TRADE

Global trade in cereals in 1995/96 is expected to reach 201 million tons, slightly up from the previous forecast in December and nearly the same as the estimated imports in 1994/95. Compared to the previous year, only wheat imports are forecast to rise while the forecast for rice points to a smaller volume. Coarse grains trade is forecast to remain the same as in 1994/95.

The forecast for international trade in wheat and flour (in wheat equivalent) for 1995/96 (July/June) remains at 95 million tons, some 2 million tons above the previous year. Wheat imports by the developing countries in Asia are forecast to remain the same as last season, at 38 million tons, representing 40 percent of total world imports and over one half of total wheat shipments into all the developing countries combined. Only China and Indonesia are expected to import significantly more this year. Among the other major importers in Asia, the Islamic Republic of Iran and the Philippines are likely to purchase as much as in the last season while significantly smaller quantities are anticipated to be purchased by Pakistan and the Republic of Korea. In Africa, aggregate wheat imports into the developing countries are forecast to reach

OVERVIEW OF WORLD CEREAL IMPORTS

19.5 million tons, which would be some 800 000 tons or 4 percent more than their estimated level in 1994/95. The only significant increase in imports is expected in Morocco, where, due to a poor harvest, purchases are forecast to reach 3 million tons, compared to 1.2 million tons in the previous year. By contrast, shipments to many other countries are expected to decline, in particular in northern Africa. Strong demand in Latin America and the Caribbean is expected to keep this year's wheat imports into the region close to last year's record volume of over 15 million tons.

Among the developed countries, imports by the CIS from third countries in 1995/96 have been further reduced and are now put at 5.8 million tons, compared to 6.2 million tons anticipated in December and a volume of around 5 million tons last year, mainly due to the slow pace of purchases by the Russian Federation. By contrast, the forecast for imports into Europe has been raised to 4.3 million tons, some 500 000 more than anticipated earlier and some 200 000 tons more than in 1994/95. The forecast for wheat imports into the EC has been raised by 200 000 tons to 2.2 million tons reflecting larger expected purchases of high quality wheat and durum which are in short supply in the Community. Due to strong demand for durum, imports into the Slovak Republic and Romania have also been raised this month, by around 200 000 tons and 100 000 tons, respectively.

Although global wheat trade is forecast to expand in 1995/96 by 2 million tons to 95 million tons, aggregate wheat shipments (July/June) from the five major exporters are expected to remain the same as in 1994/95, or nearly 85 million tons. Other sources including India and eastern European countries are expected to export more this year.

Wheat exports from the EC are now forecast at 16 million tons, 700 000 tons less than last season and 500 000 tons less than anticipated earlier. A steady and strong pace in export loadings led to larger shipments between July and November than during the same period in 1994 so that in late December, the Commission imposed an export tax wheat leaving the Community. This latter provision is the main reason for this month's reduced export forecast. Wheat exports from Bulgaria and Hungary were substantial from July through October 1995. However, following signs of possible domestic grain shortages, the Government of Bulgaria has imposed a ban on wheat exports until October 1996. Also in Hungary, the Government has not issued any export licenses in recent months, in order to guarantee domestic supplies due to higher than expected shipments in the early months of the season.

World trade in coarse grains in 1995/96 (July/June) is forecast to remain at 88 million tons, similar to the previous year's estimated import volume. Aggregate 1995/96 imports into the developing countries are expected to reach a new record of some 55 million tons, 2 million tons higher than in 1994/95. Most of the growth is expected to occur in Asia and to a lesser extent in Africa. In Asia, imports are forecast to reach 31.5 million tons, 1 million tons or 3 percent above last year's estimated volume. Among the individual Asian countries, this year's barley and maize purchases by Saudi Arabia and maize imports by Thailand are forecast to decline. By contrast, coarse grain imports by China and the Republic of Korea are expected to increase. The combined purchases of these two countries alone would represent well over one-third of the total coarse grain imports of the developing countries as a group.

Coarse grain imports by the developing countries of Africa are forecast to rise by 500 000 tons from last year to some 10 million tons in 1995/96. In northern Africa, a combination of smaller maize purchases by Egypt and lower barley imports by Algeria is forecast to nearly offset larger maize and barley imports by Morocco. In eastern Africa, this year's imports by several countries, including Ethiopia, Sudan and Tanzania are forecast to decline mainly as a result of higher domestic production. By contrast, maize purchases by Kenya are expected to reach 600 000 tons mainly on account of a smaller harvest. Imports into southern Africa have also risen, in particular in Zambia and Zimbabwe as a result of a substantial domestic deficit of maize caused by last year's drought.

In Latin America and the Caribbean, total coarse grain purchases in 1995/96 are forecast to remain close to last year's estimated volume of nearly 13 million tons. Imports into Mexico are forecast to rise for the second consecutive year and to reach 6 million tons in 1995/96. Smaller imports are anticipated into South America mainly as a result of normal to above-normal crops in several countries, including Brazil and Colombia.

