Food Outlook - March/April 96

CEREALS

SUPPLY/DEMAND ROUNDUP

Early prospects for the 1996 cereal crops point to a recovery in world production after the reduced harvest last year. Based on the condition of crops already in the ground and planting intentions for those to be sown later this year, and assuming normal weather for the remainder of the season, FAO's first provisional forecast suggests an increase of about 5 percent in world cereal output this year to some 1 990 million tons. At this level, production of cereals in 1996 would be close to trend, with the largest increase expected in coarse grain output in developed countries. If current forecasts materialize, cereal output would be sufficient to meet the expected consumption requirements in 1996/97. However, the supply/demand situation would remain closely balanced in 1996/97, as the expected increase would not allow any significant replenishment of cereal reserve stocks after their sharp reduction in the current season. Thus, even assuming a normal growing season, current indications are that global food security would remain precarious, with cereal reserves below minimum safe levels for at least another year.

WORLD CEREAL PRODUCTION, SUPPLIES, TRADE AND STOCKS

WORLD CEREAL PRODUCTION - FORECAST FOR 1996

The food supply situation in a number of low-income food-deficit countries continues to be tight, as a result of reduced domestic cereal production on one hand, and sharply rising world market grain prices and declining food aid resources on the other. In Africa, several countries face a difficult food security situation. In the Horn, the food supply is particularly tight in Eritrea and Somalia, following substantially reduced main season harvests in 1995. In addition, civil strife continues to adversely affect food security in Somalia. In Ethiopia, despite a bumper cereal harvest last year, 3 million people in some rural provinces need food assistance because of localized crop failure and limited purchasing power. In Sudan food supply problems persist in the southern provinces which are affected by prolonged civil conflict. In the Great Lakes region, the presence of some 2.4 million refugees and internally displaced persons continues to necessitate large emergency food assistance. The rate of refugee repatriation is still disappointingly low. In West Africa, the food supply situation remains tight in Liberia and Sierra Leone reflecting the adverse impact of past civil strife on food production. By contrast, in southern Africa, the food situation is expected to improve as an above-average grain harvest is forecast for 1996, a welcome recovery from the drought-reduced production of 1995. In Asia and the Near East, the food situation remains particularly tight in the Democratic People’s Republic of Korea, Laos, Iraq, and Afghanistan. In the CIS, the cereal supply situation is critical in Tajikistan, where the most vulnerable risk starvation, while the supply pipeline in Azerbaijan and Georgia is inadequate.

As indicated above, world cereal production in 1996 is expected to recover to 1 990 million tons, some 5 percent up from 1995’s reduced output. Larger global wheat and coarse grains crops are expected this year, while little change from 1995 is tentatively forecast for paddy. The bulk of the increase is anticipated in developed countries with output in the developing countries rising only marginally. These early forecasts are tentative and could be subject to major downward revisions should conditions turn unfavourable in one or more of the major growing areas.

Wheat output is provisionally forecast at 570 million tons, 15 million tons or 4.6 percent up from 1995 and back on trend after below-trend production in the past two years. Although many crops are still dormant or have yet to be planted, the latest information on the major winter wheat crop in the northern hemisphere indicates that a larger area was sown, and that weather conditions have been generally favourable so far except in the United States Southern Plains. In addition, continuing strong international wheat prices are expected to stimulate larger spring wheat plantings. Wheat output is forecast to rise significantly in Africa, North and South America and the CIS, while marginal increases are foreseen in Central America, Europe and Oceania. FAO’s first forecast for world coarse grains output in 1996 points to a recovery in production by 8.7 percent to 860 million tons from last year’s much reduced crop. At this level, output would be above the trend, but below the record crop in 1994. As indicated above, the bulk of the recovery is expected in developed countries, in particular in North America, but significantly larger coarse grain crops are also anticipated in Africa and the CIS. However, since most crops in the northern hemisphere are yet to be sown, this early forecast is very tentative. As regards rice, the 1996 main paddy season in the southern hemisphere and around the equatorial belt is well advanced but, in Asia, where the bulk of the rice is grown, the season has yet to begin, pending the arrival of the monsoon rains. While it is still too early to make a firm forecast of 1996 paddy production, assuming growing conditions remain as good as in 1995, paddy output in 1996 could be around 560 million tons, almost unchanged from the previous year.

FAO's forecast of world trade in cereals in the current 1995/96 marketing year is virtually unchanged since the last report at 201 million tons, which would be slightly above the revised estimate for 1994/95. A marginal increase in expected shipments of wheat has been mostly offset by a reduction in the forecast for rice trade. The forecast for world imports of wheat and wheat flour (in wheat equivalent) has been raised to 95.5 million tons indicating that, despite continuing strong wheat prices, more wheat will be shipped in 1995/96 than earlier expected. Of the total, developing countries' imports are now anticipated to account for about 74 million tons, 1 million tons above the previous year. The forecast for world trade in coarse grains in 1995/96 is unchanged at 88 million tons, marginally above the revised estimate for 1994/95. While imports by the developing countries are still forecast to increase significantly, shipments to Asia are now expected to rise more than earlier anticipated and those to Africa by slightly less. The overall increase in coarse grains shipments to developing countries is expected to be offset by reduced shipments to the developed countries, especially the CIS. FAO's forecast for global rice trade in 1996 has been lowered by 0.3 million tons since the previous report to 17.8 million tons, 2.5 million tons down from the record level traded in 1995. This revision mostly reflects a reduction in the forecast of imports to Bangladesh following this country's larger than expected domestic harvest.

The latest forecast for global cereal utilization in 1995/96 points to a decrease of 38 million tons, or 2 percent, from the previous year to 1 752 million tons. The bulk of the reduction in global cereal utilization is anticipated to occur in the developed countries where aggregate cereal use could be 60 million tons, or 8 percent, less than last year. Utilization in the developing countries, by comparison, could rise by 22 million tons, or 2 percent. Food consumption of cereals is forecast at around 910 million tons in 1995/96, an increase of 13 million tons, or 1.4 percent, over the previous year. The increase in the developing countries would not be sufficient to raise the annual average per caput food consumption above last year's level of 169 kilograms. Feed use of cereals is forecast to be down by 7 percent to 598 million tons in 1995/96 compared to last year, a fall of 46 million tons, with the bulk of the reduction expected in the developed countries. Other uses of cereals, such as for seed, industrial purposes and post-harvest losses, are forecast in 1995/96 at 244 million tons, down slightly from last year.

