|food outlook||No.3, September 2005|
|global information and early warning system on food and agriculture(GIEWS)|
Basic food commodities
Table 3. Wheat production (million tonnes)
Note: Totals computed from unrounded data.
The forecast for global wheat output in 2005 has been revised upward slightly since the previous report to 614 million tonnes, 2 percent less than the record crop of 2004 but still above the average of the past five years. Higher forecasts for Australia, Canada, China, the Russian Federation and the United States have been only partly offset by reduced production prospects in South America, North Africa and parts of Europe.
In Far East Asia, the 2005 wheat production is estimated higher than last year at 191 million tonnes. In China (Mainland) the winter wheat crop harvested until June was estimated at 90.3 million tonnes, 3.7 million tonnes up from last year’s average level reflecting a larger area and favourable weather. Harvesting of spring wheat is underway and the aggregate wheat output for the year is forecast to reach 95 million tonnes. In India, latest estimates of the 2005 wheat crop, which was harvested in May, indicate an output of 72 million tonnes, virtually unchanged from the previous year, but 1 million tonne above the average of previous five years. In Pakistan, according to official estimates, the 2005 wheat crop harvested in May amounted to a record 21.1 million tonnes, reflecting the incentive of government price support and favourable weather.
In the Asian CIS subregion the wheat harvest is nearly completed and preliminary estimates put output at about 23 million tonnes. This would represent an increase of 8 percent from the below-average production of just over 21 million tonnes in 2004, when the subregion’s main crop in Kazakhstan was affected by adverse weather.
In Near East Asia, wheat production is estimated to have risen to a new record level in 2005, with the subregion’s aggregate output reaching almost 47.6 million tonnes. In Turkey, the subregion’s largest producer, another good crop was harvested. Output is estimated above the five-year average at 20.2 million tonnes. The Islamic Republic of Iran achieved a new record wheat output in 2005, estimated at 15 million tonnes, reflecting mostly the continued government support of wheat production under its policy to maintain wheat self-reliance but also generally favourable conditions during the season. Good growing conditions – specifically above-average precipitation in winter and spring – also favoured the crop in Afghanistan, where output is estimated to have reached almost 4.3 million tonnes, just slightly below the 2003 record output. Output also rose significantly above the five-year average in Syria, to about 5.9 million tonnes. By contrast, in Saudi Arabia, production fell sharply due to a further reduction in the area planted.
In North Africa, the 2005 aggregate wheat output is estimated to drop by 18 percent from last year’s record level, to about 14 million tonnes, despite a record crop in Egypt. Delayed plantings in Algeria due to a late start of the rainy season, and extensive dry spells in Morocco resulted in sharply reduced output in these countries. Morocco’s output is estimated to be less than half of last year’s level at about 2.5 million tonnes. Wheat production in Tunisia was also smaller this year but remained above the average of the past five year’s. By contrast to the rest of the subregion, output in Egypt increased further this year to a new record level estimated at almost 8.2 million tonnes, as a result of an increase in the area planted.
In Eastern Africa, the 2005 aggregate wheat production in the subregion is forecast at about 2.5 million tonnes, just marginally lower than last year’s crop. In Ethiopia, by far the major producer in the subregion, prospects are favourable reflecting good rains in the past months and output is expected to increase further from the previous year’s already above-average crop. In Sudan, where the crop was harvested earlier in the year, output was estimated at about 380 000 tonnes, 19 percent lower than the previous year but still above average.
In southern Africa, overall prospects for the 2005 wheat crop, to be harvested from October/November, are favourable, reflecting a recovery from the two previous consecutive drought-affected seasons. A significant increase in production is expected in spite of a small decrease in the area planted in response to the depressed prices of the commodity on the international market at planting time. In South Africa, which normally accounts for about 85 percent of the subregion’s aggregate production, the first official estimate indicates an increase in production of about 21 percent over the previous year to an average level of about 2 million tonnes. The share of South Africa’s wheat production in the regional total this year is expected to go up to 90 percent.
In Central America and the Caribbean, a good 2005 irrigated winter wheat crop was harvested in Mexico, virtually the only producer of the subregion. The winter crop accounts for over 90 percent of the annual wheat production. Planting of the 2005 spring wheat crop is about to be completed. Aggregate output for the year is forecast at about 3 million tonnes, a significant recovery from last year’s production, seriously affected by reduced water supplies for irrigation which led to a sharp drop in plantings.
