The forecast for global cereal imports in the 1996/97 season has been raised by 4.6 million tons since the previous report to 193.3 million tons. Despite this revision, however, world cereal imports would be 10 million tons, or 5 percent, below the previous years level, the lowest since 1990/91. Most of this years anticipated decline would be on account of smaller wheat and maize deliveries, while rice imports are also estimated to show a contraction.
The latest estimate of world wheat imports in 1996/97 (July/June) is nearly 90 million tons, down over 3 million tons from the 1995/96 level but almost 2.5 million tons higher than was reported in April. This months revisions mainly reflect a notable increase in import estimates for the Islamic Republic of Iran, the EC, the Republic of Korea, Pakistan and Yemen, which would more than offset downward adjustments mainly for China, but also for India and the CIS. The decline in world imports in 1996/97 is primarily a result of a reduction in total imports by the developing countries, which are expected to fall to 71 million tons, 4 million tons below last year and the smallest volume since 1993/94. On the other hand, wheat imports by the developed countries are anticipated to rise to 19 million tons, an increase of 1 million tons from the previous year, mainly due to larger imports by several countries in eastern Europe.
The main feature underlying trade developments this season has been the sharp drop in wheat imports by China (excluding the Province of Taiwan), from over 13 million tons in 1995/96 to 4 million tons, due to a domestic bumper crop. However, larger imports by two other countries in Asia prevented global trade from falling further. India, faced with rising domestic wheat prices, switched from a net exporter in 1995/96 to an importer of around 1.8 million tons this season. Actual purchases by India are estimated to be higher but not all consignments are expected to be delivered before the end of the current season. Latest estimates of imports by the Islamic Republic of Iran puts that countrys imports at 6 million tons, substantially more than its normal imports in recent years. However, similar to India, purchases by the Islamic Republic of Iran could be even higher following prolonged dry conditions and another year of falling output.
The wheat export market in 1996/97 has been characterized by larger sales from southern hemisphere exporters and the EC and a sharp fall in exports from the United States. The late-season surge in purchases by several countries, especially in Asia, was particularly important in boosting this years exports. Among the major exporters, Argentina and Australia have benefited most from the rise in global imports as they both had bumper crops in 1996. Exports from the EC are also likely to increase significantly following a record harvest in 1996. However, concerns over possible lower crop yields this year and a fast rise in internal prices led to the European Commissions decision in April 1997 to end weekly wheat export tenders, followed by the reintroduction of export taxes on daily sales in May, for the first time since September 1996. In Canada, despite an increase in production, export sales are likely to remain at the previous years level, mainly due to a delay in shipments caused by internal transport difficulties as a result of a harsh winter. Exports from the United States are estimated to fall well below the previous year despite a record pace of shipments between July and December 1996, because of the combined impact of a decline in production, depleted stocks and strong domestic demand that curbed exports during the second half of the season.
The forecast for total coarse grain imports in 1996/97 (July/June) has also been raised this month, by over 2 million tons, to around 85 million tons, mainly as a result of upward revisions to imports of maize by Colombia, Egypt, and Malaysia; of sorghum by Mexico; and of barley by Poland and Saudi Arabia. These revisions more than offset downward adjustments to maize and barley import estimates of the CIS, Brazil and the Republic of Korea. At the current forecast level, aggregate imports of coarse grains in 1996/97 point to a decline of 6 million tons, or 7 percent, from the previous year, most of which would be on account of lower maize purchases.
The main factors behind the decrease in world coarse grain trade during the 1996/97 season have been the decline in maize purchases by China, the EC and Mexico which more than offset larger barley purchases by Saudi Arabia. Imports by China fell in response to a larger domestic crop while the outbreak of foot-and-mouth disease has resulted in smaller maize purchases by the Province of Taiwan. The recovery in production in the EC and Mexico are expected to reduce their imports by 50 and 11 percent, respectively. By contrast, larger barley imports by Saudi Arabia and, to a lesser extent, also by Bulgaria and the Islamic Republic of Iran, are anticipated to contribute to the increase in world barley imports after a decline in 1995/96.
