Beverages, sugar and fruits
Cereals and Cassava
Oilseeds, oils and fats, cakes and meals
Agricultural raw materials
The fall of coffee and cocoa prices to their lowest levels for several decades provides the most dramatic example of the current depressed state of most agricultural commodity markets. Prices for tea have also weakened as supplies have grown ahead of demand. There appears little prospect of an early recovery in beverage prices and attempts to coordinate international action to restrain supply growth have been unsuccessful. International attempts to stimulate demand by shifting consumer preferences may prove more effective, but with a longer lead time. Sugar prices fared rather better during 2000, but have declined during 2001, and again, expected production growth ahead of demand in the short term will make it difficult to achieve higher prices. In international markets for fruits, market imbalance appears currently to be more in the opposite direction, with reduced citrus production and continuing growth in import demand for tropical fruits, although even here any strengthening of prices is expected to be limited in the short run.
The ICO composite prices averaged 64 US cents per pound in 2000, more than 25 percent lower than the already depressed price level of 1999. Prices in 2001 are the lowest since 1973 in nominal terms and the lowest ever in constant terms. While prices for both Arabica and Robusta varieties have declined substantially, the fall in Robusta prices has been particularly pronounced.
WORLD COFFEE PRICES US cents \ lb
The Association of Coffee Producing Countries export retention scheme was effectively abandoned as prices continued to decline. Slow-down in the economies of many coffee importing countries and relatively high stock levels implies continuing sluggish demand at least for the near term. Improving quality has been suggested as one way to improving market prices. However, with current price levels below production costs of many coffee producers, investment is inevitably curtailed, and this could adversely affect quality and the prospects for price recovery.
World green coffee production reached 6.6 million tonnes in 2000/01 crop year (October-September), a growth of 4 percent from the previous crop year. Production in Latin America declined, reflecting reductions in Brazil, the worlds largest producer (by 1 percent to 1.9 million tonnes), Guatemala (down 14 percent), and Mexico (down 30 percent) as growers in the region adjusted to low world market prices. The only notable increase among Latin American countries occurred in Colombia, where production increased by 29 percent as a result of favourable weather and the earlier renovation of coffee plants under the scheme launched by the National Growers Federation. Output in Africa fell by 12 percent from 1999/00 to 2000/01 mainly because of a significant decline in output in Côte dIvoire to 190 000 tonnes from the abnormally high level of 354 000 tonnes in 1999/00. Most other major coffee producers in Africa increased output: production in Ethiopia, Kenya and Uganda registered a growth of 5 percent, 12 percent and 3 percent, respectively. In Asia, Vietnams production remained unchanged at 700 000 tonnes, but still 68 percent higher than in 1998/99. Output in Indonesia increased by 23 percent from the previous crop year but was still 21 percent lower than in 1998/99.
In terms of varieties, the share of arabicas in world coffee production in 2000/01 was around 66 percent, the same as in 1999/00. The increase in output of Colombian milds was sufficient to offset the considerable decline in production of other milds, particularly from Central America.
Coffee stocks decreased by 6 percent in producing countries in 2000/01 mainly due to reduced production in Latin America. However, the significant increase in stocks in major coffee consuming countries, including the EC, Japan and the United States, more than offset the decline in producing countries.
World exports of coffee reached 5.3 million tonnes in 2000, a growth of 4 percent from the 1999 level. Exports from Brazil fell by 22 percent to 1.1 million tonnes and accounted for 20 percent of world coffee exports in 2000. Exports from Colombia declined by 8 percent. Exports from Guatemala and Mexico increased by 4 percent and 22 percent respectively, but this was not enough to offset the decline in other Latin American countries. Most African coffee exporting countries except Uganda registered some growth, as did exports from Asian coffee exporting countries. Exports from Vietnam continued to grow rapidly, by almost 50 percent between 1999 and 2000.
World coffee imports increased slightly to reach 4.8 million tonnes in 2000. The increase was mainly attributable to growth in the United States and Japan. Imports into the EC (15) were down marginally in the same year. Provisional data suggest a small decline in world coffee imports in 2001. Per caput consumption of coffee in importing countries as a whole decreased by nearly 4 percent between 1999 and 2000. Domestic consumption in producing countries as a whole increased by 6 percent between 1999/2000 and 2000/2001 Consumption in Viet Nam increased by more than 40 percent, and this emerging market has potential for further expansion.
The ICCO daily price averaged $888 per tonne in 2000, the lowest since 1973 in nominal terms. During the first 10 months of 2001 prices fluctuated around an average of $1 058 per tonne. This is 16 percent higher than the same period last year but still 12 percent and 38 percent lower than in 1999 and 1998.
WORLD COCOA PRICES US $ \ Tonnes
World cocoa bean production reached 2.8 million tonnes in the 2000/01 crop year (October-September), 7 percent lower than in the previous season, but still slightly higher than in 1998/99. Production in major African cocoa producing countries as a whole declined in 2000/01, mainly due to a 16 percent fall in Côte dIvoire, the worlds largest producer with more than 40 percent of world production. Côte dIvoire produced 1.2 million tonnes of cocoa beans in 2000/01, almost the same as in 1998/99. Output fell significantly in Ghana as a result of black pod disease, although production increased in Cameroon and Nigeria. Two major Asian producers, Indonesia and Malaysia, recorded declines of 1 percent and 11 percent, respectively partly because of reduced yields following lower investment. Most major cocoa bean producing countries in Latin America increased output: Brazil by 11 percent; Dominican Republic by 29 percent; and Ecuador by 5 percent.
Global grindings of cocoa beans, a proxy for world cocoa consumption, reached 3 million tonnes in 2000/01, up 1.5 percent compared to 1999/00. Grindings in the EC, the worlds largest cocoa consumer, reached 1.2 million tonnes in 2000/01, a growth of 1.6 percent. Among the major consuming countries, the area of the former USSR registered the highest growth at 11.8 percent over the previous year. Grindings in Canada were down by 11 percent and those in the United States remained at the previous years level. Grindings in Côte dIvoire continued to increase and reached 265 thousand tonnes in 2000/01 as a result of the governments subsidy scheme to promote domestic processing. Grindings at origin accounted for about 32 percent of world grindings in 2000/01.
Cocoa bean stocks fell by 15 percent to 1.1 million tonnes in 2000/01 as production decreased while demand slightly increased. The world stock-to-grinding ratio, a proxy for world cocoa availability, fell from 45 to 38 percent in 2000/01. However this decline was not large enough to change the price trend as current stocks are considered sufficient to meet world cocoa demand.
World exports of cocoa reached 2.5 million tonnes in 1999/00, a growth of 13 percent from the 1998/99 level, reflecting increases in the worlds three largest cocoa bean exporting countries. Exports from Côte dIvoire, the largest exporter, increased by 28 percent or nearly 300 000 tonnes echoing increased output. Exports from Ghana and Indonesia, the worlds second and third largest exporters, continued to grow with increases over the previous year of 2 percent and 6 percent, respectively.