In South America, planting of the 2005 winter wheat crop has been virtually completed in Argentina, Chile, Paraguay and Uruguay, while in southern producing states of Brazil harvesting of early planted crops has recently started. As a consequence of inadequate levels of soil moisture at planting time in the main producing countries and unattractive price prospects, the aggregate planted area of the subregion is estimated to be down by about 12 percent from last year’s record. Subregional output is tentatively forecast at 21.4 million tonnes, a decline of 15 percent from 2004.
In North America, the winter wheat has already been gathered in the United States, and the spring wheat harvest is nearing an end. As of early September, the aggregate 2005 crop was estimated at 59 million tonnes, virtually unchanged from last year’s good level. In Canada, harvesting of the bulk of the wheat crop has started as of late August and the early stages were somewhat hampered by heavy rainfall and cool temperatures. The latest official forecast foresaw output at 24.7 million tonnes, some 4 percent down from the previous year’s crop. However, hot and dry weather, that set in for the remainder of August after the wet start to the month may limit the yields of some of the later developing crops and output may not turn out as high as expected at the outset of the harvest.
In Europe, the bulk of the 2004 wheat crops have already been gathered in central and southern parts. Latest estimates put the EU’s aggregate output at 123.7 million tonnes, almost 10 percent down from last year’s record crop, but still in line with the average of the past five years. The reduction is largely a result of a return to normal yields throughout the region after exceptionally good levels last year under near optimum conditions. Although crops in the Iberian Peninsula were devastated by drought, these countries account for only a relatively small proportion of the total EU crop so the impact of this was minimal at the regional level. However, regarding durum wheat specifically, which traditionally accounts for about 8 percent of the total wheat crop, the decline in output this year is much more marked. Plantings were reduced sharply in Spain and Italy, two of the main producers, and these and the other durum producing countries were also among the worst hit by the drought. The EU’s total durum crop is estimated to be just over 7 million tonnes compared to the record of almost 12 million tonnes last year.
Also in the Balkan countries, a smaller wheat crop has been harvested this year, mostly reflecting a return to average yields after the record levels in 2004. However, these countries also experienced some losses due to above-average rains throughout the spring and summer, occasionally torrential and causing severe flooding in parts. Some crops suffered yield reduction because of water logging during development, while some areas of near-mature crops have been so badly damaged that they will not be harvested. Furthermore a higher percentage of poor quality grain is expected because of the likely proliferation of disease in the moist conditions and the likelihood of grains sprouting in the head the longer the harvest is delayed. Output in Romania is estimated at 7.2 million tonnes, down from last year’s bumper output of almost 8 million tonnes but still above the five-year average. Despite a significant increase in plantings last autumn, this year’s average yield is estimated to be more than 1 000 kg per tonne less than the record level achieved in 2004. Output in Bulgaria is put at 3.3 million tonnes, again well down from 2004 but about average. The wheat harvest in Serbia and Montenegro is estimated at about 1.9 million tonnes this year compared with about 2.8 million tonnes in 2004.
In the European CIS countries (The Russian Federation, The Ukraine, Belarus and Moldova), the wheat harvest is nearly complete and aggregate output in 2005 estimated at 65.7 million tonnes, some 2 million tonnes up from the previous year. The increase comes mostly as a result of a significant increase in the aggregate area harvested in the region, which totalled some 31.3 million hectares about 1 million hectares up on the previous year. Output in The Russian Federation is estimated at 46.1 million tonnes while that in Ukraine is put at about 17.6 million tonnes and just over 1 million tonnes is estimated for Moldova.
In Oceania, the outlook for Australia’s 2005 wheat crop is much more favourable than the prospective at the outset of the season. After very dry conditions during the main planting period, good rains finally arrived in the second half of June, just in time for some intensive late planting activity. Nevertheless, the area sown in the main eastern producing states where the country’s highest yields are normally achieved remained well below last year’s levels. At this stage, with the crops in the main producing areas still several weeks away from maturity, forecasts are still quite tentative, and opinions regarding the final size of the harvest vary significantly. The latest official forecast as of early September, but based on crop conditions in late August, is the most conservative, putting output at 19.7 million tonnes, about 3 percent down from 2004, bearing in mind the late planting date of such a large proportion of the crop and the limiting effect this has on potential yield. Other analysts’ forecasts range up to 24 million tonnes.
