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GRAIN: WORLD MARKETS AND TRADE
World Grain Import Demand On The Rise
Non-FSU Imports Hit A Record 200 Million Tons
(May 15, 2000) World wheat and coarse grain imports, excluding the former Soviet Union (FSU), have surged nearly 50 million tons in the past decade to a projected 200 million tons in 2000/01, with the growth evenly distributed between wheat and coarse grains. For wheat, rising demand is fueled by growing populations and changing diets. Greater demand for coarse grains is driven by increased demand in corn feeding in Asia and barley in the Middle East.
While falling FSU imports offset growth elsewhere in the early 1990's and led to stagnating global trade, total imports are once again on the rise. Global wheat imports are forecast up in 2000/-01 to their highest level in 8 years, while coarse grain imports are projected at their biggest in more than a decade, spurred by record barley demand.
World Wheat Situation And Outlook
Global wheat trade in 2000/01 is projected to be 107 million tons, up 2.4 million tons from 1999/2000. Lower world production is expected as smaller crops in China, Iran, and North Africa more than offset a record EU crop. Weather in the Northern Hemisphere has been a key factor this year, with a second year of drought in North Africa and Iran at the same time that near ideal conditions prevailed in much of Europe. China’s acreage is down as farmers respond to lower prices and changes in the Government’s procurement policies. Argentina, Australia, and Canada are currently projected at close to the near-record levels of last year.
Global consumption in 2000/01 is expected to grow for a sixth straight year to another record level. Feed demand growth is modest as reductions in China partially offset increased feeding in the EU.
Import demand is forecast up for a second year to its highest level in 8 years. Most of the increase is being driven by the smaller North African and Iranian crops. Iran will likely remain the world’s largest wheat importer, having replaced Egypt last year. China’s imports are expected to rebound from the record low of the previous year. Because of strong import demand in 2000/01, the United States and EU are expected to boost their exports, while Argentina, Australia, and Canada maintain exports at the near-record levels of 1999/2000.
Global stocks are forecast to fall to near 20-year lows, with consumption expected to exceed production for a third consecutive year. The last time stocks approached such low levels was in 1995, when wheat prices hit record levels. This time, however, upward pressure on prices will be mitigated by continued large supplies in major exporting countries.
Exporters
Production in the United States is initially forecast to decline about 2 million tons to its lowest level in 5 years, but abundant stocks will keep supplies relatively large. U.S. exports are projected up 1.5 million tons to 30.5 million tons.
Expanded area and near ideal growing conditions are expected to produce a record European Union crop, which is forecast to jump 9 million tons from 1999/2000. Lower internal prices resulting from the Agenda 2000 reforms and a weak currency may allow for some exports without subsidy as well as boost internal feed consumption. But even with higher projected exports and feed use, the EU likely will build stocks. Combined production levels in Argentina, Australia, and Canada are forecast to drop 4 million tons, but a large carryin is expected to keep exports near the levels of a year ago.
Turkey and Hungary are together expected to increase exports about a million tons as a result of bigger crops. Those additional exports should be easily absorbed by buoyant import demand in the Mediterranean Basin, providing little threat to the EU and other major exporters.
Importers
North Africa
Severe drought has slashed production prospects in Algeria, Morocco, and Tunisia and will raise imports 1.6 million tons to near-record levels. Morocco should see the largest jump in imports. Despite a larger crop, Egypt is expected to boost imports due to low stocks.
In contrast, Egypt is expected to harvest a second record crop in a row, reducing import demand from the 1998/99 peak.
Middle East
Iran is expected to import a record 7.5 million tons (up 5 million tons from 2 years ago) because of a second drought-ravaged crop. Continuation of the U.N. oil-for-food agreement with Iraq is likely to keep their imports unchanged from last year. Imports by the United Arab Emirates are expected to decline from last year’s record because of fewer opportunities to export flour.