FAO's current forecast of coarse grain imports into the developed countries in 1995/96 stands at around 33 million tons, 2 million tons below the already reduced purchases in 1994/95. The most significant decline, over 1 million tons or nearly 6 percent, is forecast for Japan, the world's largest coarse grain importer. Smaller purchases are also anticipated for Europe, especially the EC but also Poland and Romania primarily due to larger domestic output. High internal grain prices in the EC have already resulted in a two-fold increase in sorghum imports while purchases of barley and maize are also up compared to the same period of last season. In the CIS, due mainly to the continuing depressed livestock sector and the lack of finance to pay for imports, only 500 000 tons of coarse grains are expected to be imported this year from third countries. By contrast, South Africa, normally a maize exporter, is forecast to import over 1 million tons of maize this year, due to last year's drought.

On the export side, reflecting mainly the smaller maize crop in the United States, the aggregate supplies of the major coarse grain exporters in 1995/96 have fallen by 50 million tons or 11 percent from the previous year. Consequently, in order to meet this year's anticipated imports, stocks are being drawn down sharply, especially in the United States. On a July/June basis, exports from the United States are forecast to increase by over 1 million tons due to short supplies elsewhere. Among the other major exporters, coarse grain sales from the EC are forecast to decline compared to the previous year mainly due to the strong domestic demand bolstered by the short supply of cassava for animal feed. In order to dampen domestic prices, the Commission, in late December, introduced a tax on barley exports. While coarse grain shipments from Argentina are expected to increase slightly, those from Australia and Canada would remain close to last year's levels. By contrast, much larger exports are expected from several non-EC countries in Europe, including Bulgaria, Hungary, Poland and Romania.

Global rice trade in calendar year 1995 ended with a sharp surge in exports from Thailand. Shipments in December totalled 622 200 tons, about 198 000 tons (47 percent) up from the previous month. With this large increase, Thailand's total exports of rice in 1995 reached 5.94 million tons, 1.2 million tons more than in 1994, and substantially above the volume anticipated in November. By contrast, estimates of shipments out of Myanmar, Japan and Viet Nam in 1995 have been revised downwards to take into account a sharp decline in November/December. In Japan, the consignment of 200 000 tons of food aid to the Democratic People's Republic of Korea, originally ear-marked for delivery in December, has been postponed to 1996. Myanmar's rice exports, which have declined drastically since July, fell to virtually zero in the final two months of 1995 because of competition from the domestic market for supplies. In Viet Nam, official reports indicate that a total of 2.1 million tons were exported in 1995, down by 0.2 million tons from 1994. Largely reflecting these changes, FAO's forecast for global rice trade in 1995 has been revised slightly to 19.1 million tons, 2.6 million tons up from the previous year and an all-time high.

For 1996, current indications are that global rice trade would decline to around 18 million tons, significantly more than earlier anticipated. Substantial upward revisions have been made to the import forecast for Bangladesh and Sri Lanka. With the Aman harvest substantially smaller than even the poor crop in the previous year, and a postponement of 1995 contracts to the current year, Bangladesh's imports in 1996 are now forecast at 1.6 million tons, which would be about 0.3 million tons more than the imports effected in 1995. Sri Lanka, which exported some rice in 1995, is likely to make substantial imports in 1996 because of drought damage to its main rice crop in the ground. Imports into the Philippines in 1996 are also expected to rise substantially because of reduced carry-over stocks held by the government and a likely poor main harvest in 1995/96. Preliminary official indications showed that some 500 000 tons are likely be imported in 1996, 166 000 tons more than in 1995. By contrast China, where output improved in 1995 is expected to reduce its imports in 1996 from the high level last year. Imports into Indonesia are also expected to fall. The situation, however, is uncertain and requires close monitoring as much would depend upon the 1996 harvest, the bulk of which is in the first quarter of the year. In view of the recent floods in Java, prospects for the main crop hinge critically on weather in the coming weeks.

Africa's imports, which had fallen steeply in 1994 and 1995 because of high international rice prices, may stage a recovery in 1996 but this would depend upon the level of export prices and the availability of food aid in rice. Imports into South America are also projected to increase mainly because of a likely reduced 1996 output in Brazil, the largest producing and consuming country in the region.

The decline in world trade in 1996 is expected to result in reduced exports from many of the traditional exporting countries, especially Thailand and the United States. In Thailand, however, the reduction would be mainly in the first half of the year before the second crop comes into the market. India's exports, which more than trebled in 1995, are forecast to fall slightly. However, the country's policy on export trade, which is frequently adjusted to meet newly emerging situations, could alter this assessment. Punjab, one of the main states from where export supplies are drawn, is reported to have a reduced output this year but this may be offset by improved performance in other surplus producing states, especially Haryana. Moreover, the removal of the levy system on producers in the Punjab could pave the way for larger exports to be contracted by the private trade. This expansion could however be offset by the impact of the recent rise in the export prices of rice supplied by the Food Corporation of India and the continued logistical problems in moving rice out of the country.