The forecast for global trade in wheat in 2005/06 (July/June) has been raised by 2 million tonnes since the previous report, to 105.5 million tonnes. The forecast has been raised mainly due to higher anticipated import demand in North Africa and in the EU. Nonetheless, at the current forecast level, world exports in 2005/06 would be around 4 million tonnes smaller than in the previous season primarily because of a likely drop in wheat sales to several countries in Asia.
Total wheat imports in Asia are currently put at around 45 million tonnes, 5 million tonnes below the previous season. Most of the decrease is attributed to China (Mainland) where domestic production is estimated to have increased for the second consecutive year, thus boosting domestic supply and reducing the need for large imports. Imports by Indonesia are also forecast to decline, mostly as a result of large carry-over stocks from the previous season. A sharp rebound in production in Afghanistan, to near-record levels, is also expected to result in a significant drop in that country’s wheat purchases. Imports by Pakistan are also forecast to decline sharply because of higher production. In July, Pakistan removed all taxes on wheat imports by private traders in order to improve the domestic supply situation but the pace of foreign wheat purchases have so far proven slow, in part due to logistical constraints, including import inspection procedures. Another traditional importer, the Islamic Republic of Iran, would also need to import very little this season as production is seen to have increased for the fifth consecutive year to a new record. By contrast, imports by Saudi Arabia are forecast to increase in view the country’s relatively low estimated level of production this year. India could also increase its wheat purchases this season although the amount will remain relatively small because of another year of good production. In Iraq, total imports could exceed the previous season’s revised level. Iraq has recently accelerated its wheat and flour purchases from several countries, including Australia, Islamic Republic of Iran, the Syrian Arab Republic, Turkey and the United States.
Total wheat imports in Africa are currently forecast to exceed 29 million tonnes, up from the previous season’s already high level. Most of the increase is expected in North Africa where widespread drought hampered production in several countries. Larger wheat purchases are on the horizon especially for Algeria and Morocco where the impact of the drought has proven to be more severe. In contrast, imports by Egypt, the world’s largest wheat importer, are expected to decline this season, following a larger domestic wheat crop. In Sub-Saharan Africa, imports are forecast to rise in Nigeria, the region’s largest importer, as a result of fast growing demand. In contrast, imports could decline slightly in the Republic of South Africa, given the expected increase in production and in Tanzania, as a result of relatively large carryovers from the previous season.
Wheat imports by most countries in Latin America and the Caribbean are expected to change little from the previous season but imports by the region’s largest importer, Brazil, are forecast to increase in view of an expected decline in production and the increase in domestic demand. Some of the increase in wheat imports by Brazil is expected to be in the form of larger purchases of flour from Argentina, Brazil’s main wheat supplier. In Europe, aggregate imports are forecast to remain steady at the 2004/05 level with imports by the EU similar to the previous season at about 7 million tonnes.
Export competition is expected to intensify this season in view of very large exportable quantities in the Black Sea region and the anticipated reduction in world import demand. Among the major exporters, sharply reduced sales are anticipated in 2005/06 (July/June) from Argentina while sales from Australia and the United States could also decline slightly. In contrast, shipments from Canada and the EU could increase. Among other exporters, good production levels coupled with more competitive prices are seen to drive up sales by the Russian Federation, Kazakhstan and Ukraine to important markets across Asia as well as North Africa.
Global wheat utilization in 2005/06 is forecast at 623 million tonnes, up 8 million tonnes from the previous season in spite of a decline in production this year. Food consumption of wheat is forecast at 439 million tonnes, up only slightly from the previous season but sufficient to maintain per caput levels steady in most cases. At the world level, per caput consumption of wheat is put at 68kg, unchanged from the previous season. Based on the latest estimates, this year’s large supplies of feed wheat are expected to result in an increase of almost 4 million tonnes in feed usage of wheat for animal consumption, to 114 million tonnes. All of this increase, however, is expected in the developed countries where total feed use of wheat is forecast to reach 101 million tonnes. Higher forecast feed use in the EU, the Russian Federation and Ukraine account for most of the anticipated growth in feed use among the developed countries.
The forecast for wheat stocks for crop years ending in 2006 has been revised upwards by 4 million tonnes to 163 million tonnes since the previous report. At this level, global wheat stocks would be about 10 million tonnes, or 5 percent, smaller than their opening level. Most of this month's revisions reflect upward adjustments to the estimates for this year’s wheat production in several countries, including a number of wheat exporting countries.
