FAO/GIEWS - Food Outlook No.5, November 1998

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1/ World trade in wheat and coarse grains is based on estimated imports delivered through 30 June of the July/June trade year. Some late-season purchases may be included in the next season if deliveries occur after 30 June. 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.

The forecast for global trade in cereals in 1998/99 has been raised by 2 million tonnes to 201 million tonnes since September (table A.2). At this level, world imports of cereals would be some 6.5 million tonnes, or 3 percent below the previous year’s volume, with smaller wheat and rice imports accounting for most of the decline.

The forecast for global wheat imports in 1998/99 (July/June) has been raised by 1 million tonnes to 91.5 million tonnes. Most of the increase in this month’s forecast reflects higher estimates for the CIS. Nevertheless, at the current forecast level, wheat imports would be about 3 million tonnes below the revised estimate for 1997/98. Total imports by the developing countries are forecast at 73 million tonnes, down 3.0 million tonnes from last year, while aggregate imports by the developed countries are expected to fall marginally to 18 million tonnes, some 400 000 tonnes less than last year.

Total wheat imports into Africa are forecast at 22 million tonnes, about 1.3 million tonnes less than in the 1997/98 season. Imports by most countries in

North Africa, which had surged last year due to severe drought, are likely to decline because of larger harvests this season. However, imports by most sub-Saharan African countries are likely to remain close to the previous two years’ levels. In Asia, this year’s total imports are forecast at about 42 million tonnes, down almost 4 million tonnes from last year. Most countries in Asia are expected to import less this year, particularly India, the Islamic Republic of Iran and Pakistan, mainly on account of larger domestic production. Imports by Indonesia are forecast to decline for the second consecutive year, mainly as a result of the economic crisis and despite the worsening food shortages caused primarily by sharply reduced domestic rice supplies. The Government has recently lifted subsidies on the import of wheat flour and although private traders could now import wheat flour at zero tariffs, commercial imports have become expensive because of the devaluation, despite its gradual appreciation in recent weeks. By contrast, imports by Bangladesh may nearly double this year because of the food shortage caused by recent floods. However, most of this year’s anticipated increase in wheat imports by Bangladesh is expected to be in the form of donations by major exporters.

The forecast of Europe’s wheat imports has been reduced slightly to 4 million tonnes, 1 million tonnes below the previous year’s volume. The bulk of the decline is expected in the EC, following this year’s record production and larger availabilities of high quality wheat. In the CIS, this year’s exceptionally poor harvests, particularly that in the Russian Federation, could result in higher imports. Total imports into the CIS are now expected to reach 3.3 million tonnes, up some 500 000 tonnes from last year. However, this forecast remains extremely tentative given the uncertainties over these countries’ capacity to make commercial imports. The eventual import volume could be much higher should exporters increase their donations, i.e. food aid, and/or provide more credits.

Imports into Latin America and the Caribbean are forecast at around 17 million tonnes for the 1998/99 July/June trade season, about 2 million tonnes more than last year. Increased imports by Brazil, the region’s largest wheat importer, would account for most of the expansion. Purchases by Brazil are forecast to reach 6.2 million tonnes, up 1.2 million tonnes from the previous year. The increase is largely due to weaker wheat prices in international markets, a factor which is expected to encourage more wheat purchases from abroad, in addition to the small decline in domestic wheat production compared with the previous year.

As regards wheat exports (table A.3), the dominant feature since the start of the 1998/99 season has been more ample export supplies against a smaller world import demand.