FAO’s latest forecast for food aid shipments of cereals in 1995/96 (July/June) remains virtually unchanged from earlier expectations at 7.6 million tons. This volume would be 1.6 million tons or about 17 percent less than the revised estimate for 1994/95. Of the total, the low-income food-deficit countries (LIFDCs) are expected to receive about 6.5 million tons, or 85 percent. This would be similar to their share in the previous year but the actual volume received would be 1.5 million tons lower than in 1994/95, and would represent only about 8 percent of their forecast total cereal imports, compared to 11 percent in 1994/95 and 13 percent in 1993/94. The combination of reduced food aid availabilities and high wheat and coarse grain prices is expected to result in an increase in the cost of cereal imports for LIFDCs by almost U.S.$ 3 billion or 22 percent over the previous year.

International wheat export prices surged upwards in February due to adverse weather conditions in the major United States winter wheat areas and indications of somewhat tighter export supplies of the 1995 crop than earlier expected. After temporarily weakening in early March, prices rose again late in the month as the outlook for the United States wheat crop deteriorated. By late March, U.S. No. 2 hard winter wheat (f.o.b. Gulf) was quoted at U.S. $ 222 per ton, close to the peak in February and almost 50 percent above the price a year ago. Maize export prices strengthened further during February and March reflecting continuing active export demand and tight stocks, especially in the United States where domestic demand remained strong. By late March, the price of U.S. No.2 maize (delivered Gulf ports) was U.S.$ 175 per ton, some U.S.$ 65 per ton or 60 percent up from a year ago. International rice prices changed little during March after declining somewhat in February. The average price for Thai 100B was slightly lower in March than in the previous month. However, prices of lower grades of rice strengthened slightly, under pressure from generally tight supplies.

FAO’s latest forecast of global cereal stocks at the end of the 1995/96 seasons has been cut by 2 million tons since the previous report, to 265 million tons, mainly reflecting downward revisions of the forecasts for wheat and rice stocks which more than offset a slight increase in those of coarse grains. At the forecast level, world cereal carryovers would be 47 million tons or 15 percent less than their opening level and the smallest volume since 1981. By contrast, the forecast of end-of-season coarse grains stocks has been raised marginally, since the last report, to 106 million tons, still some 41 million tons or 28 percent less than last year. World rice stocks are also forecast to decline by the end of the marketing seasons in 1996, and since February, the forecast has been revised down further to 54.7 million tons, which would be about 7 percent less than their opening level.

The substantial drawdown in carryover stocks in the current 1995/96 season to just 14-15 percent of the trend utilization in 1996/97, well below the 17-18 percent range that the FAO Secretariat considers the minimum safe level for world food security, means that meeting world consumption requirements in 1996/97 depends almost entirely on a good 1996 harvest. As indicated above, early production prospects for 1996, based on the assumption of normal weather, point to a large enough recovery in global cereal production to meet expected requirements in 1996/97, and to avoid a further erosion of reserve stocks. However, if current production forecasts materialize the supply/demand situation would remain closely balanced and not much improved from the current season. Moreover, with many of the 1996 crops still to be sown and others just in the early stages of development, a deterioration of the 1996 crop outlook cannot be ruled out at this stage. Thus, the situation needs to be closely monitored in the coming months.

CURRENT PRODUCTION AND CROP PROSPECTS

POSITION BY REGION

• ASIA
• AFRICA
• CENTRAL AMERICA AND THE CARIBBEAN
• SOUTH AMERICA
• NORTH AMERICA
• EUROPE
• COMMONWEALTH OF INDEPENDENT STATES
• OCEANIA

ASIA

Prospects for the 1996 winter wheat crop in Asia are generally favourable. In China, winter wheat plantings increased by some 2 percent over the previous year and the crop is reported to be in satisfactory condition. An above-average harvest, similar to last year, is expected notwithstanding earlier drought in the north and the possibility of pest infestation in some regions. In India, a bumper crop close to last year’s record harvest of 65.4 million tons is in prospect, some 9 percent above the Government target of 60 million tons. Above-average crops are also anticipated in the Islamic Republic of Iran and Pakistan, where production is currently forecast to be some 3 percent higher than last year's record crop of 17 million tons. By contrast, production in Afghanistan is likely to be again limited, due to short supplies of agricultural inputs and insecurity. In Iraq, output is expected to be constrained by serious shortages of spare parts for agricultural machinery and other agricultural inputs. Reflecting Government policy measures to reduce domestic output, production of wheat in Saudi Arabia is expected to be markedly reduced. Growing conditions are satisfactory in Syria and Turkey following adequate rains. Prospects for the region's 1996 winter coarse grain crop, about to be harvested, are favourable. Land is being prepared for planting the 1996 main coarse grain crop, which normally begins in April.

In China, planting of the 1996 early paddy crop is underway. While soil moisture in the southern provinces is adequate for sowing, drought in the north has affected water supplies in the Yangtze river, which may affect surrounding rice areas. The Government has intensified efforts to support production for 1996. The procurement price for grains (including rice) has been raised by 20 percent to encourage farmers to remain in production. In recent years, the loss of rural labour to the urban sector has been a major constraint to increasing agricultural output. In Indonesia, the 1996 main rice season is more advanced. The harvesting of the wet season rice crop in Java stretches from February to June and conditions are reported to be favourable. Despite flood damage to the crop early in the year, official indications are that 51.2 million tons of paddy could be harvested, 2.7 million tons up from last year. In Malaysia, the 1996 outlook is favourable. In most years, output of paddy in the country has been around 2.1 million tons. In Sri Lanka, drought since October has affected large parts of the country. As a result, nearly 50 000 hectares of rice land could not be planted and the Maha (main) paddy crop is expected to be reduced by 23 percent to under 1.4 million tons. The serious drought is also likely to affect the Yala (second) rice crop as water supplies in irrigation reservoirs are reported to be extremely low.

In Japan and the Republic of Korea, plantings of paddy normally start around April. For 1996, a target output of 6.6 million tons paddy has been set in the Republic of Korea, 3 percent more than the crop harvested in the previous year. In Japan, about 790 000 hectares will be diverted from rice plantings under the Area Land Diversion Programme, a slightly larger reduction of rice area than in 1995. Elsewhere in Asia, the 1996 paddy season awaits the arrival of monsoon rains, which generally start around June.

AFRICA

NORTHERN AFRICA: . Prospects for the sub-region's 1996 wheat crops, to be harvested from June, are generally favourable and a substantial increase in output is anticipated. In Algeria, where plantings in central and western areas were delayed by insufficient precipitation at the beginning of the growing season, rains from January maintained beneficial moisture conditions. Significant rains in the first half of March in Tunisia continued to benefit crop development and lower than normal temperature favoured soil moisture accumulation. Production is expected to more than double from last year's poor volume. In Morocco, heavy rainfall earlier in the year caused some damage to crops and infrastructure but increased markedly the level of the country's water reservoirs. A marked recovery in wheat output in 1996 is anticipated. In Egypt, where the wheat crop is largely irrigated, growing conditions are satisfactory. However, reflecting below-normal rains in northern rainfed areas, total area sown is reported to be fractionally less than last year. Aggregate output of coarse grains in 1996 in the sub-region is expected to recover sharply from last year's drought-affected harvest.