The anticipated decline in world reserves this season is mostly driven by further reductions in inventories in China as well as in India, Turkey, the Syrian Arab Republic, and Morocco. Ending stocks in the EU are also forecast to decline from their exceptionally high levels as a result of a sharp fall in this year’s production. In the United States, wheat inventories are forecast to increase as exports may decline because of increased competition. For the major exporters, as a group, total wheat stocks are now forecast to approach 52 million tonnes, up 2 million tonnes from the previous report and now only slightly below their opening levels. At the current forecast level, aggregate wheat stocks held by major exporters represent 32 percent of the world total, similar to the estimated ratio in 2004/05 and still highest in 2 decades. Moreover, total wheat stocks held by major exporters as a percentage of their total disappearance (defined as domestic utilization and exports) remains fairly steady at around 21 percent, lower than in the previous season but close to its 10-year trend.
International wheat prices rose slightly since the start of this year’s marketing season with the US wheat No. 2 (HRW, fob) averaging US$167 per tonne in September, up US$16 per tonne since May and US$12 per tonne more than in the corresponding period last year. The strength in the US origin hard wheat prices reflected faster pace of sales earlier in the season, which indicated strong export demand for the US wheat, supported by the lower transport costs at that time (i.e. decline in dry-bulk ocean freight rates) and a weaker US dollar. While prices for hard wheat have been on the rise, soft wheat prices remained under downward pressure because of greater competition with large supplies of much cheaper (at around US$95 per tonne) wheat entering world markets from the Black Sea region. In the EU, in spite of large supplies, the pace of sales remained weak as the Euro started to regain strength against the Dollar and the level of export refunds (subsidies) stayed low, albeit a small increase in recent weeks from 4 to 6 Euro. By late September, wheat futures for December delivery at the Chicago Board of Trade (CBOT) were quoted at US$120 per tonne, up slightly from August and the corresponding period last year. Looking ahead, while trade is forecast to contract and this could mean more downward pressure on prices, prospects for a sharp drop in export supplies in Argentina, reduced sales from the EU and gradual resumption of normal export levels from the US Gulf could keep prices above the previous year’s levels.
Table 4. Coarse grains production (million tonnes)
Note: Totals computed from unrounded data.
Developments for the world’s major coarse grain crops in the past two months have called for an 11 million tonnes downward revision in the global 2005 output forecast to 958 million tonnes. The most significant downward adjustment concerns the United States, where hot and excessively dry conditions in the Corn Belt have compromised yield potential. Lesser reductions have been made to the forecasts for Central and South America and Europe, also mostly reflecting the impact of drought or dry conditions in the maize producing zones of these regions. Only partly offsetting these downward revisions, were increased crop forecasts for some Asian and African countries. At the forecast level, the 2005 world coarse grain crop would be some 6 percent below last year’s record level, but still well above the average of the past five years.
In Far East Asia, prospects for the 2005 maize crop are favourable. In China, where harvest of the main crop is well advanced, the maize output is tentatively forecast at 128 million tonnes, 2 million tonnes lower than last year’s bumper harvest but still well above the average of the previous five years. This year, planting and early crop development in the North China Plain was affected by the high temperatures and low rainfall. In India, the monsoon has brought favourable precipitation to most of the producing states, with the exception of West Rajasthan, West Uttar Pradesh and coastal Andhra Pradesh. Maize production in 2005 is forecast at 14.5 million tonnes, 2.6 percent up from the previous year, reflecting, in addition to the favourable growing conditions, a larger sown area and increased use of hybrid seeds in response to higher maize prices. Heavy monsoon showers in late August returned to the Philippines, keeping soil moisture levels high for maize. In the first half of 2005, Philippine produced almost 2 million tonnes of maize, 15.5 percent lower than in the previous year, due to the drought and high fertilizer cost. However, the maize output for the second half of the year is expected to increase by 14 percent to about 3.5 million tonnes.
Harvest of the 2005 coarse grains in the Asian CIS countries has been completed. Output is estimated at 4.3 million tonnes, similar to the previous year’s below average harvest. This includes about 2.4 million tonnes of barley and 1.5 million tonnes of maize. Kazakhstan produces nearly 60 percent of the subregion’s coarse grain crop.