Asia
While China’s crop is forecast down 8 million tons due to reduced acreage and yields, imports are up less than 2 million tons since stocks remain large. Total use is estimated to decline as farms shift away from lower-quality feed varieties.
Higher imports are expected for Indonesia, Malaysia, and the Philippines due to continuing recovery of those economies from the recent financial crisis. South Korean demand is forecast to be unchanged from last year.
Pakistan’s imports are unchanged from a year ago, with its continued reliance on stocks to fill the balance of its shortfall.
Former Soviet Union
Production in the region is forecast to drop 2 million tons as a much smaller crop in Kazakstan offsets more modest increases in Russia and Ukraine. Imports are expected to drop because of a larger Russian crop, whereas exports are down because of limited exportable supplies in Kazakstan and Ukraine.
World Coarse Grains Situation And Outlook
World coarse grain trade is projected up nearly two million tons to 99.3 million tons in 2000/01. Higher world production is expected as bigger crops in Argentina, Brazil, the EU and the United States more than offset smaller crops in China and South Africa. Global production is expected to narrowly outpace consumption, so carryout stocks are forecast to rise slightly and continue to put downward pressure on prices.
Global corn trade is forecast up slightly in 2000/01 as production is forecast to exceed consumption for the third straight year. U.S. exports will continue to face strong competition from Argentina and China. Although imports are forecast down in Asia, they are expected to grow more than 10 percent in the Middle East and North Africa. Latin America’s imports are also increasing, driven almost entirely by Mexico.
Barley trade is forecast to rise by nearly 1.5 million tons or 8 percent as a second year of drought in the Middle East and North Africa cut production. To meet this stronger demand, the EU is forecast to export a record 10.5 million tons, while Australian and Canadian exports are also up with larger crops.
U.S. and China corn and EU barley are forecast to comprise nearly two-thirds of world coarse grain stocks. With the U.S. corn crop expected to be larger than last year and consumption showing small growth, stocks will increase. China’s stocks are down because of reduced production and relatively large exports. The EU is expected to have another large barley harvest, but stocks will be a function of continued displacement by cheaper feed-quality wheat and exports.
Exporters
United States corn production is forecast up by nearly 8 million tons and exports of corn are forecast up 2.5 million tons to 48.5 million tons. Carryout stocks are therefore projected to increase by 5.1 million tons from 1999/2000 and as a result, U.S. prices are expected lower. Sorghum exports are expected to remain strong as Mexican imports are forecast to continue at the pace of a year ago.
China corn exports are forecast down 2 million tons to 6 million due to lower world prices.
Argentina corn exports are up 800,000 tons to 9.5 million tons from 1999/2000 as a near record crop and stagnating domestic utilization is expected to force corn into the export channels.
Lower European Union prices resulting from the Agenda 2000 reforms and a weak currency could create the conditions necessary for the EU to export barley without subsidies. Consequently, exports are forecast up 1 million tons to a new record 10.5 million tons as demand continues to skyrocket.
Importers
Asia
Overall Asian import demand is expected to fall slightly in 2000/01. Lower feed needs resulting from the outbreak of foot and mouth disease in South Korea is expected to result in less corn imports. Japan corn imports are expected to drop slightly as feed needs contract in response to expanding imports of meat. Malaysia is expected to import more corn to fuel its expanding domestic poultry industries as it recovers from disease outbreak. Taiwan is expected to have fairly constant consumption and therefore steady import needs. China is expected to import more barley to fuel its rising beer industry.
Middle East and North Africa
Middle East and North African barley imports are forecast up nearly 14 percent from 1999/00 levels as drought continues to reduce grain production. Egypt corn imports are expected to increase 500,000 tons to 4.5 million as the poultry industry expands.
Latin America
Brazil corn imports are forecast down 200,000 tons to 1.4 million tons as a larger crop is expected. Expanding consumption in the rest of Latin America will be filled almost entirely by production gains.
May 15, 2000 Foreign Agricultural Service USDA, Washington, D.C. 202-219-0515
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