World trade in cereals in 1996/97 is currently forecast at 186 million tons, down nearly 15 million tons or 7 percent from imports in 1995/96. The bulk of this years contraction in world trade is in wheat and coarse grains, but preliminary indications also point to a slight decrease in rice imports.
World trade in wheat and wheat flour (in wheat equivalent) in 1996/97 (July/June) is forecast at only 85 million tons, some 6 million tons below the revised estimate for 1995/96. Larger plantings, due to high prices combined with generally favourable weather, particularly among the importing countries are expected to result in the smallest volume of wheat trade in a decade.
Aggregate wheat imports by the developing countries in 1996/97 are forecast at 69 million tons, nearly 4 million tons less than last year. Among the developing countries, imports are forecast to fall most significantly in China. A bumper wheat crop this year and the slow purchases during the early months of the season suggest that Chinas imports should drop sharply during 1996/97. Accordingly, the forecast for total imports into China, including the Province of Taiwan, has been reduced by 3.5 million tons to 9 million tons which would be 4 million tons lower than the estimated imports in the previous year. By contrast, this years purchases by the Republic of Korea are expected to exceed last years imports by 500 000 tons and reach 3 million tons. Prospects of weaker international prices, combined with strong domestic demand are responsible for this development.
Total wheat imports into the developing countries in Africa are anticipated to decline, mainly in Morocco and Tunisia. This years purchases by Morocco are currently forecast to reach 1 million tons, the same as in 1994/95, but down 1.8 million tons from last year due to an expected recovery from drought. Imports by Tunisia are forecast to return to more normal levels, of around 600 000 tons, compared to 1 million tons imported in 1995/96. By contrast, purchases by Algeria and Egypt would equal or slightly exceed last years levels, mainly due to strong domestic demand and to the expectation of lower international wheat prices compared to last year. In Jordan, this years wheat imports are anticipated to decline slightly from last years estimated volume. Wheat imports into Central America are forecast to rise slightly due mainly to purchases by Mexico.
Aggregate wheat imports into the developed countries are forecast to decline to around 17 million tons, down almost 2 million tons from the previous year. Mainly due to larger production, especially in the Russian Federation, imports into the CIS are forecast at 2.4 million tons, some 2 million tons, or 50 percent, below the estimated imports in 1995/96. However, given the uncertainties associated with estimating the internal domestic supplies and the size of trade within the CIS, this forecast is very tentative. In Europe, smaller imports into the EC, resulting from higher production, are expected to be more than offset by larger imports by Bulgaria and Romania. In Bulgaria, the new season is already pointing to an extremely tight supply situation as last years extraordinary exports have led to a sharp depletion of carryovers, while this years production is officially forecast to drop to the lowest volume since 1951. In Romania, last years bumper wheat crop had made large exports possible, but this years poor crop is likely to necessitate large imports.
OVERVIEW OF WORLD CEREAL IMPORTS
Regarding exports, the forecast for this years shipments (July/June) from the United States has been revised downwards by 1 million tons to 25 million tons, which would be sharply below the 34 million tons exported last year. The decrease due to smaller world trade and greater competition from other exporters. By contrast, all other major exporters are forecast to export more during 1996/97 compared to the previous year. Shipments from Argentina are anticipated to expand the most as this country is expecting a record crop this season. Exports from Romania will be significantly smaller this year, as a result of a poor domestic crop. In Bulgaria, because of the tight domestic situation, the ban on wheat exports, introduced in October 1995, is assumed to continue until the next harvest.
Mainly as a result of higher production in several key importing countries and consequently reduced international trade, the volume of trade, this year, will not only be determined by price but also by quality. So far this season, China has cancelled purchases of at least 1.4 million tons of hard red winter wheat from the United States after finding traces of tilletia controversa kuhn (TCK) smut fungus. Also, Poland recently barred a cargo of wheat shipped from India, after tests had indicated the presence of Karnet bunt fungus; earlier Turkey and Morocco also rejected shipments of Indian wheat because of this fungus. Consequently, export demand for high quality wheat is expected to be strong this year.
World trade in coarse grains in 1996/97 (July/June) is forecast at 82.5 million tons, some 8 million tons lower than estimated imports last year. Among the major coarse grains, maize trade is forecast to contract significantly, mainly due to much smaller demand, particularly from China but also from several countries in Africa and Latin America. Global maize trade this year is forecast to fall below 60 million tons, close to 9 million tons below estimated imports in 1995/96. World trade in barley is forecast to decline slightly mainly on account of smaller imports into northern Africa. International trade for nearly all the other major types of coarse grains is expected to remain the same as last year.
Aggregate imports into the developing countries are expected to be about 52 million tons, 4.5 million tons, or 8 percent, lower than estimated imports in 1995/96. In Asia, several countries are forecast to import less coarse grains this year. Purchases by China (including the Province of Taiwan) are expected to reach 7.7 million tons, about 3.8 million tons less than during 1995/96 as Chinas 1996 crop is expected to be larger than last year. Imports by the Republic of Korea are anticipated to decline by around 500 000 tons to 9.5 million tons as the current high maize prices in international markets could encourage larger purchases of relatively cheaper low quality wheat. Maize imports by Indonesia are also forecast to decline by about 300 000 to 500 000 tons due to ample domestic supplies following two years of above average crops and large imports during 1995/96. By contrast, Saudi Arabia, the worlds largest barley importer, is likely to increase its barley purchases slightly, taking advantage of this years larger barley supplies in the world market.