In North Africa, harvesting of the 2005 winter coarse grain crops is well advanced. Aggregate output is forecast at about 11.5 million tonnes, some 10 percent below the 2004 crop due to reduced plantings in most countries as a result of dry weather. In Egypt, the largest producer, the maize crop is officially forecast to decrease to 5.6 million tonnes, due to a steep drop in area planted.
In West Africa, crop prospects are good following regular and widespread rains over the main producing zones of the Sahel, and planting of coarse grains has been completed in most countries. An above-average harvest could be obtained if favourable growing conditions continue through October. In the southern parts of the countries along the Gulf of Guinea, an average maize crop has been harvested while planting of the secondary maize crop is underway. In the northern parts, coarse grains are generally developing satisfactorily.
In Central Africa, growing conditions are favourable so far in Cameroon but crops may have been affected by extensive dry spells in Gabon.
In Eastern Africa, harvesting of the 2005 coarse grains has been completed in southern parts of the subregion and is expected to start soon in northern countries. The subregion's 2005 aggregate output is forecast at about 23 million tonnes, 8 percent above average. In Eritrea, production of coarse grains is anticipated to recover from the below average crop of 2004 due mainly to improved weather. In Ethiopia, the outlook for the coarse grain harvest is favourable following good rains in the past months and the output is expected to increase slightly compared to last year’s good level. In Sudan, early indications suggest an improved crop, mainly in major producing areas. In Kenya, production of the “long-rains” maize crop is forecast at about 2.5 million tonnes, more than 40 percent above the 2004 “long-rains” production. By contrast, in Somalia, the recently harvested 2005 main season “Gu” crop in the main producing areas of the south, is estimated at about 73 000 tonnes, compared to last year’s “Gu” production of about 125 000 tonnes. In Tanzania, the 2005 coarse grains output is estimated at about 4.2 million tonnes, slightly below last year’s good crop. In Uganda, recent reports indicate an average 2005 output reflecting adequate weather conditions in main producing areas.
In southern Africa, FAO's latest estimates of the 2005 coarse grain crops indicate an aggregate output of 19.0 million tonnes, some 10 percent higher than the year before and 12.5 percent above average level primarily due the record harvest of 13.0 million tonnes in South Africa. Production of maize, the main staple in the subregion, also increased proportionately to the above-average level of 17.6 million tonnes. In South Africa, the subregion’s largest producer, the latest official estimate of maize production is 12.4 million tonnes, 31 percent above the average of previous five years. The harvests of maize have also been favourable in Angola and Mozambique relative to the average levels. However, in most other countries in the subregion, such as Zimbabwe, Botswana, Malawi, Namibia, Lesotho, Zambia and Swaziland, severe dry spells during the growing season resulted in reduced harvests currently causing food shortages in parts of the subregion.
In Central America and the Caribbean, in Mexico, planting of the 2005 main rain-fed summer maize crop is almost completed and preliminary estimates point to a slight increase in the area planted compared to previous year’s summer crop. Elsewhere in the subregion harvesting of 2005 main season coarse grain crops is well advanced. Favourable weather conditions during the growing season resulted in a general increase in both area planted and production compared to last year’s same season’s levels in most countries. In aggregate, subregion’s 2005 maize production is tentatively forecast at 24.6 million tonnes, similar to the good crop of last year.
In South America, harvesting of the 2005 coarse grains has been completed in the main southern producing countries. The subregion’s aggregate output is expected to be about 72.3 million tonnes, some 3 percent below last year’s harvest and far from 2003 record crop of 80.4 million tonnes. This is essentially due to the pronounced reduction in Brazil’s maize output that offset the good results obtained in almost all other South American countries. In Brazil, the 2005 aggregate maize production is estimated at 35 million tonnes, about 16 percent less than 2004 output. This decline is mainly due to diversion of land to soybeans and rice following more attractive prices and to the negative impact of dry weather conditions on plantings and yields of the first and second crops in South and Centre-West producing states. On the contrary, in Argentina, maize crop output is officially estimated at record level of 19.5 million tonnes, reflecting about 16 percent increase in planting and the positive effect on yields of adequate precipitations during the grain filling phase. In Chile, Colombia, Peru and Uruguay, 2005 maize outputs confirm the upward trend showed during the last few years and, as a consequence of favourable weather conditions, are estimated well above the average of the past five year’s.