WESTERN AFRICA: Seasonably dry conditions prevail in the Sahelian zone where generally good crops were harvested in 1995. The aggregate output of cereals has been revised downwards slightly to 9.4 million tons, which is below the 1994 record of 10 million tons, but still above average. Production reached a record or was close to previous record levels in The Gambia, Guinea-Bissau, Mauritania and Senegal. Production decreased from the 1994 outturn in Burkina Faso, Chad, Mali and Niger, but remained normal or above normal. In Cape Verde, the maize crop was average.

In the coastal countries, from Guinea to Nigeria, the rains have started in the south, allowing planting of the first 1996 maize crop to start. In 1995, aggregate production of cereals is estimated at 19 million tons for the eight coastal countries, which is about average. In Liberia and Sierra Leone, population displacements and insecurity have severely disrupted agricultural production and 1995 cereals output was very low. The peace process concluded in 1995 in Liberia has led to an improvement in the food supply situation of the population affected although the security situation is still tense. In Sierra Leone, civil strife is just beginning to abate. The transport of food aid from Freetown to the east has resumed but security conditions are still difficult. Negotiations have started between rebels and the Government and are expected to lead to a cease fire and the beginning of a peace process. Current estimates point to more than 3 million people affected in the region, of whom about 1 to 1.5 million are receiving food assistance.

CENTRAL AFRICA: In 1995 coarse grains production was normal to above normal in most countries. Land preparation for the first 1996 maize crop is underway in southern Cameroon. Maize is being planted in northern Zaire and is growing satisfactorily in the centre and the south of the country.

EASTERN AFRICA: In 1995 the sub-region’s aggregate wheat crop was an estimated 2.5 million tons, 15 percent up from the above-average output of the previous year. Harvesting of the 1996 wheat crop has started in the Sudan. The crop is reported to be in good condition following favourable weather during the season and the latest forecast points to an output of 570 000 tons, one-quarter higher than in 1995.

The 1995 main season coarse grain crop, the harvest of which was concluded only in December in several countries, was good overall, but performance varied considerably amongst countries. In Ethiopia, Uganda and Tanzania, record crops were harvested; in Kenya and Sudan production declined but remained average to above average. By contrast, in Somalia and Eritrea, the coarse grain harvest was sharply reduced following erratic rains and pest infestations.

Harvesting of a good 1995/96 secondary coarse grain crop is completed in the sub-region, except in Ethiopia, where the “belg” crops are scheduled to be harvested from June. In Ethiopia, a normal secondary “belg” crop is expected following adequate rains in the second half of February and first half of March, while in Tanzania, the recently harvested secondary coarse grain crop was reduced in some parts. Prospects for the 1996 main season maize crop in the unimodal rainfall areas are favourable, reflecting abundant rains since the beginning of the season. In Kenya, despite some localized crop reductions in the Eastern Province, the recently harvested “short rains” coarse grain crop was normal overall. Planting of the 1996 main season coarse grains is underway. In Uganda, the recently-harvested second season coarse grain crop was above average following good rains. In Somalia, the recently harvested secondary “Der” season crop was above average, reflecting abundant rains during the season. In Burundi and Rwanda, the 1996 first season cereals have been harvested; outputs remained below normal despite an increase in production in Rwanda.

SOUTHERN AFRICA: Latest estimates put the sub-region’s 1995 wheat harvest at 2.3 million tons, of which 2.1 million tons was produced by South Africa, slightly less than earlier forecast as a result of adverse weather conditions in the Orange Free State during the harvest period. However, at this volume, output in South Africa would still be 17 percent higher than in the previous year. In Zimbabwe, the wheat harvest was less than half of the previous year’s crop and much below average, reflecting a shortage of irrigation water.

Prospects for the 1996 coarse grains crop, harvesting of which is due to commence in April are favourable in most countries. Despite the slow start of the rains in Malawi, Mozambique, Zambia and Zimbabwe, rainfall has generally been good in the sub-region with the exception of Namibia where cumulative rainfall has remained much below normal. Initial indications are that the sub-region’s output may be above-average and well up on last year’s drought-reduced outturn on account of an increase in area planted and expectations of above average yields. In Angola, continued good rains and the generally peaceful conditions across the country have led to a sharp increase in area planted. Overall, an above-average harvest is expected although yields may be affected by input shortages in some regions as a result of transportation difficulties. In Mozambique, maize in the southern provinces has been adversely affected by an acutely dry spell in January followed by excessive rains and severe flooding in February. In South Africa, heavy rains may have led to some crop damage in the eastern corn belt and the Kwazulu-Natal. Nevertheless, the initial forecast of the South African maize crop points to an above-average harvest, double the drought-affected 1995 output of 4.6 million tons. Similarly a good harvest is anticipated in Zimbabwe, the second largest producer in the sub-region where maize output in excess of 2 million tons is forecast.

The 1995 paddy crop of the sub-region is estimated at 2.6 million tons. The 1996 season is well advanced in Madagascar, the main rice producer of the sub-region. Rainfall has been adequate but prospects for the harvest remain uncertain following January cyclones that may have damaged quite large areas of crop land.

CENTRAL AMERICA AND THE CARIBBEAN

Harvesting of the 1995/96 wheat crop has started in the main growing irrigated areas of the North-west of Mexico, which accounts for most of the sub-region's production. The crop was affected by adverse weather at planting and reduced water supplies for irrigation since December. Early forecasts put the 1996 production at about 3.7 million tons, slightly above the poor 1995 level, mainly due to a modest increase in plantings. The sector is still affected by shortages of credit and the high cost of farm inputs caused by the devaluation of the currency.

Fieldwork continues in most Central American countries for planting of the 1996 main season coarse grains which is about to start. In Mexico, the area planted to maize is expected to return to normal, provided good weather persists, particularly in the main central and southern maize belts where the crops were severely affected by drought last year. Plantings of sorghum are also anticipated to increase substantially from 1995. In El Salvador, Guatemala, Honduras and Nicaragua, intended plantings are about average, largely due to a good rainy season that has maintained soil moisture. In the Caribbean, normal rains in the Dominican Republic since January have favoured planting of the 1996 first season coarse grain and of the minor food crops. In Haiti, the outlook is uncertain for the 1996 first season maize and sorghum plantings as a result of heavy and persistent rains in recent weeks. In Cuba, despite below-normal rains in the western and central parts of the country, growing conditions are good for the 1995/96 second season maize crop, as well as for other minor food crops.