World cocoa imports increased by 16 percent reaching 2.5 million tonnes in 1999/00, largely as a result of increased imports by the EC, Former USSR and the United States. Imports into the EC and the United States increased as manufacturers and processors took advantage of low world prices. The EC recorded an overall increase of 6 percent in 1999/00, reaching 1.2 million tonnes - 50 percent of world imports. Imports into the United States increased by 22 percent and accounted for about 20 percent of world imports. Imports into the Former USSR recovered to their 1997/98 level after being depressed over the intervening period by economic downturn and devaluation.
World cocoa bean production in 2001/02 is expected to recover to its 1999/2000 level as a result of more favourable weather conditions in West Africa. Concern over possible disruption to Côte dIvoire supplies should be diminished if the proposed new marketing system that includes minimum guaranteed producer prices is implemented. Producer prices fell sharply after the liberalization of the subsector in 1999 which coincided with the collapse of world market prices. Four West African producers (Cameroon, Côte dIvoire, Ghana and Nigeria) agreed to establish a scheme to withdraw and destroy 250 000 tonnes of cocoa beans to improve world market prices, but the details of implementation and the likely impact of this scheme are still uncertain. In any case, current stock levels are sufficient to meet demand as improvements in processing technologies and marketing systems have enabled manufacturers and traders to secure continuous supplies with smaller working stocks. Prices are therefore likely to remain depressed at least for the near term.
The weakening of tea prices in the final quarter of 2000 continued during the first ten months of 2001, with the FAO composite price averaging $1.59/kg, 13 percent lower than the same period last year. Prices averaged $1.83/kg during the first quarter of 2000, weakening to $1.75/kg in the second quarter according to seasonal demand trends, but then reaching a high of $1.85/kg in the third quarter as orders from the Russian Federation were placed, and exports of tea to Near Eastern markets increased. By the final quarter of 2000 prices had begun to weaken. However, the composite price for the year averaged $1.80/kg, 3 percent higher than the average 1999 price of $1.75/kg, when weak demand kept prices lower.
WORLD TEA PRICES US cents \ Kg
World tea production in 2000 reached 3 million tonnes, up nearly 3 percent over 1999. Most major tea producing countries had larger harvests. Output increased by 5 percent in India, and by 8 percent in Sri Lanka. However, drought and early frosts reduced output in Kenya, by a further 5 percent in 2000 while adverse weather also reduced output in Indonesia by 4 percent.
World tea exports reached 1.3 million tonnes in 2000, up almost 5 percent compared to 1999. Most major exporting countries in the Far East had larger shipments, but those in Africa generally exported less. Exports from Sri Lanka increased by 7 percent reflecting strong demand from the Russian Federation. Shipments from Indonesia were larger by 8 percent due to increased consignments to Iraq under the UN Oil for Food programme. Exports from China, mostly of green tea, increased by nearly 14 percent and from India by 5 percent. Kenyas exports declined by 10 percent reflecting reduced export availability and weak demand in the traditional markets of the United Kingdom and Egypt.
World net tea imports increased by more than 5 percent in 2000, reaching 1.3 million tonnes. This increase reflected the 5 percent gain in developing countries mostly due to improved economic conditions. Imports by major developed tea importing countries, except Japan where tea import volumes increased by more than 18 percent, declined in 2000. Imports into the United States fell by 12 percent, while the EC recorded an overall decline of 3 percent. In the EC, larger shipments to the Netherlands and France were insufficient to offset smaller shipments to the United Kingdom and Germany. Imports by the Russian Federation were about the same as in 1999 when imports surged to compensate the shortages in the previous year, but indicative of continuing relatively strong demand.
Preliminary returns from major producing countries in the first eight months of 2000 suggest a considerable increase in world tea output in 2001: production in Kenya is expected to recover by 14 percent; output in India should increase by 4 percent, Indonesia by 6 percent and Sri Lanka by 1 percent. This increase in production is likely to maintain weak tea prices in 2001. Import demand from countries of the Near East (the main market for exports from East Africa) are sensitive to oil revenues, and the military action in this region, may also constrain demand. However, auction prices in India and Sri Lanka could strengthen if demand for high quality teas picks up again in the Russian Federation as it did in the latter part of 1999. Other factors that may influence the world tea prices include the implementation of the bilateral free trade agreement between India and Sri Lanka, which was reached in March 2000. Under this agreement Sri Lanka would qualify for a 50 percent fixed tariff concession for tea exports to India on a preferential basis subject to an annual maximum quota.
The rise in sugar prices seen in 2000 continued into January 2001, when prices averaged US 10.32 cents per pound. However, prices began to fall thereafter reaching a low of US 6.69 cents per pound in October 2001. This trend was largely due to the weakening import demand, particularly in the Russian Federation because of high stock levels and higher tariff rates, and uncertainty in the market place after the terrorist attacks on September 11 2001.
International Sugar Agreement Daily Price ( fob & stowed, in bulk, US cents/lb.)
In 2000, world sugar prices, particularly for raw sugar, were strengthened by a supply deficit and continued recovery in the economies of some major sugar importers. World sugar prices, which reached 14-year lows in February 2000, recovered nearly 90 percent to an average US 10 cents per pound in December 2000, bringing the yearly average to US 8.18 cents per pound. However, despite the fact that global output was less than estimated global consumption the price recovery was constrained. This was largely due to large stocks carried by many consuming countries, including India where nearly 11.4 million tonnes, or about 20 percent of the world stocks were located, as well as a larger than expected beet sugar output by the EC, which dampened the rise of white sugar prices in particular.
World sugar production in 2000/01 amounted to 129.4 million tonnes, down nearly 5 percent from 1999/00 levels, with reductions in both developed and developing countries. Most of the decline is due to structural adjustments in production as a result of extremely low world sugar prices prevailing in 1999 and 2000. Adverse weather conditions, diseases, and harvest delays further diminished global production.
Among developed countries, the largest declines occurred in Australia (down 1.08 million tonnes), the EC (900 000 tonnes) and the United States (510 000 tonnes). Gains in other developed countries were insufficient to offset these losses. In other European sugar producing countries, production in 2000/01, increased by 50 000 tonnes in the Russian Federation and by 238 000 tonnes in Poland, as better than anticipated processing campaigns resulted in higher output. Output also expanded in South Africa by some 300 000 tonnes.
In developing countries, output in 2000/01 declined by 5 percent compared to 1999/00. The reduction was largely due to smaller harvests in Brazil and China. Output in India remained unchanged at 19.5 million tonnes. In Brazil, a combination of production adjustments and adverse weather reduced output by 2.5 million tonnes, nearly 13 percent less than in 1999/00, to reach 17.3 million tonnes. In China, sugar output was 7.2 million tonnes in 2000/01, a decline of 12 percent or 1.0 million tonnes. The factors responsible for this trend included the reduction in planted areas due to continued milling rationalisation, extremely dry weather during planting, and in some provinces relatively higher prices for grain. Adverse weather in other developing countries also accentuated reductions in sugar output. Production in Cuba and Mexico totalled 3.5 million tonnes and 4.9 million tonnes respectively in 2000/01. In Thailand, output fell by 300 000 tonnes reaching 5.4 million tonnes, mainly due to disease in the northern sugarcane areas.