The sharp contraction in global coarse grain import demand has been reflected in reduced exports mainly from the United States. Despite a substantially larger production in 1996, coarse grain exports from the United States in 1996/97 are estimated to fall to 53 million tons, compared to 66 million tons in 1995/96. This decline has been partially compensated by larger shipments from other major exporters, with the biggest increase expected in the EC, which after 3 years of continuing decrease, benefited from the strong import demand for barley by other countries, especially from Saudi Arabia. This could result in a boost of total EC coarse grain shipments to 8 million tons, twice as much as in the previous year. Larger export surpluses from South Africa and Hungary, as well as the lifting of the maize export ban in China, have led to keen competition among coarse grain exporters for market shares.
FAO's forecast for world rice trade in 1997 has been lowered slightly to 18.1 million tons, which would be 1.2 million tons below the volume traded in the previous year and 2.8 million tons less than the record level achieved in 1995. While only small changes have been made to the previous forecast for world trade, larger adjustments were necessary to the trade projections for a number of countries. In particular, the forecast for imports into the Islamic Republic of Iran has been raised to take into account the impact of the earthquake in May. By contrast the forecast for Bangladesh's imports has been lowered to 150 000 tons. The quantities contracted so far in 1997 have been negligible compared to the previous two years when large imports of rice were effected in the first four months of the year. Virtually nothing has been imported from Thailand; deliveries of rice were confined mainly to small quantities transported overland from India. Moreover, although cyclones in May have affected the rice crop, the damage is expected to be small and is likely to be compensated by larger outputs from the Aman and Boro crop, assuming a return to normal weather conditions.
Overall, export sales in the past month continued to be slow. Thailand's exports by mid-May totalled just 1.67 million tons, nearly 0.6 million tons below those achieved in the same period last year. With export shipments lagging significantly behind last year's, the forecast for Thailand's exports in 1997 has been lowered by 0.2 million tons to 5 million tons. Myanmar's exports have declined even further since last year's huge fall. Official indications are that less than 150 000 tons could be exported this year in contrast to 255 000 tons and 655 000 tons shipped in 1996 and 1995 respectively. FAO's forecast for Myanmar's exports has been lowered accordingly.
In Viet Nam, export shipments in the recent months have recovered somewhat. For 1997, an export volume of 3 million tons is expected compared to 3.1 million tons in 1996. India's exports, which totalled 4.2 million tons in 1995 and 3.6 million tons in 1996, could take an even greater drop to 2.3 million tons in 1997, 0.2 million tons less than the previous forecast. The forecast for rice exports from the United States in 1997 has been raised slightly to 2.4 million tons, 0.2 million tons below its 1996 export shipments. United States rice shipments in May were mainly to Central America where its sales of paddy rice have grown sharply in recent years. In particular, exports to Mexico have risen following the establishment of NAFTA with sales of paddy rice to Mexico in the first two months of the year totalling 86 368 tons. In 1996, Mexico imported 408 730 tons from the United States which constituted about 99 percent of its rice imports.
Exports from Pakistan, which reached a record 1.66 million tons in 1996, are forecast in 1997 to remain at about this level. January exports totalled 142 000 tons compared to 112 000 tons shipped out in the same month last year. China's exports have also risen, most of them destined for Liberia and Japan.
Trade in the next few months would hinge critically on the outcome of discussions between the Democratic Peoples Republic of Korea and potential donor countries. Very little rice has been imported so far to meet the massive shortage of food in the country. The timing of Japan's purchase of rice to meet its 1997 fiscal year commitments and the timely arrival of Monsoon rains are also critical elements that would influence the direction of trade in the second half of 1997.