SOUTH AMERICA

In the southern parts of the sub-region, normal rains since February throughout the principal wheat growing areas have helped replenish soil moisture, in preparation for sowing of the 1996/97 crop. In Argentina, plantings are expected to increase due to attractive prices for producers, and should recover from the drought-reduced level of last year. In Brazil, sowing of the 1996 wheat crop is about to start in the main producing states. Larger plantings are expected in response to strong internal demand and to efforts by the Government to stimulate a recovery in production, following the poor output in 1995, through increased availability of credit to farmers. In Uruguay, where planting is due to start from May, wheat area is anticipated to be close to the normal 1995 level. In Chile, the 1996 crop has been affected by a severe drought, with resulting major losses in production. In the Andean countries, harvesting of the 1996 main season wheat crop in Bolivia has started under favourable conditions and an above-average output is anticipated. In Ecuador, slightly below-normal rains in February have fallen in the highlands' principal growing areas, benefiting planting of the 1996 main season crop which is underway. Early forecasts indicate that production should be close to the average 1995 outturn. In Peru, normal to above-normal rains have favoured planting of the 1996 wheat crop in the main growing areas of the country. Plantings are expected to decrease slightly from the 1995 level but would still remain above average.

Rains in March in the southern parts of the sub-region came too late to help significantly the 1996 coarse grain crops, which were adversely affected by dry weather earlier in the growing season. Reduced output is anticipated in the main producing countries. In Argentina, where about 18 percent of the area planted has been harvested, early forecasts put production at about 10 million tons, compared to 11.4 million tons in 1995. Sorghum output is also forecast to be below average. In Brazil, where harvesting is well advanced, output is expected to be below normal at 29 to 29.5 million tons, down from last year's record of 36.2 million tons. In Chile, harvesting is about to start and production is preliminarily forecast to be about average, while in Uruguay, where harvesting is underway, a slightly below-average maize outturn is anticipated. In the Andean countries, in Bolivia, harvesting of the 1996 main season maize crop is about to start, particularly in the large producing eastern areas and inland valleys, where normal to above-normal outputs are expected. In Ecuador, harvesting of the 1996 main maize crop, mostly yellow, has started in the coastal areas, while that of white maize, grown principally in the highlands, should start from May. A preliminary forecast indicates that total maize production is expected to decrease from last year's record but should remain above average. In Peru, normal to abundant rains in recent weeks in the large producing coastal areas of Cajamarca and the southern plains of Arequipa have helped the development of the 1996 white maize crop, while harvesting of the yellow maize crop continues, particularly around the capital and the main growing areas in the highland departments of San Martin and Junin. Aggregate maize production is preliminarily forecast to be close to the good 1995 level. In Venezuela, sowing of the 1996 maize and sorghum crops has started in some of the main producing areas. Plantings are expected to decrease further from last year's below-average area, reflecting the severe financial and administrative constraints to the agricultural sector.

The region's 1996 paddy crop season is well advanced. Most countries are now harvesting their main season rice crop. In Argentina, high international rice prices and preferential arrangements under MERCOSUR have prompted a substantial expansion in the area devoted to rice but drought has adversely affected the crop. It is estimated that paddy output in 1996 is likely to be 5 percent less than the record 928 000 tons harvested in 1995. By contrast, in Uruguay the 1996 output of paddy is likely to be higher than in the previous year. Although the area planted to rice has not increased, favourable growing conditions have improved the prospect for higher yields. Output of paddy in Brazil, the largest producer and consumer in the region, is expected to fall by one million tons to 10.2 million tons. Reduced plantings in the region of Rio Grande do Sul, brought about by a fall in producer support price for paddy and a substantial increase in fertilizer prices, are among the main reasons for the fall in output. In Peru, high domestic prices of rice have encouraged farmers to expand plantings in 1996. Larger output of rice is also expected from Chile, Ecuador and Venezuela.

NORTH AMERICA

In the United States, the outlook for the 1996 wheat crop is uncertain. The USDA's Prospective Planting Report (29 March) indicated that winter wheat plantings rose by nearly 7 percent from the previous year to about 21 million hectares, but unfavourable weather conditions in the autumn and winter are expected to result in losses of 10 to 15 percent of this area. Some crops have already been ploughed under in preparation for replacement with spring grains. Although weather conditions improved slightly in mid-March, when much-needed rains fell across the central Great Plains, much of the remainder of the winter crop, already reported to be in poor condition, continues to be stressed by dry soil conditions, high winds and temperature fluctuations. For spring wheat, which will be planted in the coming weeks, USDA forecasts a 3.2 percent increase in area from 1995. Although high wheat prices remain an incentive, feed grain and oilseed prices are also strong. However, the final area of wheat for harvest in 1996 will still depend greatly on weather conditions in the coming weeks. Based on the crop conditions so far and the indications for spring planting, and assuming normal weather prevails for the remainder of the season, the aggregate wheat area for harvest in 1996 is expected to increase by about 5 percent. Thus, assuming average yields, aggregate wheat production could increase by about 10 percent from 1995 to 65 million tons. In Canada, where planting of the bulk of the 1996 wheat and coarse grain crops is yet to start, early indications point to an increase of about 10 percent in spring wheat area, continuing a move back towards wheat after a large shift to oilseed production in 1993 and 1994.

Planting of the 1996 coarse grain crops is already underway in some southern areas of the United States, but the bulk of the maize crop is planted in the Corn Belt from late April. The USDA projects that the area planted will increase some 12 percent, reflecting a zero percent Area Reduction Programme (ARP) for maize, the possibility for producers to augment plantings with land transferred from the long-term Conservation Reserve Programme (CRP), under the “early-out’ option, and attractive prices. However, the weather will also have an important influence on the outcome of the 1996 plantings. Moisture deficiencies are reported in some parts of the Corn Belt, but conditions could improve if adequate rains are received in the coming weeks. Assuming that farmers’ planting intentions are realized, and that weather conditions are normal for the remainder of the season, an increase of as much as 30 percent could be expected in the United States coarse grain crop from the below-average output in 1995. In Canada, as for wheat, planting of the 1996 coarse grain crop will begin in April. Early indications point to a marginal increase in the aggregate coarse grain area which will remain above the average of the past five years.

Planting of the 1996 paddy crop In the United States has started in some southern parts. This year's rice programme has not been finalized but interim provisions have been established. Although the final 1996 Farm Bill has not been passed, expectations are that the target support prices for rice, deficiency payments and the Area Reduction Programme would be eliminated to enable greater responsiveness by producers to market prices of different crops. USDA forecasts that the area planted to rice in 1996 will decline by some 4 percent.