In North America, cereal production prospects in the United States have not been altered significantly by the devastating impact of Hurricane Katrina. Damage to crops was mainly limited to the northern Mississippi Delta where sugarcane, cotton and soybean are the major cultivations. Further to the north in the eastern Corn Belt and Ohio Valley, crops benefited from the additional moisture that arrived in these areas. Of far more impact on the major maize crop has been prevailing hot and dry weather in the central and southern Corn Belt for most of June, July and early August, which has taken its toll on yield potential. As of early September, with the maize harvest just getting underway in the southern producing states, only 51 percent of the total crop was rated as good/excellent, compared with 69 percent at the same time last year. The hardest hit states have been Illinois, Missouri and Texas, where 57 percent, 43 percent and 38 percent of the crop, respectively, is rated very poor/poor. The latest official forecast foresees a total maize output of about 270 million tonnes. This would be 10 percent down from last year’s record crop but would still be the second largest crop on record as, despite the likelihood of below average yields, a very large area has been sown this year. The country’s aggregate coarse grain output is forecast at 288 million tonnes. In Canada the coarse grain harvest is underway and although the season has been generally favourable, output is expected to fall back from last year’s bumper level. The latest forecast of aggregate coarse grain production is 25.3 million tonnes, compared with 26.7 million tonnes in 2004, but this is still well above the average of the past five years.
In Europe, the past two months have seen some deterioration in the prospects for the 2005 coarse grain crop, mainly in regard to maize in southern countries, which have been affected by drought. Thus the forecast of the region’s aggregate coarse grain output has been revised downward since June to 208 million tonnes, 13 percent below last year’s record output. In the EU the small grain crops have mostly been harvested under favourable conditions, but with both area and yield down compared to last year, a significant cut in production is expected by 15 percent for barley, 19 percent for rye and 11 percent for oats. Furthermore heavy summer rainfall in some parts, particularly in Germany, has reduced considerably the quality of this year’s crops. As for maize, the bulk of the crop has still to be gathered. Summer drought has reduced yields of the region’s main crops in France, Italy and Spain. Although the drought has been quite devastating at the local level in some countries, particularly in Spain and Portugal, the overall impact is not as great as with the more widespread drought in 2003.
In the Balkan countries, excessive rainfalls and flooding characterised the summer, with a negative effect on both yield and quality of the small coarse grains (mainly barley). However, after the optimal conditions in 2004 it was already expected that output would decline this year. In Romania, production of barley is estimated to be about 20 percent down from last year’s bumper crop although still about average. The summer rainfall was less detrimental for the maize crop, which is forecast to reach 10 million tonnes, second only to the record crop last year.
In the European CIS countries, harvesting of the 2005 coarse grains is well advances and aggregate production is estimated at about 51 million tonnes, some 4 million tonnes down from last year and below the average of the past five year’s. The reduction reflects the combined effect of a reduction in area because of adverse weather at planting time and some reduction in yields from the high levels achieved last year. Of the total, barley is expected to account for some 27 million tonnes and maize for 9.7 million tonnes.
In Oceania, prospects for winter grain production in Australia have seen a sharp turn-about since the start of the season when it seemed that dry conditions would seriously limit planting. Good rains arrived around mid-June, just in time to allow a rush of fieldwork before the end of the planting window. In fact, the area sown to barley, the major winter coarse grain, is reported to have increased this year, this crop being chosen in preference to wheat by many farmers as it performs relatively better even when planted quite late in the season. Thus, even assuming a moderate yield, a little below the five-year average, the latest official forecast puts total output of barley up by about 3 from the previous year at 6.6 million tonnes. Planting of the summer crop of sorghum (for harvest in 2006) will be carried out in September and October. Prospects are favourable reflecting the build-up of sufficient soil moisture supplies when the winter rains finally arrived, and planting could increase by about 10 percent, with farmers making use of fallow that could not be planted to winter grains because of the earlier dryness.
Global trade in coarse grains in 2005/06 is currently forecast at 104.5 million tonnes, down 2 million tonnes from the latest estimate for 2004/05. The decrease in exports from the previous season would be mainly accounted for by lower shipments of barley while some declines are also anticipated for maize and sorghum. The estimates for coarse grains exports in 2004/05 have been raised by nearly 5 million tonnes since the previous report as a result of much larger reported sales by the major exporters, including Argentina, Australia, the United States and several countries in Europe.
