FAO/GIEWS - Food Outlook, February 1998

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The forecast for global trade in cereals in 1997/98 has been lowered by about 700 000 tonnes to 201 million tonnes (Table A.2). At the current forecast level, world imports of cereals in 1997/98 would be some 3 million tonnes, or 1.5 percent, above the previous year’s reduced volume. Most of this month’s revisions reflect a sharp decrease in this year’s anticipated maize imports by several countries in Asia coupled with a slight reduction in the expected volume of global wheat imports. By contrast, the forecast for rice trade in 1998 has been raised to its second highest on record mainly as a result of larger import requirements in Asia following smaller domestic production in several countries.

The forecast of global wheat trade for the 1997/98 (July/June) has been lowered by 300 000 tons since the previous report to 92.7 million tonnes. This reflects downward adjustments to estimates of imports by several countries in Asia, in North and South America and in the CIS which have more than offset upward revisions in Africa, Central America and Europe. At the current forecast level, wheat imports this season would be some 400 000 tonnes lower than in the previous year. In spite of the financial turmoil in Asia and its potential effect on grain trade in that region, aggregated wheat imports by the developing countries are expected to rise by about 2.7 million tonnes in 1997/98 to almost 76 million tonnes. Imports of wheat into the developed countries are expected to fall to 17 million tonnes, 3 million tonnes below the previous year, mostly due to reduced purchases in Europe.

The forecast for wheat imports by Asia has been adjusted downward by 1 million tonnes, bringing total imports by the region to about 46 million tonnes, some 2 million below the estimate for 1996/97. The largest downward adjustment this month was made for mainland China where a record crop is anticipated to reduce wheat imports to their lowest levels in over two decades, i.e. 2.5 million tonnes. Moreover, following the recent financial crisis in Asia, which has resulted in sharp devaluations, falling per caput incomes and rising prices expressed in national currencies, wheat imports by some of the countries may also decline. However, the extent of this decline may prove less significant than that for coarse grains mainly because wheat remains the second most important staple after rice and this year’s rice production has also fallen. Overall, the financial crisis may result in about 500 000 tonnes smaller wheat purchases, and that mainly in Indonesia and Malaysia. By contrast, wheat imports by Pakistan in 1997/98 are expected to rise by at least 1 million tonnes this year to 4 million tonnes, largely because of a weather damage to the crop.

1/ World trade in wheat and coarse grains is based on and expressed in estimated imports delivered through June 30th of the July/June trade year. Some late-season purchases may be included in the next season if deliveries occur after June 30th. In general, exports and imports are calculated based on estimated shipments and deliveries during the July/June trade season and thus they may not be equal for any given year due to time lags between shipments and deliveries.



Wheat  Coarse grains  Rice (milled)  Total 
1996/97  1997/98  1996/97  1997/98  1997  1998  1996/97  1997/98
( . . . . . . . . . . . . . . . . million tonnes . . . . . . . . . . . ) 
Asia  48.1  45.9  56.3  55.3  9.0  10.9  113.4  112.1
Africa  19.2  21.8  8.3  10.4  4.0  3.9  31.5  36.2
Central America  3.8  4.7  7.8  8.4  1.3  1.3  13.0  14.4
South America  9.4  10.4  4.7  6.0  1.6  1.6  15.7  18.0
North America  2.6  2.5  3.4  3.9  0.6  0.6  6.6  7.0
Europe  6.8  4.7  6.1  4.3  0.9  1.0  13.8  9.9
CIS  2.7  2.3  0.3  0.1  0.4  0.3  3.5  2.7
Oceania  0.5  0.4  0.2  0.2  0.3  0.3  1.0  0.9
WORLD  93.1  92.7  87.1  88.7  18.2  19.9  198.5  201.3
Developing countries  73.0  75.7  55.0  58.0  15.0  16.7  143.0  150.4
Developed countries  20.1  17.0  32.1  30.6  3.2  3.2  55.5  50.9

Wheat imports into Africa in 1997/98 are currently forecast at a record 21.8 million tonnes, one million tonnes higher than last reported and 2.6 million tonnes more than in 1996/97. Total wheat imports by the North African countries are expected to rise by 3 million tonnes to 16 million tonnes due to reduced production in several countries. Wheat imports into the rest of Africa are now expected to be close to 6 million tonnes, but still some 200 000 tonnes less than in the previous year.

The 1997/98 forecast of total wheat imports into Latin America and the Caribbean has been revised downwards slightly to around 15 million tonnes, some 2 million tonnes above the estimate for 1996/97. Small downward adjustments to estimates of imports have been made for a number of countries in South America, but purchases by Brazil, the largest importer in the region, are still anticipated at 5.7 million tonnes, or 500 000 tonnes above the previous year due to a fall in production. Mexico, on the other hand, is expected to import less wheat this season mainly due to a slight increase in domestic production.

