both summer and winter crop seasons.

The 2002/03 barley crop is forecast at 6.5 million tons, down 1.0 million or 13 percent from last year. This is based on a forecast area of 3.3 million hectares, down 0.4 million or 11 percent from 2001/02. The barley growing regions, including Victoria, South Australia, and New South Wales, have received below normal precipitation during the month of April and growers are waiting for autumn rains to begin planting. Western Australia has received above-average precipitation for the past month and winter grain planting is well underway. Historically, South Australia produces approximately 40 percent of Australia’s barley and in the 2001/02 season produced a record crop.

Romania’s wheat production for 2002/03 is forecast at 5.5 million tons, down 2.4 million or 30 percent from last year’s large crop. Harvested area is estimated at 2.2 million hectares, down 300,000 hectares or 12 percent from last year. Currently, the 2002/03 winter crop has seen little moisture since planting. Crops in the southern (Walachia) and the south-eastern regions (Dobruja) have been hit hard by a drought for over a year now. Yields are expected to be lower in the far western region (Banat) as well, due to a lack of winter and spring rains during planting season.

Key 2001/02 Production Briefs

Brazil’s 2001/02 corn crop is currently estimated at 35.0 million tons, down 1.0 million from last month and down 6.5 million or 16 percent from last year’s record harvest. Harvested area is estimated at 12.0 million hectares, down 0.3 million from last month and down 1.0 million or 8 percent from last year. Production is estimated lower as a result of drought and crop stress affecting the winter corn crop in central Brazil. Winter corn yield forecasts have been reduced to 5-year average levels of 2.0 tons per hectare, down from above-average expectations in April. Planting operations for the winter corn crop were completed in early April, with government surveys indicating sown area increased nearly 20 percent compared to last year as farmers responded to buoyant prices. Winter corn is heavily concentrated in key Center-South states, with Parana, Mato Grosso do Sul, and Sao Paulo accounting for 70 percent of total area. This region has coincidentally been experiencing very dry conditions for the past 2-3 months, with critically low rainfall and declining soil moisture. Crop damage and losses in Parana alone are estimated near 1.0 million tons by local authorities. Unless substantial, widespread, and consistent rainfall is received in the winter corn heartland during the next few months, production can fall precipitously from current forecast levels.

Palm oil production for the 2001/02 marketing year is estimated to be 8.8 million tons, up 9 percent or 700,000 tons from last month. The increase this month is a reflection of improvements in plantation productivity, improved security in rural areas, and increased harvested area. Harvested area is estimated at 2.3 million hectares for 2001/02, up 3 percent from a year ago. Since a year ago, the rupiah has gained 30 percent in value against the dollar and is quoted at 9,270 rupiah to the US dollar for April. Consequently, domestic prices for palm oil have been limited and are partly offsetting gains made by higher international prices and improved rural security. For 2000/01, palm oil production is also revised upward, to 7.9 million tons, up 4 percent or 300,000 tons from last month.