Aggregate coarse grains imports by countries in Asia are forecast to remain nearly unchanged from the previous season with expected purchases by most countries remaining steady at the previous season’s level. However, maize and barley imports by the Islamic Republic of Iran are forecast to continue to increase, mainly driven by a fast growing feed demand, while good prospects for barley production in the Syrian Arab Republic could result in lower imports by that country.
Total imports by countries in Africa are forecast to increase by almost 1 million tonnes from the previous season to just over 16 million tonnes in 2005/06. Barley and maize purchases by several countries in North Africa are expected to increase, mainly in response to less favourable production prospects. Total imports are expected to increase also in the sub-Saharan countries as a group. Lower imports by the Republic of South Africa, Kenya, and Sudan are likely to be more than offset by larger import demand in Zambia and Zimbabwe.
This season’s coarse grains imports by most countries in Latin America and the Caribbean are likely to increase slightly. In Mexico, the region’s largest importer, this year’s maize output is currently forecast to remain similar to the previous season’s level, thus resulting in an increase in imports given its fast growing demand for feed. Brazil is expected to emerge as a net maize importer this season because of the reduced domestic production. However, in Europe, imports are likely to remain subdued mostly as a result of large supplies. In the EU, where this year’s production is forecast to drop, imports could still decline because of ample carryovers and large expected imports of feed wheat.
Regarding exports, maize sales from Argentina and the Republic of South Africa are forecast to increase significantly as a result of a strong rebound in their production. Exports from the United States are also forecast to increase although prospects for any significant rise in exports have been hampered by Hurricane Katrina, which has greatly interrupted grain movement in the Mississippi River Gulf Ports. Maize exports from China are expected to remain below the previous season. However, in view of the recent rebound in transport costs and delays in the resumption of normal export activities in the United States, China’s maize could become more competitive, leading the way for larger exports to China’s nearby markets. Among other important players, a sharp fall in coarse grains production in Bulgaria and Romania could result in lower sales of barley and maize from those two countries. Barley exports from Ukraine are also seen to decline this season, mainly as a result of lower production. However, exports from the Russian Federation could approach the previous season’s level in spite of a small anticipated decline in production since stocks remain large and local supplies of feed grains exceed domestic demand.
World utilization of coarse grains is not expected to change by any significant margin in 2005/06 as compared to the previous season, remaining at around 977 million tonnes. Large supplies of feed wheat, somewhat weaker demand in regions fighting animal diseases and generally slower economic growth prospects are among the main factors for this. In fact, contrary to the situation in 2004/05 when feed usage was the driving factor for the sharp expansion in total use of coarse grains, feed use in 2005/06 is forecast to contract by almost 10 million tonnes, to 617 million tonnes. On the other hand both food use and other usages of coarse grains, which include industrial use, are expected to expand significantly in 2005/06. Total food consumption is forecast to rise to 178 million tonnes after a decline in 2004/05. Industrial use of coarse grains is forecast to expand again this season, mostly driven by strong demand from the fast growing ethanol industry and increases in maize-based ethanol plant capacities. In the United States, usage of maize for ethanol production in 2005/06 is officially forecast to reach 38 million tonnes, up 4.3 million tonnes from 2004/05. High oil prices are expected to drive up demand for alternative energy also in other countries.
The forecast for world coarse grains stocks for crop years ending in 2006 has been lowered by as much as 17 million tonnes since the previous report, to 172 million tonnes. The adjustment is mainly driven by a sharp cut in the forecast for world production in 2005. At the current forecast level, world ending stocks of coarse grains are expected to decline by roughly 20 million tonnes, or 11 percent, from their relatively large carry-in levels. Contrary to earlier expectations, total coarse grains inventories in major exporters could decline sharply, mostly in the EU as a result of a significant drop in production. Based on the latest estimates, stocks held by major exporters by the end of the seasons in 2006 could reach 80 million tonnes, down 12 million tonnes since the previous report and also 10 million tonnes below their high opening levels. As a result, the overall global share of coarse grains inventories held by the major exports are now expected to remain close to the previous season’s level.
Elsewhere, significant decreases in stocks could be expected also in China and Brazil where production declines are expected to drive down maize inventories. Similarly, as a result of this year’s less favourable production prospects, smaller barley inventories are expected in most countries in North Africa, Morocco in particular.