Wheat Coarse grains Rice (milled) Total
1997/98 1998/99 1997/98 1998/99 1998 1999 1997/98 1998/99
( . . . . . . . . million tonnes . . . . . )
Asia 45.4 42.1 53.2 52.8 15.8 10.8 114.4 105.7
Africa 23.3 22.0 10.8 11.5 3.8 4.0 37.8 37.6
Central America 5.2 5.6 10.0 10.3 1.3 1.4 16.6 17.2
South America 10.0 11.6 5.9 7.4 1.9 1.8 17.8 20.8
North America 2.5 2.5 4.0 3.2 0.6 0.6 7.2 6.3
Europe 5.3 4.1 3.4 3.9 1.0 1.1 9.7 9.0
CIS 2.8 3.3 0.3 0.2 0.4 0.4 3.4 3.9
Oceania 0.4 0.4 0.1 0.1 0.3 0.3 0.8 0.8
WORLD 94.9 91.5 87.8 89.3 25.1 20.4 1/ 207.8 201.3
Developing countries 76.2 73.2 57.4 58.9 21.9 17.0 155.5 149.1
Developed countries 18.7 18.3 30.4 30.4 3.2 3.4 52.3 52.1

1/ Highly tentative.

Prospects for a decline in world trade in 1998/99 (July/June) are expected to result in smaller aggregate exports from major exporters compared to the previous year. Among the major exporters, shipments from Argentina and Canada are expected to decrease by as much as 2 million tonnes and 7 million tonnes respectively, in part due to lower domestic production. By contrast, this year’s record crop and a faster pace of exports from the EC so far this season could result in larger shipments, by about 2.5 million tonnes, with a less pronounced expansion in exports anticipated from Australia and the United States. While total exports from the major exporters are forecast to decrease, shipments from some of the smaller exporting countries are likely to expand. Turkey, for example, is expected to almost double its exports to 2 million tonnes this season.

The forecast for world trade in coarse grains in 1998/99 (July/June) has been raised by 800 000 tonnes from the previous report to over 89 million tonnes. At this level, global imports of coarse grains would be 1.5 million tonnes, or about 2 percent, above the previous year’s level. The latest revision is mainly due to indications of larger than expected purchases by Brazil and Mexico. Total imports by the developing countries are currently put at 59 million tonnes, about 1.5 million tonnes more than in 1997/98 while aggregate imports by the developed countries are forecast to remain the same as in the previous year, or about 30 million tonnes. Most of the anticipated rise in global coarse grain imports in 1998/99 would be accounted for by a 1 million tonnes increase in barley, to 14.5 million tonnes, and a 500 000 tonnes increase in rye to 1.4 million tonnes. World maize imports are expected to increase only marginally to some 64 million tonnes, while trade in most other coarse grains is likely to remain unchanged from last year.

Total coarse grain imports into Africa in 1998/99 are put at 11.5 million tonnes, up 700 000 tonnes from the estimated imports in 1997/98. The increase is almost entirely due to higher import demand by several countries in sub-Saharan Africa due to smaller maize crops. By contrast, in North Africa, imports are likely to decline slightly in the wake of larger harvests. In Asia, coarse grains imports are expected to remain at last year’s reduced volume of about 53 million tonnes, mostly because of larger coarse grain inventories and weak demand from the animal feed sector in countries affected by the economic difficulties. In addition, Indonesia, which in the previous season resorted to exceptionally large imports of maize from China, is not expected to contract significant volumes in 1998/99. Elsewhere in Asia, imports by the Islamic Republic of Iran are also forecast to decline slightly. By contrast, the decline in this season’s international barley prices could trigger larger barley purchases by Saudi Arabia.

In Europe, aggregate coarse grain imports in 1998/99 are currently forecast at around 4 million tonnes, slightly more than the previous year. This would be largely on account of a likely increase in barley and maize imports by the Czech Republic due to slightly reduced domestic production, and larger maize purchases by Poland, mostly in response to lower international prices. In the CIS, it appears unlikely that with the continuing problems facing the animal feed sector and the devaluation of currency, imports would expand despite this season’s anticipated sharp fall in coarse grain production.

Imports into Latin America and the Caribbean are currently put at nearly 18 million tonnes, up about 2 million tonnes from last year. The forecast for coarse grain imports by Mexico has been raised to 7.4 million tonnes, up 600 000 tonnes from last month and also last year, mostly on account of larger maize purchases in response to low prices. Brazil is also forecast to import more maize this season, about 2 million tonnes, up 1 million tonnes from last year and 300 000 tonnes more than was reported in September, chiefly on account of lower maize production. In Central America, while the full impact of the floods caused by the hurricane "Mitch" may not be known for several weeks, the extent of the damage as reported to-date points to a considerable increase in import requirements, especially in Honduras, where the devasting floods coincided with the planting of the 1998/99 second (main) season maize crops.