In Europe, the forecast of wheat imports in 1997/98 has been revised upward slightly to 4.7 million tonnes, which is still 2 million tonnes lower than purchases during the previous season. The forecast of smaller wheat imports this season is the result of improved crops in a number of eastern European countries, notably Bulgaria, Poland and Romania. By comparison, wheat imports into the EC are forecast to grow, largely due to a shortfall of high quality wheat and durum this season. Larger crops in the CIS are expected to be responsible for smaller wheat purchases in 1997/98, now forecast at 2.3 million tonnes, particularly in Georgia, the Russian Federation and Uzbekistan.

Turning to this year’s export prospects, total shipments in 1997/98 (July/June) are expected to be down by about 2.6 million tonnes compared to the previous year (Table A.3). Most of the decline would be on account of slightly reduced exports by the EC and significantly lower shipments by Argentina and Australia. By contrast, Canada and the United States are expected to increase shipments slightly, and those from Hungary and Romania are expected to increase sharply. Exports from Turkey are anticipated to remain unchanged from last year.

The forecast for world coarse grain imports in 1997/98 (July/June) has been cut by 1.3 million tonnes from last month to 88.7 million tonnes. At this level, global imports of coarse grains would be 1.6 million tonnes, or about 2 percent, above the revised estimates for the previous year. While most of this month’s downward revisions affect countries in Asia, major upward adjustments have also been made to the anticipated imports by several countries in Africa. As a whole, aggregate imports by the developing countries are now put at 58 million tonnes, 3 million tonnes more than in 1996/97 and 1 million tonnes less than were previously reported. By contrast, total imports by the developed countries are expected to continue their decline to slightly below 31 million tonnes, about 1.5 million tonnes smaller than in the previous year and the lowest level in over 3 decades.

Since the previous report, the forecast for coarse grain imports into Africa in 1997/98 has been adjusted upwards by 1 million tonnes to above 10 million tonnes. At this level, total imports into this region would be 2 million tonnes more than the estimate for 1996/97. As mentioned in the previous report, the bulk of the increase in imports into northern Africa is expected to occur in Algeria and Tunisia because of drought-reduced domestic production. However, following upward revisions to production estimates in Egypt, the forecast for this country’s purchases has been lowered by 400 000 tonnes to 2.8 million tonnes. By contrast, the forecast of imports into sub-Saharan Africa has been raised by nearly 1.5 million tonnes this month. This revision takes into account larger import requirements in Kenya, Senegal, Somalia, Zambia and Tanzania, mainly attributed to reduced domestic supplies as a result of smaller crops.

In Asia, due to the financial crisis confronting a number of countries, imports are likely to decline to just over 55 million tonnes, down 1 million tonnes from the previous year but almost 3 million tonnes lower than was expected earlier. While the full impact of the financial turmoil, at least in the short-term, is difficult to assess, it is assumed that the beneficial aspects of international economic rescue measures coupled with credit facilities provided by major exporters could, to a large extent, prevent a more drastic cut in this season’s imports. Some decline in imports may prove inevitable in light of a likely contraction in demand for feed grains from the livestock sector in response to higher domestic prices and the slowing down of income growth. Thus, the forecast for coarse grain imports by the Republic of Korea has been lowered by 1.5 million tonnes to 8 million tonnes which would be 1 million tonnes less than in the previous year. Similarly, combined imports by Indonesia, Malaysia and the Philippines are now expected to reach 3.4 million tonnes, 1 million tonnes less than was anticipated before and 400 000 tonnes below the estimated imports in 1996/97. Although not related to the financial crisis in Asia, the forecast for coarse grain imports by Japan, the world’s largest coarse grain importer, has also been reduced to about 20 million tonnes, the same as last year’s revised imports, and some 700 000 tonnes less than anticipated earlier. These adjustments reflect the continuing lack of growth in livestock production in Japan since the mid-1990s. By contrast, the forecast for imports by Thailand has been kept unchanged, at around 400 000 tonnes, mainly because of sustained demand from the domestic poultry sector due to strong export demand.

Almost unchanged from the previous report, total coarse grain imports into Europe in 1997/98 are expected to fall to 4.3 million tonnes, about 1.8 million tonnes below the previous year. Imports into the EC are forecast at 2.5 million tonnes, down 500 000 tonnes from 1996/97 following a bumper crop and large domestic availabilities of lower quality wheat which can be used for feed. Elsewhere in Europe, the anticipated decline in coarse grain purchases by Bulgaria, Poland and Romania, due to larger domestic crops, is expected to be greater than the expected increase in imports by the Baltic countries. Aggregate imports by the CIS are also forecast to fall reflecting the large rise in 1997 crop output and a lack of growth in demand from the animal feed sector.

In Latin America and the Caribbean, total imports in 1997/98 are still expected to exceed the previous year’s level despite this month’s small reduction in the forecast of purchases by Mexico to 5.4 million tonnes. All of the increase is expected in South America where several countries, including Brazil, Peru and Uruguay, are likely to increase their imports substantially, mainly because of the strong growth in animal production.