EUROPE

Early prospects for the region’s 1996 wheat and coarse grain crops are satisfactory. The bulk of the crops in most areas remain dormant, except in southern Spain, Portugal and Italy where vegetative growth has already begun. Adequate snowcover in southeastern regions continues to protect crops from extremely cold temperatures while regular precipitation throughout the rest of the region helped to maintain soil moisture reserves for spring growth. In the EC, the area planted to winter grains expanded somewhat, particularly in France, Germany and the United Kingdom, the three major producers, following reduction of area restrictions and favourable autumn conditions. The bulk of the increase was in wheat with smaller increases in rye and barley. The outcome of grain planting this spring will still be important for the overall crop but the information on the area and condition of the winter crops points to an increase in aggregate cereal production in the Community of about 5 percent. In the EC, paddy planting generally starts around April. Good rains in Spain, however, have prompted early sowing of the crop.

Elsewhere in the region, indications are that winter grain plantings in eastern countries have remained mostly close to last year’s areas or are slightly reduced in some parts where limited finance still constrains farmers. The major exception to this is Poland, where the winter cereal area is officially estimated to be 5 million hectares, 4.6 percent up from last year. Winter wheat sowings are put at 1.8 million hectares, 78 000 hectares more than in 1995 and rye sowings rose 146 000 hectares to 2.4 million hectares. However, winter weather conditions are reported to have been very harsh and the percentage of winterkill could be somewhat higher than normal. In Bulgaria, latest official estimates put winter wheat plantings at some 800 000 to 850 000 hectares, down from 910 000 hectares in the previous year. In Hungary, although no official estimates are available, winter plantings are thought to have been constrained by farmers’ shortages of finance. In Romania, latest reports indicate that winter wheat was sown on some 2.1 million hectares compared to the above-average 2.4 million hectares in the previous year. Weather conditions in the coming weeks and access to inputs for spring crop planting will be important for the outcome of the 1996 crops in the eastern countries but on current indications, crops in most of these countries are expected to remain around last year’s volumes. In the Yugoslav Federal Republic (Serbia and Montenegro) the 1996 winter wheat output is anticipated to decrease due to smaller plantings and higher cost of agricultural inputs. However, the area planted to spring crops, mainly maize, is expected to increase reflecting Government production incentives. In Croatia, the 1996 wheat crop is forecast at 856 000 tons, which would be 12 percent down from last year mainly due to reduced plantings. In Bosnia-Herzegovina, prospects for the developing wheat crop are favourable reflecting increased plantings in central areas and satisfactory weather so far. The area planted to spring crops is expected to increase in Serb areas following the end of the economic sanctions. In Slovenia and the Former Yugoslav Republic of Macedonia, average wheat crops are expected as a result of normal weather so far.

COMMONWEALTH OF INDEPENDENT STATES 1/

The outlook for the 1996 cereal and pulse harvest is better than last year. The aggregate area sown to winter grains for harvest in 1996 increased by nearly 3 million hectares from the previous year but at an estimated 28 million hectares remained below average and 5 million hectares less than in 1993. Deep snow in the major producing parts has protected winter grains from extreme cold and provided good moisture reserves for spring crops. The crop is still mostly dormant. Extreme cold in January - February has caused some winter kill in western parts, but, in general, the crop condition is better than last year in the major producing states. In the Russian Federation, where 15.2 million hectares (1995: 11.9 million hectares) were sown to winter crops, preliminary indications are that crops on 88 percent of the area sown are in good to satisfactory condition. In the Ukraine, where winter wheat plantings also increased somewhat, crop conditions are reported to be mostly satisfactory. In Kazakhstan, the area sown to winter crops increased to 1.2 million hectares, but the bulk of the crop will not be sown until May. In Uzbekistan and Turkmenistan the winter grain areas increased marginally. By contrast, in Armenia, Georgia, Tajikistan and Kyrghyz Republic, shortages of credit and seeds constrained plantings of the major wheat crop.

The final outcome of the 1996 harvest throughout the CIS will depend crucially on the areas sown in the spring , weather conditions until the harvest and the extent to which current plans to facilitate farmers' access to fertilizers and machinery are put into effect. In the Russian Federation, it is hoped that 55 million hectares will be planted to cereals this year and output is targeted to recover to 77-80 million tons (1995: 63.5 million tons). In the Ukraine and Kazakhstan, the areas sown could remain close to last year's but output could recover from last year's drought-reduced levels.

OCEANIA

In Australia, planting of the main 1996 wheat and coarse grain crops is due to start in May. Official forecasts in late March put the wheat area at an above-average 10.3 million hectares, up about 5

percent from the previous year. Growers are expected to respond to strong international prices. However, yields may slip back marginally from their above-average levels obtained in 1995, and assuming normal weather conditions, output is forecast to expand by about 4.5 percent. The area planted to the main winter coarse grain crops, mostly barley and oats, is expected to decrease slightly mainly reflecting a shift towards wheat plantings, and as a result, winter coarse grain production is projected to fall marginally. The minor 1996 summer coarse grain crop, mostly sorghum, which is now being harvested, was favoured by good rainfall in the later stages of development. Production is estimated to increase by at least 50 percent from the previous year’s reduced volume due to expanded plantings and improved yields. Harvesting of the 1996 paddy crop is already underway. Output is forecast at 1.28 million tons, up 13 percent from the previous year.

TRADE

World trade in cereals in 1995/96 is now expected to reach 201 million tons, which would be marginally higher than in 1994/95 and similar to the previous forecast in February. While world imports of wheat and coarse grains are anticipated to expand this year, rice trade is likely to be smaller than in the previous year. Based on these forecasts, aggregate cereal imports by the developing countries would be around 144 million tons, slightly more than in 1994/95 and a new record. At 57 million tons, total cereal imports by the developed countries would be marginally above those in the previous year, which had reached, however, their lowest volume in over two decades.

The forecast for international trade in wheat and wheat flour (in wheat equivalent) for 1995/96 (July/June) has been raised by 500 000 tons this month to 95.5 million tons, an expansion of some 2 million tons compared to last year’s estimated import volume. While this month’s upward revision is relatively small, it is significant in that it is further evidence of the somewhat larger trade volume this year despite a surge in wheat prices. Following this month’s upward revision of the forecast for soft wheat and durum imports into the EC and slightly higher imports into Poland, the 1995/96 aggregate imports by the developed countries are now expected to reach 21 million tons, almost 1 million tons higher than last year and also slightly more than last reported.