Turning to exports, ample supplies of coarse grains among the major exporting countries would be more than sufficient to meet the expected small increase in imports. Significantly increased maize shipments could originate from the United States and barley from the EC. Among smaller exporting countries, Hungary and Romania are likely to export a similar volume of maize as in the previous season. However, shipments from China are forecast at 3.5 million tonnes, about 50 percent down from the previous year, mainly due to lower domestic production as well as reduced import demand from the neighbouring countries.

The forecast for global rice trade in 1998 has been revised upward by 1.3 million tonnes from the last report to a new peak of 25 million tonnes, 6 million tonnes more than in 1997, and over 4 million tonnes above the previous record in 1995. The upward revision mostly reflects larger imports and/or import commitments to date by several of the major importing countries whose output in 1997 and early 1998 was severely curtailed by adverse weather related to El Niño, but also increased demand likely from several Asian countries recently affected by severe floods.

The estimate of imports by Bangladesh has been raised sharply, by 600 000 tonnes, from the previous report to 1.6 million tonnes, based on shipments to date, and prospects of continuing large requirements in the coming weeks due to recent devastating floods that affected most of the country and inflicted considerable damage to the rice crop. It is likely that some of this exceptional import volume will be met by food aid. The forecast of Indonesia’s rice imports in 1998 has been raised by 500 000 tonnes to a record 5.5 million tonnes, reflecting further reductions to the 1998 production estimate. Some of Indonesia’s import needs are being met through preferential arrangements. In particular, the Government of Japan has offered to lend rice to Indonesia which could be repaid in kind or with cash at a future date. In addition, Japan is also providing Indonesia with financial grants and loans to enable it to purchase additional rice from the international market. The estimate of rice purchases by the Philippines in 1998 has also been adjusted upward, by 650 000 tonnes, to 2.2 million tonnes based on contracted volumes to date. Some of this is reportedly being imported as a precautionary measure against the potential effects of La Niña-related floods expected during the last quarter of the year. By contrast, the estimates of rice imports by several other countries including China (Mainland), the EC, India, Cambodia, Ghana and Kenya have been reduced by a combined total of 450 000 tonnes. African countries in aggregate are forecast to import less rice in 1998 owing to the region’s record production in 1997.

On the export side, the forecast for rice shipments out of Thailand for 1998 has been raised by 200 000 tonnes from the previous estimate to 6.2 million tonnes due to consistently high demand on the international market and a good output from the second-season crop. Exports during the first eight months of 1998 are estimated at slightly over 4.3 million tonnes, compared to about 3.2 million tonnes during the same period in 1997. Exports of Thailand’s high quality fragrant rice are also expected to expand owing to higher output. The forecast of shipments out of India has been increased by 1 million tonnes since the previous report to 3.5 million tonnes based on prospects for yet another record crop. The forecast for Australia’s export shipments has also been increased by about 100 000 tonnes to 700 000 tonnes, a consequence of bumper harvests in the past two years. Export volumes from China (Mainland), Japan, Myanmar and Suriname have been raised by a combined 300 000 tonnes. By contrast, the forecast of rice shipments from Viet Nam in 1998 has been lowered by 300 000 tonnes to 3.7 million tonnes following the decision by the Government to control rice exports with the aim of ensuring domestic food security. Nevertheless, the revised forecast, if realised, would still be a new record level of exports for Viet Nam. Projected exports from the United States remain unchanged at 3 million tonnes, an increase of over 30 percent from the previous year.

For 1999, global rice trade is provisionally forecast to decline sharply from the 1998 record to more normal levels as production in many of the major importing countries is expected to recover from the reduced 1997 levels following adverse weather related to El Niño. Increased production, and therefore lower imports, may materialize particularly in Indonesia, the Philippines, Bangladesh and Brazil, four of the leading importers thus far in 1998.

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