Exports virtually mirrored production trends. World sugar exports declined by 2.5 percent in 2000, as availability was reduced in major exporting countries and rising prices discouraged shipments. Major declines occurred in Brazil where exports fell by 3.7 million tonnes (9 percent of all sugar traded in the world market) returning to average levels following the exceptionally large shipments in 1999. This reduction was partly offset by increased shipments from many origins including Cuba (800 000 tonnes), the EC (100 000 tonnes) and Thailand (500 000 tonnes). Imports recovered in several Far Eastern markets in line with GDP growth. World sugar imports (in raw equivalent) in 2000 were estimated at 38.9 million tonnes.
Early reports indicate that sugar output in the major producing countries, such as Australia, Brazil, China and Thailand, is likely to recover in 2001/02, more than offsetting declines in beet sugar production, particularly in the EC. World sugar production is expected to grow by 1.5 million tonnes to 131 million tonnes (raw value), potentially weakening prices.
Banana - Import Prices ( U.S. /tonne )
Banana prices in major markets, while fluctuating within a relatively narrow price range, remained atypically firm through the first half of 2001. This firmness was partly due the conjunction of lower production in several Latin American countries affected by adverse weather conditions and of constant demand in most markets. While in national currency terms European prices were higher than in the corresponding period of 2000, in dollar terms prices in the EC were somewhat weaker during much of the first half of 2001 due to weakness of the EURO compared to the dollar. In the United States prices reached nearly 70 cents/kg in July, compared to an average of 42 cents/kg in 2000.
Based on preliminary estimates, total banana imports were slightly higher in 2000 at 12.1 million tonnes as compared to 11.9 million tonnes in 1999. Imports increased markedly in Japan to just over a million tonnes, fuelled by the appreciation of the yen against most currencies during 2000, which made imported bananas cheaper when compared to domestic fruit. Banana imports rose 2.8 percent to 3.3 million tonnes in the EC, and over the first eight months of 2000 were up substantially in China.
Based on preliminary data global banana export volumes decreased slightly in 2000 to 11.1 million tonnes compared to 11.7 million tonnes in 1999. In Latin America, exports contracted in many countries (with a marked fall of 12.6 percent in Costa Rica), mainly due to adverse weather and reduced purchases by marketing companies in the face of weaker international prices. Two notable exceptions were Ecuador, where exports rose slightly due to an increase in the cultivated area, and Honduras, where production continued its recovery from the damage inflicted by Hurricane Mitch in late 1998. In the Philippines, shipments expanded significantly under the combined effects of a larger crop, higher demand in East Asia and the devaluation of the national currency against the yen and the dollar. Exports also increased in the Windward Islands during 2000. During the first six months of 2001 Ecuador has experienced climatic and economic difficulties which have resulted in a considerable decline in exports. Similarly, Costa Rica and Panama have seen some decline in their exports in the first half of 2001.
The conjunction of lower exports in Latin America and weak dollar prices in the EC, traditionally the most profitable of the major banana markets, led to a significant drop in export earnings for many developing countries in 2000. The profitability of the banana industry was further curtailed by higher input and transport costs in the wake of rising oil prices. However, excess capacity in the reefer trade has constrained freight rates somewhat during 2001.
The orientation of prices for the remainder of 2001 is difficult to predict, as it will depend on a series of factors which play in different directions. On the one hand, there are indications that supply could continue to contract while demand growth is expected to continue. Supporting the idea of a contraction in supply are the assumptions that marketing companies will continue to reduce the size of their banana plantings in Latin America, and that output in Ecuador will continue to be curtailed, both by climatic and economic conditions. This contraction, however, could be partially offset by output increases elsewhere, notably in the Philippines, Guatemala and Honduras. On the demand side, banana imports are expected to remain relatively robust as harvests of some competing fruits in Europe, particularly pears and apples, are expected to be lower.
The revised banana import regime being implemented by the EC as of 1 July 2001 is likely to entail some shifts in the pattern of supply as the multinational firms are to receive some 83 percent of import licenses based on the 1994-96 base period. There may therefore be reduced competition in the EC markets as the number of sellers is reduced. How prices react will depend on a number of variables, some of which could be exogenous to the banana supply and demand balance itself. These could include economic growth or the lack of such growth, in all major markets, supplies of competing fruits, and shifts in supply chain relationships in the EC as the new regime takes effect.
World tropical fruit production increased by nearly 2 percent in 2000 to reach 61.4 million tonnes, of which developing countries accounted for some 98 percent. Mango is the dominant variety produced, followed by the other major tropical fruits pineapples, papaya and avocado. Other tropical fruits referred to as minor, such as lychees, durian, rambuttan, guavas and passionfruit are traded in smaller volumes.
Mangoes account for about 36 percent of global tropical fruit production. In 2000 mango output was estimated at 22.4 million tonnes, an increase of 2 percent compared to 1999. Pineapple production in 2000 was 13.4 million tonnes, 22 percent of the world tropical fruit production, papaya production reached 8.4 million tonnes, and avocado output was estimated at 2.3 million tonnes. The production of minor tropical fruits reached 15 million tonnes.
International trade in tropical fruits continues to be dominated by pineapples. Significant growth in both the volume and value of international trade in other tropical fruits has developed in recent years, particularly mango and, to a lesser extent, avocados, carambola, guava, lychee, mangosteen, passionfruit and rambuttan. Most of the recent growth in tropical fruit trade is based on expanded crop areas specifically intended for export.
Provisional data for 2000 indicate greater exports of several fruits, significantly for avocado and papaya, and marginally for pineapples: pineapple exports are estimated at 870 000 tonnes; avocado exports at 228 000 tonnes; and papaya exports at 151 000 tonnes. Early reports indicate a slight decline in export volumes for mangoes between 1999 and 2000. For avocado and papaya, nearly 70 percent of export trade is concentrated in the top 3 exporting nations, while slightly less than 50 percent of fresh mango exports originate in the top 3 exporting countries.
Preliminary data indicate increased import volumes for all four major tropical fruits (pineapple, mango, avocados, papaya), with the largest percent increase over 1999 for avocados. Developed countries imported almost 80 percent of fresh tropical fruits in 2000. Individually, the United States, the European Community, Japan, Canada and China (Hong Kong SAR) remain the largest import markets for fresh tropical fruit. Pineapple imports, at 904 000 tonnes, accounted for 50 percent of total world import volumes in 2000, with the EC and the United States accounting for 70 percent of import demand. Mango imports, at 514 000 tonnes for 2000, increased slightly over 1999, with the United States and the EC being the leading importing markets.
Prices for fresh citrus recovered in 2000/01 from the very low levels of the previous season. World citrus production declined some 1.5 million tonnes in 2000/01, as output fell in almost all-major producing countries.
Germany - Citrus Wholesale Prices (DM / kg )
Orange production in Mexico, China and most Mediterranean countries was lower in 2000/01. United States production also declined due to adverse weather early in 2001. In the Southern Hemisphere, the 2000/01 orange crop was some 6 percent lower in Brazil due to insufficient rainfall, disease problems and reduced grove care; however, orange supply was expected to rise 11 percent in South Africa and 5 percent in Argentina.