The export market this year is expected to be affected by the financial crisis in Asia. This has already taken a toll on imports in this region, despite the recently announced expansion of export credit facilities, especially from Australia, Canada and the United States. The crisis in Asia will not only affect the size of trade but would also have implications for the pattern of trade as some of the Asian countries look for cheaper sources of imports. Thus, larger purchases can be expected from the eastern European countries and from China, boosting exports from these origins well above earlier estimates.

International rice imports in 1997 are estimated at 18.2 million tonnes, 1.3 million tonnes below the volume imported in 1996 and 2.5 million tonnes less than the record level achieved in 1995. Many of the traditional exporters were affected by lower import demand due to an increase in supplies in most of the major importing countries, attributed to good harvests and large imports carried over from 1996. Thus, imports by Indonesia in 1997, which was the world’s leading importer in 1995 and 1996, are estimated at only 1 million tonnes, down from 2.1 million tonnes in 1996 and compared to record purchases of 3.2 million tonnes in 1995. Likewise, imports by the Islamic Republic of Iran, 1.2 million tonnes, are also estimated to be 100 000 tonnes below those of 1996. Further, imports by China (Mainland) are estimated to have declined by over 400 000 tonnes from 1996 to 350 000 tonnes due to a rise in production and smaller supplies of high quality fragrant rice on the international market during 1997. Rice purchases by Senegal, one of the major rice importers in Africa, are estimated at 400 000 tonnes in 1997, down by over 100 000 tonnes from the previous year. By contrast, imports by Brazil are estimated at 1.1 million tonnes, up by 200 000 tonnes from 1996 due to a fall in production.

With regard to exports, the pace of shipments from Thailand accelerated considerably during December 1997 and the total volume for the year is now estimated to reach over 5 million tonnes which, although slightly lower than the 1996 figure, would substantially exceed earlier expectations. Vietnamese exports for 1997 are estimated at a record 3.5 million tonnes, a rise of 400 000 tonnes from 1996, making Vietnam the second largest rice exporter in the world for two consecutive years. In addition to higher production, competitive pricing of Vietnamese rice has been a decisive factor in the increase in exports. Rice shipments from the United States are estimated at 2.3 million tonnes, the lowest in five years, partly attributed to a fall in production in 1996 and to an increase in domestic consumption in 1997. India’s exports, estimated at 1.6 million tonnes, are the lowest in three years and down considerably from 1996 due to tighter supplies resulting from increased domestic consumption.

The preliminary forecast of world rice trade in 1998 has been increased by 900 000 tonnes from the previous report to 19.9 million tonnes which, if realized, would be the second highest level after the 1995 record of 21 million tonnes. The upward revision results from a combination of reduced estimates of supplies in many of the major importing countries, and the delayed seeding of the 1998 main-season crop in some countries in the southern hemisphere, which could reduce yields.

Most of the increase in trade is accounted for by Indonesia for which import forecasts were raised by 900 000 tonnes from previous expectations to 1.9 million tonnes as prolonged drought has reportedly damaged over 400 000 hectares of paddy leading to a shortfall in production and to an increase in domestic prices. In addition, the planting delay of the main-season crop also implies that Indonesia would need to increase imports to replenish rice stocks that will be drawn down as harvesting of that crop is likely to be delayed. Rice purchases by Malaysia were revised upwards by 150 000 tonnes from the previous report to 600 000 tonnes due to the expectation of faster consumption growth in 1998. Although a rice exporter, Thailand is expected to import over 200 000 tonnes of rice in 1998 in compliance with its Uruguay Round commitments. Higher imports by the Philippines are also anticipated, especially during the first half of the year, as the seeded area for the second-season crop is expected to have been cut drastically by the lack of adequate water for irrigation. Iraq’s resumption of oil sales as part of the United Nations oil-for-food programme is expected to lead to that country’s increased rice imports in 1998. By contrast, the forecast of Bangladesh’s import requirements was revised downward by 200 000 tonnes to 100 000 tonnes due to an increase in its 1997 production estimate. Higher production estimates were also behind the revisions of anticipated imports by Sri Lanka and Guinea, which have been reduced by a combined total of 100 000 tonnes.

Imports into South America are forecast at about 1.6 million tonnes, similar to the volume estimated for 1997. Brazil, the leading importer in the region, is expected to maintain its high import volume of 1.1 million tonnes, and Peru and Columbia are expected to maintain import levels close to the previous year’s.

On the export side, the forecast of Vietnam’s expected exports for 1998 has been raised by 500 000 tonnes from the previous report to a record 4 million tonnes, largely due to good harvests. The estimate of exports by China (Mainland) has been increased by 450 000 tonnes to 1 million tonnes, the highest in four years, primarily reflecting its record 1997 paddy output. Anticipated shipments by Thailand, the leading rice exporter, were also increased by 100 000 tonnes from the previous forecast to 5.3 million tonnes based on expectations of higher demand, especially from Asian countries. On the other hand, anticipated exports from the United States were lowered by 100 000 tonnes to 2.7 million tonnes due to a downward revision in its 1997 estimated production.

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