FAO/GIEWS - Food Outlook No.1 - February 2002 p. 5

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Larger imports by the EC send world trade higher

The forecast for world cereal trade in 2001/02 has been raised by 3 million tonnes since the previous report in December to 236 million tonnes, mostly due to larger wheat purchases by the EC. At this level, global cereal imports would be some 2 million tonnes more than in 2000/01. Overall, aggregate cereal imports by the developing countries are expected to change little compared to the previous season, but imports by the Low Income Food Deficit Countries (LIFDCs) could rise by some 1.8 million tonnes, to 74 million tonnes, mostly due to higher imports by several countries in Asia. Among the individual cereals, the only significant expansion in the volume of world trade is expected for wheat, while trade in coarse grains is forecast to decline and rice imports may increase slightly.

World trade in wheat and wheat flour (in wheat equivalent) in 2001/02 (July/June) is put at 106 million tonnes, up 4 million tonnes from the previous season and 1 million tonnes more than reported in December. Of this, imports by the developing countries would be about 81 million tonnes, down 2 million tonnes from 2000/01 in spite of larger expected imports by a few countries, namely Afghanistan, China and Uzbekistan. However, the bulk of this year's anticipated expansion in world wheat trade would be on account of larger purchases by several other countries in Asia as well as in Europe, namely the EC.

In the export market, an emerging feature this season is the prevalence of exceptionally large surpluses in some countries, other than the major exporters, while total wheat shipments from the five major exporters are forecast to decline by as much as 3 million tonnes. Sharply lower wheat production in almost all major exporting countries, with the exception of Australia, is one of the factors for this decline. In Argentina, despite a substantial devaluation of the peso, the economic uncertainties have slowed export sales during this important marketing period. By contrast, good crops and the weak Australian dollar (against the US dollar) have boosted wheat exports in that country.


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. Trade in rice is reported on a calendar year basis for the first year shown.

Overview of World Cereal Imports - Forecast for 2001/02

Coarse grains
Rice (milled)
( . . . . . . . . . . . .. . . . million tonnes . . . . . . . . . .. . . . . .)
Central America
South America
North America


Losses in wheat sales from the five major exporters are expected to be more than compensated by shipments from a number of smaller exporters, as well as from India and Pakistan, usually wheat-importing countries. Ample supplies, brought about by improved crops in Central and Eastern European Countries (CEECs), as well as in the Russian Federation and Ukraine, coincided with strong demand from nearby western European countries. In addition, large exports are also expected from India and Pakistan, although eventual sales could fall short of the original targets, mostly due to quality standards and price concerns.

On the demand side, total wheat imports by countries in Asia are forecast to approach 49 million tonnes, up almost 5 million tonnes from the previous season, mostly because of domestic shortfalls. China (Mainland) is seen to import significantly more given the decline in its 2001 wheat production and the strong demand for higher quality wheat. Wheat purchases by the Republic of Korea are also forecast to increase sharply, mainly driven by favourable prices for feed quality wheat in world markets. The forecast for imports by the Islamic Republic of Iran has been revised downward in view of the slower pace in purchases; imports are now forecast to remain unchanged from the previous season's revised volume, at around 6.5 million tonnes.

In Europe, total wheat imports will be higher than in the previous season mostly driven by much larger purchases by the EC, while imports by several other countries namely Bulgaria, Romania, the Russian Federation and Ukraine are expected to decrease because of improved domestic production. Given the fast pace of EC purchases so far this season, the forecast for imports has been raised by 2 million tonnes to 6.5 million tonnes. This increase in purchases is an exceptional development since the EC is also a traditional major wheat exporter. Beside the sharp decline in its total soft wheat production in 2001, another reason underlying this sudden surge in the EC imports is the suspension of the import duty premium (since November 2001) on grain purchases from the nearby countries, making wheat imports, particularly from the CEECs, more competitive in the EC market.

Wheat imports by countries in Africa are forecast to drop slightly below the previous season's level to 25 million tonnes. Several countries are expected to reduce their imports this season. In northern Africa, higher production and improved supplies are expected to result in smaller purchases by Algeria and Morocco. However, a smaller wheat harvest in Tunisia has increased the demand for wheat imports into that country. In eastern Africa, a sharp drop is expected in imports into Ethiopia because of two consecutive years of above-average harvests. Smaller wheat imports are also anticipated by several countries in southern Africa: the biggest in the Republic of South Africa, because of another good production in 2001.
In Central America, imports by Mexico are expected to rise as domestic production failed to keep pace with rising demand. Due to hurricane damage, wheat imports by Cuba are also seen to increase slightly. In a recent symbolic move and for the first time in 41 years, Cuba made large food imports from the United States, including 50 000 tonnes of wheat. In South America, overall wheat imports are forecast to remain unchanged from the previous season in most countries with the exception of Brazil where, because of larger domestic production, imports are now forecast to fall to 6.5 million tonnes, down 500 000 tonnes from the previous report and smaller than in the previous season.