Tangerine output decreased in the leading producing countries in the 2000/01 season, notably in China, Spain, the United States and Morocco. Global production of lemons and limes was only slightly lower as reduced output in Greece, Israel, Italy, Argentina and Turkey was almost fully compensated for by production gains in Argentina, Spain, South Africa and the United States. Total grapefruit output declined by about 260 thousand tonnes due to decreases in the United States and Israel, attributed to reduced bearing trees in the former and to water and labour shortages in the latter, not fully compensated by production growth in South Africa and Cyprus.
In spite of lower production, global exports of fresh citrus rose in 2000/01, notably from South Africa, the United States and Greece. South Africa, benefiting from a depreciation in the Rand, and the United States continued to increase export volumes, particularly for oranges. Exports from Spain, Morocco, Italy and Egypt declined. Orange exports from Cuba and Mexico also rose. In the Southern Hemisphere, shipments rose in Argentina and South Africa, but fell significantly in Brazil, reflecting reduced production, and in Australia. Outside the ten major exporters orange volumes rose by some 250 000 tonnes as many smaller suppliers took advantage of shortfalls in exports of the major exporters.
Global tangerine exports decreased by more than 20 percent, mainly due to sharp declines from Spain and Morocco, again following production trends. Total exports of lemons and limes were down, especially from Turkey. Grapefruit exports increased in the United States, South Africa and Cyprus, but went down in Israel.
During the first half of 2001 prices for frozen concentrated orange juice (FCOJ) were relatively stable, ranging between $850 and $950 per tonne (CIF, Rotterdam). However, prices gradually strengthened by mid-year to between $1 000 and $1 075, and are expected to rise further, perhaps to a range of $1 200 to $1 300 by the final quarter of 2001. On the New York futures market, FCOJ closing prices rose from $0.71 per pound on 2 January 2001 to $0.74 on 2 April and to $0.79 by 31 July. Future prices for January 2002 stand at $0.81, and at $0.98 for May 2002, possibly reflecting market perceptions of FCOJ stocks. Prices for concentrated grapefruit juice in mid 2001 were high due to lower supplies. Grapefruit juice stocks are lower as the 2001/02 marketing year begins, and with hurricane damage to the Cuban crop reducing availability, prices could strengthen further. Lemon juice prices weakened based on good crops in Argentina, Spain and the United States. Ample availability of juicing lemons should hold prices down in 2001/02.
World production of orange juice contracted again in 2000/01, as orange crops available for processing in both the Northern and Southern Hemispheres were lower. In addition, Brazilian orange juice production, may have been constrained by electricity shortages which affected both processing and storage as electricity in Sao Paulo state is dependent on hydroelectric generation and the area has experienced a severe drought. United States OJ production was down by some seven percent and Australia was down by 43 percent. Output in Spain, Turkey and Mexico has also fallen. Although the availability of oranges for juicing in Brazil is expected to be 6 percent lower in 2001/02, the Florida crop is just below record levels.
After reaching record low levels, the fall in cereals prices is showing some signs of having bottomed out as production has adjusted to lower profitability, and stocks have been run down. However, international prices for cassava, which reflect feed more than food demand, continue to be weakened by slow growth in meat production.
International rice prices were under pressure during most of 2000, as reflected in the FAO Rice Export Price Index (1982-84=100), which fell from 106 in January to 98 in December. The downward trend in prices lingered well into 2001, with the index averaging 90 in January-September 2001, the lowest level since 1987.
Rice - Export Prices ( U.S. $/tonne)
The slide in price in 2000 took place against the background of falling global production, estimated at 596 million tonnes, which is 16 million tonnes less than in 1999. The contraction was mainly concentrated among exporting countries, especially China, following the abatement of Government expansionary production policies, and in India, as a result of poor distribution of the monsoon rains. Output also dropped in Vietnam, Pakistan, Argentina, Australia and the United States, which, like India and China, are major suppliers to the rice market. By contrast, most traditional importers gathered abundant crops in 2000, including Bangladesh, Indonesia, the Philippines and Sri Lanka.
Reduced import requirements in those countries weighed heavily on the international market in 2000 and global rice trade shrank by 9 percent to 22.6 million tonnes. Indeed, the fall in production in major rice exporting countries did not act as a constraint to trade, since export availabilities remained ample in 2000 because of the bumper crops harvested in the preceding years, which had beefed up rice inventories. Most of the brunt of the trade contraction was born by India and Vietnam and to a lesser extent, Argentina and Australia which recorded sizeable reductions in exports. On the other hand, competitive pricing policies helped China boost sales and gain a wider share of the market. Most of the other exporters managed to keep their shipments close to the previous year level, although this often required renewed support from their governments. The decline in world rice imports was mostly the result of lower shipments to Bangladesh, Indonesia and Sri Lanka, but also to Latin American and the Caribbean countries, especially Brazil. The extent of the contraction was limited by a rise in shipments to Africa and to Near East countries.
Despite expectations of a further drop in global paddy production, international rice prices have continued on a downward path for the first three quarters of 2001. The reasons underlying such a weakness are fundamentally the same as in the previous year, as import demand continued to shrivel.
As of September, world paddy production in 2001 was forecast at 587 million tonnes, down 9 million tonnes from the previous season. Once again, China is anticipated to be responsible for much of the contraction. However, output is also expected to fall in Brazil, Egypt, Indonesia, Japan, Pakistan and Sri Lanka. By contrast, a recovery is expected in India, which this year benefited from abundant and well distributed monsoon rains, as well as in Australia and the United States.
As of September, prospects for global rice trade in 2001 point to a small decline to 22.4 million tonnes. Unlike in 2000, Chinas exports are likely to fall, reflecting the strengthening in domestic prices witnessed over the current year. Sales from Argentina, Pakistan, Uruguay and the United States are also anticipated to be reduced. By contrast, Australia, India, Myanmar, Thailand and Vietnam are expected to make larger sales, following intensified efforts to sharpen their competitive edge.
As utilization is likely to outpace production in the light of the low domestic prices prevailing in most countries, end-of-season stocks are anticipated to be drawn down for the second consecutive year. This could mark a turning point for world prices, which could witness a recovery in 2002. However, much would depend of the final production outcome in those Northern Hemisphere countries currently engaged in harvesting.
International wheat prices increased slightly in 2000/01, reflecting a reduction in world output and smaller exportable supplies.
WHEAT PRICE * - US$/tonne
* U.S. No. 2 Hard Winter, f.o.b. U.S. Gulf ports.World wheat production in 2000 decreased for the second consecutive year. This was mostly because of unfavourable weather, particularly the severe drought in parts of Europe and North Africa as well as in several countries in Asia, including China, where reduced plantings also played an important role in curbing output. Global wheat utilization during the 2000/01 marketing season was expected to increase slightly from the previous season. Higher food consumption, mostly driven by population growth, was seen to account for the bulk of this rise while feed use was forecast to decrease, especially in Asia and North America. In the EC, the combined effect of a bumper crop and large supplies of low quality wheat resulted in a record feed use.
Global wheat trade contracted in 2000/01 (July/June) after a peak in 1999/2000. However, most of the decrease occurred in the developed countries, especially in the Russian Federation because of a larger harvest. The decline in wheat imports by the developing countries as a group, was less pronounced, and was mostly due to record crops in Pakistan and India, normally large wheat importing countries. From the major exporters' perspective, the 2000/01 trade season provided less market opportunities as world demand contracted and larger exports entered the market from a number of non-traditional exporters.