Based on FAOs preliminary 1997 production forecasts and assuming that the volume of world trade in rice in 1998 will remain unchanged from 1997, the volume of cereal trade in 1997/98 is tentatively put at 197 million tons, up 2 percent, or 4 million tons, from this years reduced volume. However, it should be noted that this increase may not represent an expansion in world import demand as it reflects some late purchases during the 1996/97 season, particularly of wheat, which are expected to be delivered only in the early months of the 1997/98 marketing year (i.e. after June 30th) and, thus, will be counted against imports of that season.
World imports of wheat in the 1997/98 season are tentatively forecast at 93 million tons, up 3 million tons, or 4 percent, from this seasons estimated imports. The bulk of this increase is anticipated in Asia where purchases by China could increase by about 2 million tons from this years reduced level to reach 7 million tons. India is expected to take delivery of about 3 million tons, up 1.2 million tons. Iraks imports are forecast at 2 million tons, i.e. at least 500 000 tons more than in 1996/97. On the other hand, imports by the Islamic Republic of Iran are likely to drop to 4.5 million tons, of which some 800 000 tons are estimated to have been contracted for this season. Imports by the Republic of Korea are anticipated to fall by 500 000 tons to 3.3 million tons, mainly due to the slow-down in the domestic demand for feed wheat. The prolonged dry conditions in north Africa could result in larger imports by Algeria, Morocco and Tunisia, whose aggregate purchases are forecast at 6.7 million tons, up by over 2 million tons from this year. The overall increase in imports into Asia and Africa are likely to be partially offset by a reduction into CIS and Europe. Further declines in imports by the CIS are expected mainly in anticipation of larger production. In Europe, imports by Bulgaria are also forecast to fall due to higher expected production and by Poland mainly because of an increase in inventories to be carried over from this season.
OVERVIEW OF WORLD CEREAL IMPORTS
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Regarding exports in 1997/98, wheat sales from Australia and Argentina are expected to drop from their 1996/97 records while those from Canada could increase most and exports from the United States are forecast to rise slightly. Sales from the EC are likely to be similar to this year. Elsewhere, larger exports are anticipated from some of the eastern European countries, particularly Hungary. By contrast, in Asia, neither India nor Saudi Arabia are expected to make offers on the international market in the next season and sales from Turkey are forecast to remain unchanged from this year.
Little change is expected in coarse grain trade in 1997/98. FAOs initial forecast for next seasons imports envisages an increase of about 700 000 tons from this year to close to 86 million tons. However, this forecast remains extremely tentative since planting in the northern hemisphere has only started. At the current forecast levels, the small anticipated rise in trade would reflect entirely larger imports by the developing countries, whereas aggregate imports by the developed countries are likely to remain unchanged. Among the different coarse grains, only maize trade is forecast to expand in 1997/98, to 61 million tons, up over 1 million tons from the estimated reduced volume in 1996/97. By contrast, after this seasons notable rise in barley trade, next years imports are expected to be reduced by at least 500 000 tons to around 15.5 million tons. Trade in other major coarse grains namely sorghum, oats, rye and millet, is likely to remain unchanged.
With the continuing absence of the CIS as a major actor in coarse grain trade, only Asia could influence next years trade developments to a notable degree. However, even in Asia, the current forecast for next season assumes only a small increase in coarse grain purchases, reflecting a slow-down in demand growth for feed in several countries and prospects for larger domestic crops. Chinas imports are likely to remain low for a second consecutive year, while purchases by the Province of Taiwan are forecast to fall further, by at least 500 000 tons compared to 1996/97, reflecting the outbreak of foot-and-mouth disease which will continue to curb import demand into the next season. However, as import purchases in Asia are particularly sensitive to price differentials between maize and low quality wheat in international markets, this years supply of low quality wheat and the projected decline in maize prices will have a significant bearing on the final trade outcome.
In the major exporting countries, despite prospects for a substantial increase in coarse grain supplies due to larger carry-in-stocks and higher production, particularly in the United States, coarse grain exports from nearly all major exporters are likely to decline or remain at around the same levels as this year because of the expectation of no major increase in import demand. The only exception may be Argentina, where this years harvesting of a bumper crop may boost exports in the 1997/98 marketing season.