The forecast for global trade in coarse grains in 2001/02 (July/June) has been raised by 1.5 million tonnes since the previous report to 106 million tonnes. At this level, world trade would still be some 2.5 million tonnes below the previous season's estimated volume, which was a record. Overall, coarse grain imports by the developing countries are likely to contract by 4 percent to almost 70 million tonnes, mostly due to smaller purchases by Mexico and Brazil. This season's anticipated decline in world trade would embrace all types of major coarse grains. World imports of maize are forecast to be slightly down and reach 76 million tonnes. Trade in barley and sorghum could also decline this season, to 18 million tonnes and 8 million tonnes, respectively. International trade in oats, rye and millet are all forecast to contract to reach 2 million tonnes, 1.4 million tonnes, and 200 000 tonnes, respectively.

In spite of the anticipated contraction in world trade this season, coarse grain exports from the United States, the world's largest exporter, could surpass the 2000/01 volume by a relatively small margin. However, the small increase in exports from the United States would not fully compensate for lower sales from Argentina, Canada, and the EC. The pace of barley sales from the EC have so far lagged considerably behind the corresponding period last year, while exports from Canada have been affected by lower production. Some of these declines in barley sales would be offset by a notable expansion in shipments from Australia. Among other exporters, maize shipments from China are likely to decrease, compared to the previous season, because of reduced crops, although the volume would still remain significant. Exports of maize from the Republic of South Africa are also likely to drop because of lower domestic production. By contrast, Brazil has turned into an important maize exporter and competitor this season, supported by large domestic supplies and a strong international demand for non-GMO maize (commercial planting of GMO crops is prohibited in Brazil). A bumper maize harvest in Hungary and an upsurge in barley output in the Russian Federation are also likely to result in much higher exports from those countries.

Total coarse grain imports by countries in Africa in 2001/02 are forecast at 14 million tonnes, down 1 million tonnes from the previous season. Northern African countries are seen to cut their imports this season, mainly on account of higher domestic production. However, imports by most countries in the sub-Saharan region are likely to remain similar or rise above the previous season's levels. One major exception is Kenya, where a combination of a good maize harvest and relatively ample stocks has reduced import needs. Imports are likely to rise sharpest in the southern subregion, where production shortfalls in a number of countries have led to higher import requirements, especially in Zambia and Zimbabwe. In Zambia, weather was the prime reason for a sharp fall in maize production in 2001 and, hence, the need for larger imports in 2001/02. In Zimbabwe, normally a surplus maize producer, the 2001 harvest was also sharply reduced, following lower plantings by commercial farmers; as a result, maize imports are seen to surge to over 400 000 tonnes, the highest volume since the mid-1990s.

In Asia, coarse grain imports in 2001/02 are likely to rise slightly above the previous season's estimated volume and reach nearly 58 million tonnes. Most of the increase would be on account of higher expected imports into Indonesia, Pakistan, the Philippines and Turkey. By contrast, imports are likely to decline in most other Asian countries. In Japan, a weak currency and recent BSE outbreaks in the livestock sector have dampened the import demand for maize. In the Republic of Korea, maize imports are likely to decline given the preference for feed wheat purchases.

In Europe, coarse grain imports by the EC, Bulgaria, and the Russian Federation are forecast to increase, while improved maize and barley harvests would mean much smaller purchases by Romania and Poland. In Latin America and the Caribbean, except Mexico and Brazil, most other countries are likely to import as much coarse grains as in the previous year. The region's largest importer, Mexico, is seen to reduce its maize and sorghum imports mostly because of larger 2001 harvests; while a record maize crop in Brazil has boosted domestic supplies and turned the country into an important exporter, small imports may be required due to the high internal transport cost of moving domestic produced grains into deficit areas.

2001 Rice Trade

FAO's estimate of global rice trade in 2001 has been raised to 23.4 million tonnes, from the earlier forecast of 22.8 million tonnes. The upward adjustment reflects the raising of export estimates for Egypt, Pakistan and Thailand, of about 300 000 tonnes each, which more than compensated reduced sale prospects by Brazil, Mainland China and Viet Nam. From the import side, the revision is mainly the result of higher estimates of deliveries to Brazil, Nigeria and Senegal.

Outlook for Rice Trade in 2002

International trade in rice in 2002 is currently forecast to record a moderate expansion of about 2 percent, to 23.8 million tonnes, 500 000 tonnes higher than forecast in the previous report. The adjustment is mainly on account of larger shipments to Cameroon, Nigeria, Senegal and the Islamic Republic of Iran.

Much of the anticipated growth in trade in 2002 reflects expectation of a surge of imports by China (Mainland), through the opening of WTO preferential tariff quota, to about 1 million tonnes. At that level, the country's imports would still fall short of the volume that could enter the country under the quota. The Chinese Province of Taiwan is expected to buy the full 145 000 tonnes committed under the WTO minimum import commitment.