Total world stocks for crop years ending in 2001 were expected to decline for the second consecutive year. A sharp decrease occurred in China, following the drop in 2000 production and the countrys deliberate attempt to reduce its stockpile for domestic use (rather than resort to large imports). This was in contrast to the situation in India, where a record wheat crop for the second consecutive year pushed storage capacity to its limits.
Looking ahead into the 2001/02 marketing season, wheat output in 2001 is forecast to decline, falling to its lowest level since 1995. At the regional level, output is expected to decrease most in North America and Asia. The expected decline in global production combined with a modest gain in consumption should result in a further decline in stocks. Most of the decline is expected in China and India but smaller inventories are also anticipated among major wheat exporting countries because of lower output. World trade is forecast to increase slightly in 2001/02. Imports by the developing countries are expected to expand most, mainly in response to stronger demand in Asia. Overall, the declines in global wheat production coupled with smaller inventories in major exporting countries are likely to lead to higher prices in 2001/02.
World coarse grain prices weakened further in 2000/01 compared to the previous season. The annual average US maize export price fell $5 to $86 per tonne, while a similar Argentine quotation declined by $10 to $78.
The latest estimate for world coarse grain production in 2000 indicates a fall for the second consecutive year to slightly below the average volume of the past five years. The decline was mostly as a result of weather-damaged crops in parts of Asia and Europe. A drought-plagued season sharply reduced Chinas maize output, the second largest maize producer after the United States. Persistent drought throughout most of eastern Europe was particularly hard on maize, though barley crops were also affected in some of these countries. By contrast, bumper coarse grain crops were registered in Argentina, Brazil and South Africa, the major Southern Hemisphere maize producers, and the United States, which produced its third largest maize crop.
MAIZE PRICE * - US$/tonne
* U.S. No. 2 Yellow, delivered U.S. Gulf ports.Global coarse grains utilization in 2000/01 is estimated to be up slightly from 1999/00, with increases in feed use and food consumption. Higher feed use is expected in Asia, primarily in China (mainland), where, in spite of a smaller crop in 2000 and large exports during the first half of the season, domestic maize supplies are considered sufficient to allow the continued growth in China's feed grain sector. Reductions in coarse grains utilization would be most pronounced in countries worst affected by drought in 2000, especially in central and eastern Europe and in the Near East.
A drawdown in global stocks in 2000/01 is estimated at some 27 million tonnes. The bulk of the decline is accounted for by China, where the sharp drop in maize stocks was precipitated by a large reduction in production in 2000 and continued large maize exports in 2001. Most of the rest of the expected global stock reduction is in central and east Europe following sharp production shortfalls in 2000. However, ending coarse grain stocks in the five main exporters, which provide the bulk of the worlds available supplies to international markets, are within the range of the previous three years.
The estimate for global imports of coarse grains in 2000/01 (July/June) is now put at about 107 million tonnes, some 4 million tonnes above the previous season. The main regions where imports increased were in North Africa and eastern Europe, in both cases in response to smaller crops.
Global coarse grain supplies are expected to further tighten in 2001/02 in spite of an expected increase in world production, primarily in maize and barley. A better than recent average maize crop is anticipated in China and a record output was harvested in Brazil in 2001, two countries which are among the largest producers in the world. However, after rising for three consecutive years, supplies are expected to decline sharply in the United States, the major coarse grain exporting country. Global utilization is forecast to again exceed production, for the third consecutive year, and total carryovers could fall, primarily for maize and barley. Against this background of shrinking.
International prices of cassava pellets have been falling, on annual basis, since 1996. In 2000, they averaged $84 per tonne or 18 percent less than in 1999. This fall mainly reflected the downward pressure exercised by competitive grain policy in the EC, the major import market and the weakness of the Euro compared to the US dollar. Prices of soybean meal, which is combined with cassava pellets in compound feeds as substitute of feedgrains, rose by 25 percent in the year 2000 compared to 1999, contributing to depress further cassava pellets quotations. Prices of cassava starch and flour also dropped by 8 percent to $158 per tonne.
International trade in dry cassava products was slightly lower in 2000 as compared to 1999 (6.9 million tonnes in cassava pellets equivalent) reflecting reduced demand for feed ingredients for pig-raising in the EC, but also the loss of competitiveness of cassava feed products vis-à-vis domestically produced feedgrains. Although purchases of cassava products by countries in the Far East increased markedly, stimulated by an 8 percent dip in world prices, this was not sufficient to compensate the fall in the EC. For instance, imports by Indonesia rose more than five fold to half a million tonnes. Increased purchases were also made by Japan, the Republic of Korea, Malaysia and Singapore, while China maintained its imports at around one million tonnes. Thailand continued to dominate the market with a share of over 90 percent of world exports. In 2000, this country raised its exports by 100 000 tonnes compared to 1999, sustained by larger shipments of cassava starch and flour to Asian countries. By contrast, sales from Indonesia fell markedly, while shipments from Vietnam and other exporters in Africa, Latin America and the Caribbean, remained unchanged from 1999.
CASSAVA Prices (U.S. $/tonne)
World cassava production in 2000 rose by about 3 million tonnes to 176 million tonnes or two percent above 1999, reflecting increases in Africa, Latin America and the Caribbean which more than offset a reduction in Asia. In this region, the decline reflected low domestic and export prices in major exporting countries, particularly Thailand and Indonesia, which encouraged a shift out of cassava cultivation.
International prices for chips and pellets in dollar terms, continued to fall during most of 2001, a reflection of faltering import demand in the EC and the weakness of the Euro compared to the dollar. By contrast, Thai export prices of cassava starch and flours recovered from the relatively low levels of the previous season. Based on preliminary estimates, trade in cassava products is tentatively forecast at 7.3 million tonnes (in product weight of chips and pellets), 6 percent above the year 2000. About 65 percent of total trade is estimated to be traded in the form of chips and pellets and the remainder in the form of starch and flours. Imports by the Community are forecast to fall by one million tonnes compared to the previous season depressed by a drop in import demand by the Netherlands and Spain, where animal disease concerns have contributed to a fall in meat production. The contraction in the EC market should be more than compensated by larger purchases by countries in the Far East, in particular China, boosted by attractive world prices for chips and pellets.
Global production of the seven major oilseeds in 2000/01 (October/September) rose by about 5 million tonnes from 1999/00, reaching approximately 310 million tonnes. The increase was largely due to gains in soybeans, as production of some of the other major oilscrops, especially the high oil-yielding oilseeds, either stagnated at the previous seasons level or declined.
FAO Prices Indices for Oils/Fats and Meals ( 1990-92=100 )
Based on the above scenario, prices for most oils and fats were pressured during much of the season as reflected by the FAO price index for oils and fats (1990-92=100), which fell by 11 points from the previous season to 82 points. Particularly during the first half of the season, prices were depressed due to excess of supply resulting from a combination of large carry-in stocks and record soybean crops in the United States and South America. However, during the last quarter of the season, prices of most of the major oils and fats began to recover, finally reversing the downward trend that started during the 1998/99 season. The turn-around in prices was largely due to (i) crop-yield concerns for the 2001/02 season in some of the major producing countries in the Northern Hemisphere, (ii) declining stocks, and (iii) growth slow-down in palm oil production in Malaysia and Indonesia, the two leading producers of that commodity.