In Africa, Egypt and Kenya are expected to raise their imports of coarse grains moderately, mainly due to smaller domestic output. By contrast, several other countries in Africa are likely to reduce their imports sharply due to a significant recovery in their production. The bulk of the decline is anticipated in southern Africa, particularly in Zimbabwe and Zambia, which, following a strong rebound in maize production, are forecast to curtail their combined imports from nearly 1 million tons in 1995/96 to almost nil in 1996/97. Another significant decrease in imports is anticipated in northern Africa, especially Tunisia, where, after two years of drought, a bumper barley crop in 1996 is expected to result in a drop in purchases of around 400 000 tons.
Aggregate imports into Latin America and the Caribbean are forecast to increase slightly in 1996/97 mainly due to a forecast increase in imports by several countries in South America, particularly Brazil which is forecast to buy more maize this year in order to make up for a domestic production short-fall.
FAO's forecast of coarse grain imports into the developed countries in 1996/97 is some 30 million tons, about 3.6 million tons lower than the estimated imports in 1995/96. The bulk of this decline is expected to occur in the EC, where this years increase in coarse grain production is expected to reduce purchases by around 2.6 million tons to 2 million tons. Also, following a strong rebound in domestic maize production in South Africa, the country is expected to return to the export market after importing 1 million tons last year. By contrast, faced with lower domestic maize production, Bulgaria may resort to buying around 250 000 tons. Similarly, smaller production in Romania is expected to lead to imports of barley of some 400 000 tons. After a year of moderate decline, purchases by Japan, the worlds largest coarse grain importer, are forecast to rise by some 700 000 tons to 21 million tons.
The current projected decline in global trade in coarse grains, stemming mainly from higher production in several importing countries, would be largely at the expense of reduced shipments from the United States, the worlds largest exporter. High prices, prevailing since the beginning of the season, point to a global scarcity of maize as the United States has been the sole supplier to the world market in recent months despite its sharply reduced 1995 crop. However, the global supply situation for maize is likely to improve considerably with production prospects for above-average crops in nearly all major exporting countries. In addition, with larger exports from a number of smaller exporters, such as South Africa and Hungary, the market is likely to return to a more normal situation, despite the continuing ban on maize exports from China and the near absence of Bulgaria and Romania in the export market this year.
FAO's forecast for global rice trade in 1996 has been raised by 0.3 million tons to 18.9 million tons, which is still one million tons down from the previous year's level of trade. The upward revision is largely on account of a substantial rise in Africa's imports in recent months. By contrast, despite heavy floods in the Far East, the volume of rice imported into the region remained depressed.
Thailand's exports have continued to fall. Its export shipments by 25 August totalled 3.6 million tons, 0.5 million tons down from the previous year. The decline in August would be the third in successive months and reflects reduced demand from Asian countries. Despite recent floods in China, exports from Thailand, its major buyer last year, have fallen, with reported June and July shipments to China estimated at just 17 000 and 31 500 tons, respectively, compared to the 50 000 to 70 000 tons exported monthly in early 1996. The decline in Thailand's exports to Indonesia and the Philippines was even more marked. In Indonesia, large imports carried over from the previous year and improved production in 1996 has enabled a significant rise in its current inventories of rice to some 2.7 million tons by end July. For 1996, Indonesia's imports are likely to be much smaller than the 3.2 million tons imported in 1995. In the Philippines, following the recovery in current stock levels and the more recent purchases of rice from the United States, only small quantities have been purchased from Thailand. By contrast, Thailand's exports to Africa have risen somewhat, reaching 123 000 and 114 000 tons in June and July, respectively, nearly 40 percent up from the average monthly levels sold to the region in the first quarter of 1996. Overall exports from Thailand in 1996 are forecast at 5.6 million tons, which would be almost 0.4 million tons less than last year.
The decline in Asia's import demand has also affected other major exporters, including the United States, Myanmar and India as well as Pakistan. In particular, after the large shipments effected in the first quarter of 1996, exports out of India have fallen, in part due to its earlier own higher export prices for rice and reduced international demand. In Myanmar, exports in the first six months of the year have been reduced by almost half compared to the same period in 1995 are likely to total just 0.4 million tons for the year, compared to 655 000 tons shipped in 1995. The only major upturn in export trade was in Viet Nam where large supplies, following a bumper harvest and reduced export prices, have allowed the country to raise its export quota and increase export sales substantially in the recent two months. As a result, the forecast for Viet Nam's exports this year has been raised substantially to 2.6 million tons against 2.3 million tons in 1995.
In contrast to the reduction in import demand by Asian importers, imports of several major rice consuming countries in Africa, the Caribbean and Latin America are forecast to rise. In Africa, after a relatively sluggish start in 1996, imports of rice have picked up significantly in July-August benefiting, in part, from the continued decline in the prices of lower quality rice from Asia.
Among Latin American countries, Cuba's imports of rice are forecast to increase the most, with its imports reaching 450 000 tons, almost 30 percent above its 1995 level. Already some 300 000 tons have been delivered in the first half of the year, principally from Thailand and Viet Nam. Cuba has traditionally been a major importer of rice, previously buying mainly from China. Peru's imports in 1996 are also expected to recover sharply from the depressed levels of the previous year. Its imports in the first half of 1996, equally distributed in terms of origin between Thailand, Viet Nam and the United States, are almost equivalent to the entire quantity of 178 000 tons imported in 1995.
Brazil's imports in 1996 are forecast to rise, but the bulk of its requirement is likely to be met by Argentina and Uruguay, both harvesting bumper crops in 1996. Under MERCOSUR, rice trade between MERCOSUR trading partners is exempt from import duties, while a common external tariff (CET) is applied to imports from outside MERCOSUR countries. Mexico is expected to import 348 000 tons, almost ten percent more than last year, most of it from the United States under NAFTA. Haiti continues to import large quantities, almost entirely from the United States.
Global rice trade in 1997 is expected to decline to around 18.5 million tons. However, this is a highly tentative forecast as much will depend on the 1996 paddy crop the bulk of which has yet to be harvested.