Compared to last year, aggregate wheat imports by the developing countries in 1995/96 are forecast to rise by some 1 million tons to 74 million tons. The largest increase would be in China where the forecast for this year’s imports has again been raised by 1 million tons and it is now put at 13 million tons, some 2 million tons more than the estimated imports in 1994/95. In China, high demand and rising domestic prices have already led to purchases of around 12 million tons of wheat and the remaining 1 million tons are expected before the end of this season. On the other hand, the forecasts for wheat imports into Algeria, Egypt and Nigeria have now been adjusted down, mainly reflecting the slow pace of imports so far.

OVERVIEW OF WORLD CEREAL IMPORTS

Since the previous report, the forecast for this year’s exports from the United States has been raised by 2 million tons to 35 million tons, which would be some 3 million tons more than in 1994/95. Despite the detection of karnal bunt fungus in the southwest United States in early March, which resulted in a temporary suspension of shipments to some 21 destinations, larger purchases by China and tighter supplies from nearly all other major exporters have put United States' shipments at near-record levels so far this year. Following a strong recovery in output, shipments from Australia are expected to rise by almost 60 percent from last year’s drought-reduced volume. By contrast, exports from Canada are lagging behind last year’s volume by around 30 percent due to reduced supplies, the ending of the federal rail subsidies (since August 1995), and higher domestic utilization. Similarly, this year’s more restrictive export policy in the EC is expected to lead to much smaller shipments than in 1994/95. According to the latest official estimates, export approvals by the EC Commission of commercial soft wheat between July 1995 and March 1996 correspond to only 5.2 million tons compared to 6.2 million tons during the same period last year. In addition, to date, EC exports of wheat flour and hard wheat have also been drastically reduced. Wheat shipments from Argentina are also forecast to be much smaller this year mainly on account of drought, which reduced the 1995 crop. Elsewhere, Hungary, India and Romania are expected to export substantially more due to bigger crops while exports from Turkey and Saudi Arabia would be cut substantially due to lower supplies .

Unchanged from the previous forecast, world imports in coarse grains in 1995/96 (July/June) are expected to reach 88 million tons, 1 million tons, or just over 1 percent, above the estimated volume in 1994/95. At that level, the anticipated increase in imports by the developing countries would be more than offset by the decline in imports by the developed countries.

Aggregate coarse grain imports into the developing countries are expected to reach 55 million tons, 2 million tons above last year's estimated volume. The forecast for total coarse grain imports into the developing countries in Asia has been raised by over 500 000 tons to 34 million tons which would be 1.5 million tons more than in 1994/95. The Philippines is forecast to import 800 000 tons compared to 300 000 tons expected earlier. Additional maize imports would be mainly due to a poor harvest and strong domestic demand for animal feed. In Africa, aggregate imports by the developing countries are now forecast to rise by nearly 500 000 tons from last year and approach 9.5 million tons in 1995/96. This forecast is about 1 million tons less than anticipated earlier as purchases by Algeria and Egypt have been slower than anticipated earlier. In Latin America, total coarse grain imports in 1995/96 are forecast to remain close to last year’s, at 12.7 million tons. While Mexico is forecast to purchase slightly more coarse grains this year in order to compensate for reduced output, imports into several countries in South America would be smaller than last year, especially in Brazil, following above-normal crops.

FAO's forecast of coarse grain imports into the developed countries in 1995/96 is 33 million tons, some 1.5 million tons or around 4 percent below the estimated imports in 1994/95. Purchases by Japan, the world’s largest coarse grain importer, are forecast to fall by 1.2 million tons, or 6 percent, to 19.8 million tons. Most of the decline would affect maize as demand from the domestic feed sector has fallen from last year mainly on account of larger imports of meat. Imports by Poland are expected to drop by 500 000 tons from last year to 350 000 tons due mainly to a strong recovery in barley output. On the other hand, the EC could import more coarse grains than was anticipated earlier, some 4 million tons compared to 3.4 million tons reported in February. Elsewhere, because of last year’s drought, South Africa, normally a maize exporter, is expected to purchase 1 million tons of maize, some 600 000 tons more than in 1994/95.

The main feature underlying this year's export trade has been a sharp drop in the world supply of coarse grains, mainly caused by a fall in maize output in the United States. In response, a significant draw-down of stocks has been necessary and international prices of all major coarse grains, particularly maize and barley, have risen to levels not seen in over 15 years. In the United States, this year’s tight supply situation has forced domestic users to compete increasingly with international buyers for scarce grain. As a result, and despite a fall in output, exports from the United States are expected to rise to over 61 million tons, 4 million tons more than last year. At this level, exports from the United States would represent nearly 70 percent of the world market, a much larger share than in 1989/90 when total shipments from the United States hit a record volume of 69 million tons.

Larger exports from the United States have been necessary in order to compensate for this year’s limited export supplies of coarse grains from nearly all other exporters, with the exception of Australia. The near absence of China and South Africa from this year’s export market combined with reduced shipments from Argentina, Canada and the EC, has resulted in above-average demand during the first half of the year for maize from the United States. Another important factor underlying this development has been the surge in international wheat prices which has prompted a shift to much larger maize purchases in place of lower quality wheat, as was the case with the Republic of Korea.

FAO's forecast for global rice trade in 1996 has been lowered by 0.3 million tons to 17.8 million tons, 2.5 million tons down from the record volume traded in 1995. The downward revision largely reflected a substantial reduction in the forecast for Bangladesh's imports following a larger than expected output of Aman paddy and improved prospects for the Boro crop. New official estimates for the Aman crop showed that crop damage in the lowland areas by floods was offset by improved yields in the highland areas because of increased soil moisture. Moreover, the export ban on fertilizers is expected to improve prospects for a good Boro crop. In 1995, output from the Boro crop which has been the main factor behind the country's expansion in production of rice was curtailed because of a lack of fertilizers. Elsewhere in Asia, few changes have been made to the previous forecast on rice import trade. China and Indonesia, both substantial buyers in 1995, are both likely to reduce their imports in the current year because of a recovery in the output of paddy in 1995. By contrast, the forecast for Brazil's imports has been raised because of the likely reduced harvest in the coming months.

Traditional exporting countries, especially Thailand, the United States and Viet Nam would be exporting less this year, primarily because of reduced supplies as all three countries suffered set backs to their crops in 1995, but also because of reduced international demand. By 27 March 1996, Thailand's rice exports totalled 1.37 million tons, 400 000 tons or 20 percent less than shipments made in the same period last year. In the United States, export sales in early 1996 have also lagged behind the same period in 1995. Shipments out of Viet Nam have increased slightly in the recent months as the winter-spring harvest starts to come into the market. Most of the supplies are from the Mekong Delta where plantings have exceeded both the target and the previous year's area. Nevertheless, it is still not clear how much of the crop would be available for the international market as in the north, midland and Red River Delta the winter-spring rice has been set back by abnormally cold weather. In the Red River Delta, plantings of winter-spring rice have lagged behind those in the same period last year and are also below the target set for this year.