With regard to oil cakes and meals, the situation was different in that demand outweighed supply, notwithstanding large soybean availability. This resulted in firming of prices as indicated by the FAO price index for oil cakes and meals, which gained 7 points from the previous seasons average, reaching 96 points. The demand side was particularly boosted during the season by the introduction of a ban on the use of Meat and Bone Meal in animal compound feed rations in the EC, which, traditionally, accounts for over 40 percent of global imports of oilcakes and meals. In addition, sustained income and population growth in different regions of the world contributed to the increase in demand. The biggest beneficiary of the higher demand was soybean meal, the abundant availability of which more than compensated for the reduced supplies of the other meals, particularly rapeseed and sunflower seed meals.
Although global production of oilseeds is expected to expand further in 2001/02, output of the high oil-yielding rape and sunflower seed is forecast to decline for the second consecutive season. Based on that oilseeds production scenario, total oils and fats output in 2001/02 could fall short of demand, which is expected to follow a trend increase. In addition to the anticipated reduction in rape and sunflower seeds, palm oil output expansion is expected to slow down. Moreover, carry-in stocks for 2001/02 are much less compared to recent seasons. The resulting tightness in global supplies of oils and fats is expected to lead to a sustainable recovery in prices. This would be in contrast to most of the previous three seasons when conditions of over-supply dominated the market fundamentals, leading to depressed prices.
Regarding oilmeals and cakes, in 2001/02, demand growth is expected to be outstripped by the expansion in supply as the forecast increase in crush of soybeans, also for oil extraction, is anticipated to lead to ample availabilities of meals relative to consumption. The resulting imbalance in global demand and supply is expected to keep a lid on prices in the sector. Consequently, and unlike the previous two seasons, oilmeals and cakes are expected to lose their price leadership role in the oilseeds complex to oils and fats.
Meat and meat products
Milk and milk products
Developments in world meat markets are in stark contrast to those in world markets for dairy products. Meat markets have continued to be affected by adverse consumer reactions to animal disease outbreaks. Recent increases in meat prices are due mainly to improved poultrymeat prices as consumer demand shifts away from beef in favour of white meats. Dairy prices on the other hand, have increased significantly and are expected to remain strong as import demand, especially in developing countries, continues to grow.
Since the start of 2001, the FAO meat price index has moved up by nearly 5 percent, mostly driven by an impressive 11 percent jump in the poultry index. This is a pattern that should persist in the near term, as animal disease concerns contribute to a global move away from beef consumption towards other meats, particularly poultry. In addition, any deterioration in global economic conditions could also trigger a further slowdown in meat consumption and result in a shift in consumer preferences to lower-priced meat cuts and poultry, a phenomena already evident in some importing countries.
Meat Prices ( U.S.$ /tonne )
The global meat economy in 2000 was characterised by slowing output growth and an increased incidence of market disruptions and trade diversion due to animal disease outbreaks in major exporting countries. This was especially so in Europe, with increased occurrence of bovine spongiform encephalopathy (BSE) cases in EC member countries previously considered free from the disease. Exporter competitiveness was also influenced by wide fluctuations of currency exchange rates and reductions in food aid and export subsidies.
Global meat production rose 2 percent to 233.4 million tonnes, with developing countries further expanding their share of the total to 55 percent. The strongest gains were in Asia and South America, prompted in part by continued low feed prices and stronger economic growth which stimulated demand for livestock products. As a result, per caput meat consumption in the two regions rose 3 percent to 27.0 kg and 66.5 kg respectively. In aggregate, per caput meat consumption in developing countries moved up 2 percent to nearly 28.0 kg, while that in developed regions dropped by nearly 2 percent to 77.3 kg.
The 9 percent jump in global meat trade witnessed in 1999, induced by strong economic recovery in Asia, the use of export programmes, such as meat food aid shipments to Russia, and high EC export subsidies, was not replicated in 2000. Meat trade, however, increased more than 2 percent to 16.9 million tonnes, with poultry meat accounting for most of that increase. Animal disease and food safety issues were minimal in the first half of 2000, with the exception of the outbreaks of food and mouth disease (FMD) in Japan and the Republic of Korea. However, the surfacing and spread of FMD, combined with increasing detection of BSE, led to market disruptions, increasing demand for meats other than beef and relative price shifts favouring poultry meat.
While the international meat market is witnessing a gradual recovery in beef demand in 2001, animal disease concerns continue to cast uncertainty about meat trade and price prospects. Global meat trade is expected to rise by less than one percent above the previous years estimated volume. However, even this marginal increase, along with the meat price gains thus far in 2001, could be put in jeopardy by the first reported Asian case of bovine spongiform encephalopathy (BSE) announced in early September 2001 by Japan, the worlds largest meat import market. This announcement might prompt a strong consumer reaction away from beef in the region, with negative implications for global import demand and world prices.
Meat production in 2001 is expected to increase by less than 2 percent with an estimated one percent drop in beef production offset by expected growth of 3 and 2.2 percent growth in the poultry and pigmeat sectors, respectively. Characterised by the slowest gains in 15 years, international meat trade is also witnessing an acceleration of the changing composition of meat trade in favour of poultry and a shift in the composition of meat suppliers as developing countries move to expand meat exports by nearly 8 percent in 2001 as those from developed countries decline more than 2 percent.
International prices rose substantially during 2000, with the FAO price index for dairy products increasing by 25 percent during the year. Since then, prices have dropped back somewhat, although the index is still substantially above the average level for the past three years. The rise in world prices resulted from strong import demand in Southeast Asia, China, Central America, North Africa and the Middle East, especially for milk powder. In terms of supply, lower output in some exporting countries and policy measures in others limited quantities available for external trade.
Global milk output rose by one percent in 2000. In Oceania, production grew strongly in New Zealand and also increased in Australia. In the United States, milk production rose by 3 percent, as farmers responded to favourable farm-gate prices. Conversely, in Eastern Europe dry conditions during the summer reduced output in a number of countries. Milk production in the Russian Federation and the Ukraine was also lower, as the dairy industry in these countries strove to achieve profitability. Production in a number of countries (the EU, Canada, Japan, Switzerland) is subject to policies which restrict output and, consequently, changes little from year to year.
International dairy prices (US $/tonne)
In developing countries, growth in milk output continued in Asia and Latin America. Milk production rose in a number of countries, including Brazil, India, Pakistan and China.
For 2001, in Oceania, milk production for the 2001/02 season in New Zealand is forecast to be 3 percent above the previous one, as a result of good pasture conditions and strong international prices. In the case of Australia, hot and dry weather in the previous production year may adversely affect pastures for the 2001/02 season and hence restrain growth in milk output. In the United States, indications are that milk output will not increase during 2001. In eastern Europe, milk production is expected to be greater than in 2000 and output may also increase in the Russian Federation and the Ukraine.