Among traditional importing countries, rice shipments to Indonesia are expected to rise by some 40 percent from last year, mainly reflecting the disappointing outcome of the 2001 rice crop. Domestic prices have reportedly been rising, obliging Bulog, the State Food Agency, to release supplies on the market. By contrast, smaller imports are likely to be made by Bangladesh, the Philippines and Malaysia, which harvested good crops in 2001. Moreover, the Government of Malaysia has announced a new set of measures to prevent rice from entering the country illegally. Shipments to Sri Lanka may also fall compared to last year, if a recently announced six-month ban on rice imports is implemented. By contrast, the reduction of imports tariffs to the pre-October 2001 levels in Turkey could somewhat boost rice purchases by the country.

Rice shipments to Africa could fall from the exceptionally high level of 7.1 million tonnes last year to 6.3 million tonnes in 2002, with much of the decline arising from smaller shipments to Cote d'Ivoire, Madagascar, Nigeria and Senegal. While the rise of imports to the region in 2001 mainly reflected a strong domestic demand and low world rice prices, the fall anticipated for the current year is mainly on account of relatively large opening stocks and of the possibility of a strengthening of international prices. Given the important role the region is playing on the world rice market, changes in import policies there could have a large impact on international prices, especially of parboiled and broken rices, which are the preferred types imported into the region.

In Latin America and the Caribbean, shipments to Nicaragua have officially been forecast to double to some 60 thousand tonnes, consistent with the fall in production expected this year. By contrast, Colombia is expected to cut them to some 15 000 tonnes, down from an estimated 100 000 tonnes last year. The revision follows from the issuance by the Government in January of a resolution that states the level to be imported during the year, all of which should be sourced in Andean Pact countries. Little changes have been made to the 2002 forecast for the rest of the region. Record purchases are expected to be made by Cuba, following two years of disappointing harvests. Increased imports are also expected to be made by Mexico, while those by Brazil could fall, given the current expectations of increased output in 2002.

Among developed countries, the forecast of purchases by the Russian Federation has been lowered somewhat. Last October, the country announced it would increase tariffs on rice imports from 5 percent to 10 percent, in an attempt to limit these to some 40 percent of domestic consumption, or about 350 000 tonnes. The introduction of an import ceiling for an equivalent amount has also been foreseen. Shipments to Japan are forecast to remain about unchanged, while those to the EC are expected to be of the order 600 000 tonnes, as in previous years.

Regarding exports, the 500 000 tonnes difference between the FAO's current and past 2002 trade forecast is mainly on account of larger expected shipments from China (Mainland), Egypt, Thailand and the United States, which more than offset downward revisions for Cambodia, Pakistan and Viet Nam.

Rice exports by China (Mainland) have been raised somewhat from the previous forecast, but they still will be the smallest since 1998. Official forecasts for rice deliveries by Egypt stand at 850 000 tonnes in 2002, substantially above the original FAO figure, and 100 000 tonnes more than in 2001. Under the subsidy program the country launched between October 2000 and September 2001, US$25 per tonne were granted on exports of medium grain rice and US$50 per tonne on long grain rice. Exports from Thailand in 2002 are now expected to remain close to last year's record level of 7.5 million tonnes, 200 000 tonnes more than previously foreseen and much above the government outlook of 7.0 million tonnes. The official forecast for the United States has been also raised somewhat. In this connection, in the preliminary allocations of rice concessional sales in fiscal year 2002, the country has earmarked 166.1 thousand tonnes under the P.L.. 480 programme, which allows especially favourable credit conditions to eligible countries, and 1.6 thousand tonnes under the Food for Progress Programme, most of which should be directed to Indonesia and Uzbekistan.

By contrast, the forecast of sales by Cambodia has been sharply lowered, following the downward revision in production there. Likewise, prospects for exports from Pakistan and Viet Nam have been downsized. In the case of Viet Nam, the official Government export target has been reduced from 4 million tonnes to 3.8 million tonnes, which would still imply an increase from last year. Export activities in the country have been at a standstill since the introduction of an export ban last December, which is to last until March, when the 10th-month crop will start being harvested. The measure was adopted in response to the limited supplies coming from the summer/autumn crop and low rice inventories, to prevent domestic shortages from arising. High relative domestic prices are reportedly depressing sales from Pakistan.

Forecast exports by the other major rice exporters in 2002 remain unchanged. Shipments from India could surge to over 2 million tonnes if the Government maintains its current policy to subsidize sales abroad, a reasonable assumption given the very large size of its rice inventories. So far, under a current export policy proposal, the validity of current sale price of rice for export is to be extended until March 2002. Sales from Myanmar are also likely to rise further, reaching their highest level in the 1990s. By contrast, little change in exports compared with last year is currently anticipated for Australia and traditional suppliers in South America.

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