India, which became the world's second largest rice exporter in 1995, is forecast to ship about 2.5 million tons of rice in 1996 compared to 3.8 million tons in the previous year. Logistical problems remain a significant constraint to the country's export activities. Rice supplies in the country remain abundant, but somewhat less so than in the previous year because of a slight reduction in output and a fall in its rice stocks. Until mid-January, government procurement of paddy rice totalled only 5.7 million tons compared to 9 million tons in the previous year. Both Punjab and Haryana, the surplus producing and rice exporting states in the north, had a poorer crop in 1995.

UTILIZATION

The latest FAO forecast for global cereal utilization in 1995/96 points to a decrease of 38 million tons, or 2 percent, from the previous year to 1752 million tons, which is about 3 percent below the long-term trend. This outlook reflects a marked decline in feed use, a moderate rise in food consumption and a small reduction in other uses. The bulk of the reduction in global cereal utilization is anticipated to occur in the developed countries where the aggregate use could be 60 million tons, or 8 percent, less than in 1994/95. The developing countries, by comparison, could experience a growth in cereal utilization of 22 million tons, or 2 percent. With respect to individual cereals, a significant decrease of 5.5 percent to 823 million tons is anticipated in the utilization of coarse grains, mostly for feed. By contrast, rice consumption could expand by two percent to 375 million tons, while wheat utilization is expected to make modest gains reaching 555 million tons.

Food consumption of cereals (excluding indirect uses, such as for alcohol, starches and sweeteners) is forecast at around 910 million tons in 1995/96. This would be an increase of 13 million tons, or 1.4 percent, over the previous year. However, since food use is anticipated to expand somewhat slower than the growth in world population, global per caput food consumption of cereals could fall slightly to 159 kilograms per year. A decline in annual per caput food consumption of 1 kilogram to 126 kilograms is forecast to occur in the developed countries as a whole, while virtually no change is likely to take place in the developing countries, at 169 kilograms per year. As for the low-income, food deficit countries (LIFDCs), per caput cereal food consumption in aggregate is expected to remain at about 171 kilograms in 1995/96.

WORLD CEREAL UTILIZATION

Total food consumption of cereals in the developing countries is anticipated to rise by about 2 percent, or 13 million tons, to 746 million tons in 1995/96. Improved production during the previous season in some Asian countries has raised local food supplies and contributed to the higher per caput food consumption forecast for the developing countries of Asia, which is already above the world average at 180 kilograms per year. In South America, better than average coarse grain crops, in particular in Brazil, are also expected to result in an expansion of the region's food consumption this season to 64 million tons, up 2 percent over last year. Larger crops in 1995 among a number of developing countries in Africa is anticipated to raise food consumption of cereals this year to 90 million tons. However, some countries in this region continue to face serious shortfalls in cereal supplies as a result of poor crops, notably in Eritrea and Somalia, and of civil strife and refugee problems in other countries, including Burundi, Liberia, Rwanda and Sierra Leone.

WORLD CEREAL UTILIZATION BY GRAIN

Food consumption of cereals in the developed countries in 1995/96 is forecast to be unchanged from last year at 164 million tons, with a decline in food consumption of coarse grains offsetting an increase in that for wheat. In some developed countries, cereal food consumption may have reached saturation levels or may be declining, such as in Japan where per caput cereal food consumption has fallen by about 5 percent since the mid-1980s.

PER CAPUT FOOD CONSUMPTION OF CEREALS

The growth in feed use of cereals, which represents about one-third of total world utilization, is forecast to be down by 7 percent to 598 million tons in 1995/96 compared to last year, a fall of 46 million tons. All of the reduction in feed use is expected in the developed countries, whereas in the developing countries it is forecast to expand by 7 million tons, or 3.5 percent, from the previous year. For the world as a whole, wheat and coarse grains used for feed are predicted to fall by 6 percent and 8 percent, respectively, to their lowest levels in several years. The fall in feed use of coarse grains alone could amount to 42 million tons. The sharp rise in grain prices this season is having a dampening effect on the demand for grain utilization for feed.

Total feed use of cereals in the developed countries is expected to shrink by 54 million tons, or 12 percent, from last year, falling to 394 million tons in 1995/96. This would be about 100 million tons less than the all-time high of 1990/91. The largest reduction in feed use is expected in the United States where, in spite of relatively large livestock inventories, the official forecast indicates a 20 percent decline, equal to 33 million tons, from last year's record level due mostly to higher grain prices. The other major reduction in cereal feeding is expected in the CIS where a combination of factors, including poor crops in 1995, a continuing fall in livestock inventories and limited foreign exchange for grain imports, are likely to contribute to an expected 26 million ton drop this year. By contrast, feed use of grains in the EC is forecast to expand by 10 percent, primarily because of relatively high prices of alternative feed ingredients in the EC, and measures to restrict exports of grains in order to contain domestic prices.

The forecast increase in the use of cereals for feed in the developing countries is most pronounced in Asia where strong economic growth, especially in China, is reported to have boosted the demand for livestock products and thus feeds. In Latin America, the aggregate utilization of cereals for feed 1995/96 is forecast to remain virtually unchanged from last year, although feed use will likely be down in Mexico due to poor coarse grain crops during the previous season combined with the reliance on expensive imports of maize to meet domestic needs.

Other uses of cereals, such as for seed and industrial purposes plus post-harvest losses, are forecast in 1995/96 at 244 million tons, down slightly from the previous year. In the developing countries, other uses of cereals are expected to increase, reflecting generally higher production which would tend to result in bigger losses resulting from post-harvest operations. For the developed countries as a group, a small decrease in other uses is likely, primarily in the EC and the CIS.

CARRYOVER STOCKS

The forecast for world cereal stocks at the close of countries' crop years ending in 1996 has been lowered again by 2 million tons compared to the previous report. Global cereal carryovers are now expected to reach 265 million tons, the smallest volume since 1981 and 47 million tons, or 15 percent, less than their revised opening level. Most of the decline would be for coarse grains, but wheat and rice carryovers are also anticipated to fall below their already reduced openings. At the forecast volume, world cereal stocks by the end of countries’ 1995/96 seasons would represent 14 to 15 percent of trend utilization in 1996/97, thus well below the 17-18 percent range that the FAO Secretariat considers the minimum safe level for world food security.