Indias milk production during the 2001/2002 marketing year could rise to an estimated 82 million tonnes. Growth is also anticipated for China and Pakistan. In southern Latin America, countries experienced markedly diverse climatic conditions during the first part of 2001. In Argentina, milk production was 5 percent lower than in the same period in 2000, as a result of high temperatures and regionalized flooding. In contrast, Chile had excellent weather for pasture development and silage production. Likewise, Uruguay enjoyed favourable conditions. Elsewhere in Latin America, a dry summer in Venezuela and some parts of Brazil inhibited pasture growth and consequently milk output.
Imports of dairy products by countries in South East Asia increased during 2000, as economic growth in this region sustained import demand. Additionally, for the oil producing countries in the Middle East and North Africa, imports of dairy products grew. Elsewhere, purchases by Central American countries also increased. Import demand is expected to be maintained during 2001
Jute, kenaf and allied fibres
Hides and skins
International prices of all natural fibres have continued their downward trend as import demand remains sluggish and there has been no cutback in production in response to falling prices. Rubber prices have held up, but any scope for price increases is limited by the ease with which supply can be expanded and is dependent on global economic growth. Economic growth in the major consuming countries is also critical to the fortunes of the hides and skins market. Prices are unlikely to strengthen until the current uncertainty concerning the timing of a recovery in global economic activity is resolved.
Index Prices of Fibres Index 1990 = 100
International cotton prices, measured by the Cotlook A Index, have declined steadily to just below 100 cents per kg by July 2001, the lowest since 1993 and about a 30 percent drop from late last year. The anticipated excess of supply over demand and the slowdown of growth in global economy were largely responsible for the lower price in 2001/02.
World cotton production is expected to reach 20.3 million tonnes in 2001/02, a 6 percent increase from 19.7 million tonnes last season. While bumper crops are expected from several major producing countries including Australia, Brazil, China, Egypt, Turkmenistan and Uzbekistan, the additional production is predominantly from the United States where production is expected to record a net increase of about 460 000 tonnes, due to an expansion in planting area from 5.3 million to 5.7 million hectares. Favourable weather conditions and the rapid adoption of biotech cotton have contributed to the increase in production for many other cotton producing countries in 2001/02.
World trade in cotton in 2001/02 is projected to reach 6.1 million tonnes, about 8 percent higher than the previous season. The record low world price has stimulated the increase in imports so far this season, which recorded higher export commitments compared with last two seasons, 1999/00 and 2000/01. The United States is expected to export 1.85 million tonnes in 2001/02, about 400 000 tonnes more than previous season. Countries in Asia continue to be the major cotton importers. The imports from Asia are estimated at 2.1 million tonnes which account for more than one-third of world imports. Turkey is expect to remain a major importer in the world market in 2001/02. Its total imports are expected to be 360 000 tonnes. China, traditionally an importer, is expected to be a net exporter in 2001/02.
World demand is expected to reach 19.9 million tonnes in 2001/02, slightly higher than the previous year. After a sharp rise in consumption in 1999/00, consumption has been relatively stable in 2000/01 and the current year. Since the world output is expected to be more than 20.3 million tonnes, the anticipated excess of supply over demand will result in higher stocks, which are estimated to reach 8.7 million tonnes, a 5 percent increase from the previous season.
Although the world price recovered slightly in October 2001 it seems that any substantial price appreciation in the short run is unlikely. China continues to export cotton and the United States is expected to increase exports this year. Moreover, the slowdown of the global economy prevents any sharp increase in demand. In the longer-term, price movements will depend largely on two emerging factors: the rapid adoption of the transgenic cotton and the rapid expansion of the area under cotton in Brazil and Turkey. The adoption of biotech cotton reached 16 percent of world total production area in 2001, and has an important role in reducing production costs. Production costs in some of these new areas are believed to be lower than the current world market price. These two developments may have important impacts on the future price direction in the next few years.
A good harvest in the 2001/02 season (July-June) led to a fall in export prices of raw jute following a recovery in the latter part of the previous season. The prices of BWD grade from Bangladesh ports fell to $310 per tonne in September 2001 from a high of $385 in June. At this level, however, it remained well below the $420 floor of the indicative price range agreed at the last Meeting of the Intergovernmental Group on Jute, Kenaf and Allied Fibres in December 2000.
The combined world production of jute, kenaf and allied fibres is estimated to have recovered by about 12 percent to over 2.8 million tonnes in 2001/02 reflecting a sharp recovery in production in Bangladesh and India, the two major producing countries. Production in India, the largest producer recovered by 11 percent to about 1.8 million tonnes and in Bangladesh by 18 percent to about 800 000 tonnes. Other major producers were estimated to have maintained their year earlier levels.
World exports of raw jute, kenaf and allied fibres continued to decline from a peak of 460 000 tonnes in 1997/98, falling to about 300 000 tonnes in 2000/01. This resulted from a decline in imports by China to about 5 000 tonnes in 2000 from a record of 166 000 tonnes in 1997. India, which overtook Pakistan as the largest importer in 1999 with 160 000 tonnes, maintained its position also in 2000 despite a smaller intake of 130 000 tonnes. Pakistan took about 70 000 tonnes, almost the same amount as in the previous year. Thailand however increased imports to about 20 000 tonnes from only 1 000 tonnes in the previous year. Imports by the EC, Africa, Latin America and Near East regions fell considerably during the year.
Global export values of jute fibres and products are estimated to have fallen to about $425million in 2000 from a high of $663 million in 1996.
Carry-over stocks of raw jute in the major producing countries has fallen in the past three seasons but still remained above 450 000 tonnes at the end of the 2000/2001 season. At this level they represented about 20 percent of the annual requirements of the manufacturing mills of the major producing countries compared with 43 percent in 1997/98, the year of last high level of stocks.
World production of jute, kenaf and allied fibres is likely to fall in 2002/2003 if the current low prices of raw jute are maintained to planting time in March-April 2002. Carry-over stocks of the major producing countries are likely to remain high at the end of the current season, thus limiting any price increases.
Prices of polypropylene, the raw material for synthetic products competing against jute, remained stable at about $775 per tonne in the first two quarters of 2001 after rising sharply to this level in 2000, and this improved the price competitiveness of jute.
Prices of African sisal, which increased earlier in the year, weakened in the third quarter of 2001 as demand contracted. Export prices of 3L grade which rose to $880 per tonne, c.i.f. European ports in July 2001 fell to $800 in October and those of UG grade from $700 to $650 during this period. Prices of Brazilian No. 3 grade weakened slightly from $360 in July to $340 per tonne in October 2001.
The combined world production of sisal and henequen is estimated to have increased by about 6 percent to some 322 000 tonnes in 2001. A sharp recovery in production in Kenya and a further rise in Brazil were the main causes of this increase. The recovery in production in Kenya would help the country to return to its normal level in 2001 from the drought-affected output in the previous year.
Global exports of sisal and henequen fibres increased by around 6 percent to 75 000 tonnes in 2001 following a slight recovery in 2000. Shipments from Kenya, Tanzania and Brazil expanded, but Madagascar was unable to maintain supplies to the world market. Exports of sisal and henequen manufactures also continued to expand.
A decline in export prices of abaca fibre apparent since December 1999 continued to the third quarter of 2001 reflecting weak demand in the face of expanding production. Prices of JK grade, f.o.b. Manila Port, fell to $102 per bale of 125 kg. in August 2001 from an average of $112 in 2000 and those of S2 grade to $118 from $160 during the same period.