This month, the forecast for wheat stocks has been lowered further, mainly due to adjustments to carryovers in the United States and the EC. Global wheat stocks by the close of the seasons ending in 1996 are now forecast to reach 105 million tons, down 2 million tons from the previous report, and 6 million tons, or 5 percent, below their opening level. This would be the lowest stock volume in 15 years. Aggregate wheat carryovers held by major exporters are currently put at 27 million tons, over 2 million tons smaller than forecast in the previous report. At this level, their total wheat stocks would be as low as in 1974 and would represent less than 26 percent of the global wheat inventories, compared with around 40 percent reached during the early 1990s. The official forecast for total wheat carryovers in the United States was lowered in February by another 1 million tons to 9.4 million tons, which is regarded as close to minimum working levels. This tight supply situation has already led the United States to authorise the release of up to 1.5 million tons from its 4-million ton food security reserve in order to meet food aid commitments.

WORLD CARRYOVER STOCKS OF CEREALS

Following the release of the EC cereal balances by the Commission in February, the forecast for this year's ending wheat stocks in the Community has been lowered to 9.5 million tons, 1.7 million tons below their opening levels and over 1 million tons less than was forecast by FAO in February. Nearly all of the reduction would involve soft wheat inventories. According to official reports, the EC's soft wheat intervention stocks fell to just over 500 000 tons at the end of February, compared to over 2.5 million tons at the same time last year.

Raised by some 2 million tons from the previous report, the forecast for global coarse grain end-of-season stocks in 1996 now stands at 106 million tons, 41 million tons, or 28 percent lower than their opening levels. Despite the rise in coarse grain prices since September 1995, which has led to reduced feed use in some countries, this year’s anticipated utilization can only be met by a large draw-down of coarse grain stocks. Most of the expected decline in world carryovers of coarse grains would affect inventories held by the major exporters, especially those in the United States, but stocks in other countries are also forecast to fall sharply.

The upward revision to world coarse grain stocks since the last report is entirely due to higher figures for the EC. The latest forecast by the Commission for aggregate coarse grain stocks of the 15-member States has been put at 18 million tons compared with over 11 million tons anticipated earlier, and close to the revised level held at the end of last season. The revision for this season’s carryovers is mainly the result of a substantially higher forecast for barley stocks. These, by the end of this season in June, would account for over half of total coarse grain stocks held in the Community, a level slightly higher than that at the beginning of the season. Maize carryovers also have been revised upwards substantially and are now expected to reach 6 million tons, compared to 4.4 million tons in June 1995.

This sharp upward revision in the EC, however, has largely been offset by reductions elsewhere. In the United States, according to the latest official forecast, this year’s ending stocks could be as low as 14 million tons, some 3 million tons less than anticipated earlier and as much as 70 percent below their opening level. With last year’s steep cut in maize production due to a drought, a significant draw down of stocks was already anticipated. However, the latest revision mainly reflects the steady and firm domestic demand primarily for animal feed as well as the strong demand for exports despite sharply higher prices. The forecast for coarse grain stocks in China has also been lowered by nearly 2 million tons this month due to recent downward revision of the size of the 1995 maize and sorghum crops.

FAO's forecast for global rice stocks at the end of the marketing seasons in 1996 is 54.7 million tons, marginally lower than in 1995. Although global output of rice rose by about 3 percent, most of the increase was in China, where production reached a record level. In many other major producing and consuming developing countries, output fell. Hence, while stocks in China are expected to recover from the previous year's low volume, in India, large exports in 1995 and a slightly reduced output are likely to result in a decline in its closing stocks in 1996. Similarly, end-of-season rice stocks in Viet Nam are forecast to decline in 1996. Among developed countries, the United States stocks are forecast to fall the most in 1996 largely because of a reduced 1995 output and the large exports made in the previous year. By contrast, in Japan, rice stocks are expected to reach 2.3 million tons, well above the previous year's level and above the government's target holdings of 1.5 million tons.

EXPORT PRICES

The further tightening in the supply situation combined with the uncertainty about crop conditions in the northern hemisphere caused another sharp surge in wheat prices in February. After temporarily weakening in early March, a deterioration in the condition of the United States crop caused prices to rise again late in the month when the f.o.b. value of U.S. No. 2 hard winter was quoted at U.S.$ 222 per ton, some U.S.$ 72 per ton or almost 50 percent above the price a year ago.

LATEST CEREAL EXPORT PRICES *

In the futures market, by mid-February, concern about deterioration of the winter wheat crop in the United States combined with strong export activity had pushed the Chicago Board of Trade (CBOT) soft red winter wheat for March delivery to a new 15-year high of U.S. $ 194 per ton. During the first two weeks in March, old crop prices began to come under downward pressure following the discovery of a fungus in the southwest of the United States which delayed shipment of some 2 million tons of wheat. New crop prices also fell due to timely and improved moisture in the Great Plains. However, by late March, although fears about the fungus began to fade, unfavourable weather conditions led to a surge in prices in the CBOT. Soft red winter wheat futures for nearby May delivery rose to U.S.$ 183 per ton.

As for wheat, maize export prices strengthened further during February and March reflecting continuing active export demand and tight stocks, especially in the United States where domestic demand, largely for feeding, has remained strong despite higher prices. By late March, the price of U.S. No.2 maize (delivered Gulf ports) had gained another U.S. $ 5 per ton over the previous month and reached U.S.$ 175 per ton, some U.S.$ 65 per ton or about 60 percent up from a year ago. Also, maize futures continued to be buoyant as, overall, tight maize stocks and persisting strong demand led to a further surge in CBOT prices to levels between U.S.$ 151 to U.S.$ 157 per ton for May contracts, compared to around U.S.$ 97 per ton of the corresponding period in 1995.

International rice prices in March changed little after the decline in February when the FAO Export Price Index for Rice (1982-84=100) fell by two points from the January level. The price for Thai 100B fluctuated during the month but averaged marginally lower than in February. The prices of broken rice, Thai A1 Super, however, recovered slightly after the steep fall in the previous month. The slight strengthening of the prices of lower grades was largely brought about by an increase in the export prices of Indian rice. In March, Indian PR 106, 25 percent rose to U.S.$ 270 per ton, U.S.$ 13 up from the previous month's average level. Moreover, supplies of broken rice from other origins, such as China and Viet Nam, remain smaller than in a normal year, adding support to the prices of broken rice.

In the next few months, export prices of rice are expected to continue to follow divergent trends with some overall weakening of prices partly because of exporters' competition for markets, a slow-down in import demand and an easing of the tight supply situation because of the second crop coming into the market. However, the prices will remain volatile, while awaiting the development of the new 1996 crops.