Production of abaca, which has continued to expand since 1997, is estimated to have increased by about 8 000 tonnes to some 90 000 tonnes in 2001, with expansion by each of the two main producers, the Philippines and Ecuador.
World exports of abaca fibre are estimated to have increased for the third year in a row in 2001 to exceed 35 000 tonnes, largely due to an increase in exports from the Philippines. Total exports of abaca products including cordage and pulp increased slightly to 43 800 tonnes (fibre equivalent basis) in 2001, almost entirely from the Philippines. The European Union countries continued to be the main destination for fibre exports, followed by the United States and Japan. The United States dominated the market for pulp.
Prices of coir fibre fell sharply in 2001. The domestic price of mattress fibre in Sri Lanka at Rs 2 900 in October 2001 declined to about a half of its level in the same month of the previous year.
An upward trend in production over the last decade is expected to continue through 2001 with output reaching a record of over 320 000 tonnes, due mainly to increased production of brown fibre in India. Production of white fibre in India remained at around 120 000 tonnes in 2001. A recovery in the production of brown fibre in Sri Lanka in 2000 is likely to continue through 2001. World production of coir yarn is expected to continue to rise further in 2001 to reach a record of over 250 000 tonnes.
Exports of coir fibre and yarn recovered in 2000 and this recovery, fuelled by stronger demand in the European Union countries, is expected to continue through 2001. Exports of coir products particularly of mats and mattings have expanded since 1998 and are likely to reach about 45 000 tonnes in 2001.
Rubber prices in the worlds major rubber exchange markets have been relatively stable in 2001. The price of RSS1 rubber fluctuated around the range of 47 to 50 pence/kg in the London market in first 8 months of 2001 in the range of 2.2 to 2.4 Ringgit/kg in the Malaysian market in the same period. Both prices were slightly lower than the average prices last year.
NATURAL RUBBER PRICES - RSS1 cif
Global production is expected to increase from 6.81 million tonnes in 2000 to 7.15 million tonnes in 2001. Production in Thailand, the worlds largest producer, continues to increase and it is estimated that total output will reach 2.42 million tonnes, about 3 percent higher than last year. Production in Vietnam has continued its upward trend and is expected to reach 280 000 tonnes, a 4 percent increase beyond the record level achieved in 2000. Production in Indonesia is estimated to increase to 1.61 million tonnes from 1.56 million tonnes in the previous year. However, Malaysian production is estimated to decline by 9 percent in 2001 as farmers continue to shift away from rubber to other crops, in particular palm oil. Production in other major producing countries such as China and India, will be little changed, while the decline in production in Côte dIvoire will be offset by higher production from Liberia.
Consumption of natural rubber is expected to be around 7.25 million tonnes in 2001, slightly lower than the 7.34 million tonnes in 2000. Nearly half the natural rubber used globally is for tyre production. Demand for motor vehicles, and hence for tyres is largely affected by economic growth. With the slowdown in economic growth, demand for natural rubber in the United States, Canada, Japan and Western Europe is expected to decline, although demand in several eastern European countries was strong up to September 2001. China is expected to continue to experience strong growth, with total consumption estimated to reach 1.17 million tonnes, making it the world largest consumer of natural rubber in 2001.
In 2000 world gross exports were 4.97 million tonnes, reflecting an increase of more than 6 percent from the previous year, and this trend continued in the first half of 2001. From January to April 2001, total world exports were 1.70 million tonnes, about 4 percent higher than the same period in 2000. Indonesia, Vietnam and Thailand accounted for most of the increase. Exports from Thailand for the first 4 months of 2001 were more than 8 percent higher than in the same period in 2000. However, exports from Malaysia continued to decline, and Malaysia fell from being the worlds largest exporter in the early 1990s to only fourth largest in 2000. After importing over one million tonnes annually for six consecutive years, the United States, the largest importer of natural rubber, saw its imports drop significantly from January to May 2001 compared with the same period in the previous year, largely due to a slowdown in economic growth. Chinas imports reached 328 000 tonnes between January and May, 16 percent above the same period in 2000. However, given the weak demand in other major importers such as Japan and the EC in the recent months, global trade in 2001 is expected to be lower than 2000.
World rubber prices are expected to fluctuate around the current level or drift lower in the near future. The deterioration of global prospects of economic growth may lead to lower demand for natural rubber. Also, lower oil prices may make synthetic rubber more competitive, further inducing lower use of natural rubber. In the near term, therefore, prices are likely to weaken. Although the global economy is forecast to resume its growth in 2002, further substantial price improvements are unlikely because of the great potential for increased supply from more intensive tapping and from the increased production capacities in new producing countries.
International prices of most types of hides and skins strengthened in the first part of 2001. From July 2001 demand levelled off and consequently prices of raw hides and skins started declining, but remained on average at a higher level than in the previous year. The short term price outlook appears uncertain as demand for leather and leather products could be affected by the weaker economic growth in major consuming countries.
Price Indices (April 1991=100)
Global output of bovine hides and skins which reached a peak in 2000 of 5.8 million tonnes, declined in 2001 as production in the main developed producing countries fell as result of lower slaughtering. Higher output in developing countries was not sufficient to offset this reduction.
Production levelled off in the United States in 2000 and preliminary information indicates that lower levels of slaughter resulting from reduced herds will be responsible for a decline in output in 2001and 2002.
In the EC, output of bovine hides is expected to decline considerably in 2001and to a lesser extent in 2002 as food safety concerns reduce beef demand, particularly in Germany and Italy. The supply of hides and skins is likely to be reduced also in the United Kingdom, Ireland and, to a lesser extent, other EC countries where bovine herds have been affected by BSE and more seriously by the foot-and-mouth disease outbreak.
Global exports of bovine hides increased in 2000, continuing the upward trend seen in the previous year. This increase of about 2 percent reflected larger exports from the European countries, sustained by stronger demand for good quality hides. However, the increase was not sufficient to match the growth of import demand as evidenced by the rise in prices of late 1999 and 2000. Exports from the United States, the largest supplier to world markets, continued to decline in 2001 and this downward tendency is likely to be maintained in 2002 as result of lower output. Developing countries exports rose in 2000 and 2001 sustained mainly by increased exports from some Far Eastern countries. This growth is likely to continue in 2002 albeit more slowly than in previous years.
In 2000 world imports of bovine hides and skins rose by about 2.5 percent boosted by increases in China, the Republic of Korea and Italy. Italy is now the worlds largest importer of bovine hides, and its purchases increased in 2000 sustained by renewed export demand for high quality leather and leather products. China and the Republic of Korea accounted for more than 30 percent of global imports of bovine hides and skins in 2000. China, the second largest importer of bovine hides, increased its imports in 2001 and a further increase is expected in 2002 as the demand for high quality hides far exceeds domestic supply.
Global production of sheep and goats skins increased slightly in 2000 due mainly to a 5 percent increase in slaughtering from expanded flocks in China more than offsetting reductions in Eastern Europe and the Russian Federation. The increase in production was largely taken up by processing in the producing countries and the volume of trade remained largely unchanged.