The US coarse grains prices gained somewhat through July, mostly on weather concerns, before easing slightly in response to more favourable growing conditions, lower world demand and a surge in supplies of feed wheat from the Black Sea region. The US No. 2 maize (Gulf, fob) averaged US$97 per tonne in September, up US$3 from May and the same as in the corresponding period last year. Strong regional demand, however, has been supportive to South African prices, especially for white maize, the supply of which is seen as more limited this season. Large supplies of old crop and more subdued demand in recent weeks kept US maize futures under pressure. By late September, the Chicago December maize futures stood at US$80, US$2 below the same time in the previous year. In early September interruptions in export activities caused by Hurricane Katrina brought exports to a halt from the US Gulf Ports. With nearly 70 percent of the US maize exported through the Gulf Ports, the US prices reacted with a decline after few days of uncertainty, manifested also in the futures price movements for that period. However, on a more positive side, the early September interruption of trade occurred before the major harvesting period began in the United States and with damaged logistics being repaired and exports gradually returning to normal, the long-term impacts on the US maize exports, and consequently prices, are likely to be negligible.
Table 5. Rice production (million tonnes)
Note: Totals computed from unrounded data.
FAO’s latest forecast for global paddy output in 2005 stands at 615 million tonnes, 6 million tonnes less than expected in June but still a record level, 9 million tonnes above the previous year’s crop. The downward revision since June mostly reflects a deterioration in prospects in the world’s two largest rice producing countries – China and India - because of adverse weather.
In Asia, despite the deterioration in prospects in recent weeks, most countries are still expected to harvest larger crops this year. In particular, output in Bangladesh is set to recover by 5 percent. In China (Mainland), the expected increase from last year is likely to be smaller than previously anticipated reflecting adverse weather in some parts of the country. Production this season is now set to reach about 180 million tonnes, only 1 million tonnes larger than the revised output estimate for 2004, which was recently released by the National Statistical Bureau. The Chinese Province of Taiwan has also been affected by adverse weather but, despite a slight negative revision, the production forecast still points to a small recovery relative to 2004’s crop. In India, the pattern of the 2005 monsoon, which is about to recede, has been erratic in paddy growing areas, with a late arrival and an uneven distribution of the rains. Accordingly, FAO’s forecast for 2005 production has been lowered to 129 million tonnes, which would still be 1 percent above the revised 2004 estimate, with the growth mainly arising from an increase in plantings. In Pakistan, the Government recently cut this season’s production forecast but the expected crop would still be a record high. By contrast, the forecast for Philippines’ paddy production over the 2005 season (July 2005- June 2006) has been raised and now points to a 2 percent annual growth. The revision reflects anticipation of a good crop over July-December 2005. A strong increase in output is also foreseen in Sri Lanka, reflecting a 19 percent increase in the main Maha crop already concluded and the positive outlook for the secondary Yala crop now at the harvest stage. Prospects in Thailand point to a strong recovery of production from the extremely poor performance last year. The Government continued to provide market support to farmers all through the 2004 season, and has already announced it is prepared to procure 9 million tonnes of paddy from the forthcoming main 2005 crop, which will be harvested in November. Prices for the new procurement programme have been set substantially above those paid in 2004 in recognition of the rising costs faced by producers. As prospects improved in Viet Nam, production is now set to reach a new record.
So far, only a few countries in the region are expected to see their production fall in 2005. In the case of Indonesia, the decline should be modest, as officials are now forecasting production to end close to the outstanding 2004 performance. A contraction in area and flooding problems in August are also anticipated to depress production in the Republic of Korea. Lingering drought problems have undermined crop prospects in Laos and, especially, in Nepal, where 23 out of 75 districts were reported to be under strain, and production in both countries is now anticipated to fall.
Paddy output in Africa is currently anticipated to grow by 4 percent to reach some 19.9 million tonnes in 2005. Egypt, the largest producer in the region, is forecast to increase output to a new record after the all-time high already achieved just last year, a reflection of the high domestic prices that have been associated with a growing demand for export. In Western Africa, many countries are going through the lean period of the year and rice prices have been reported soaring in several locations, particularly in Guinea, Chad, Mali, Niger and even Nigeria. In several of these countries, governments have taken action to bring relief, for instance by eliminating an 18 percent value-added-tax in Mali, or launching some free and targeted distribution of rice in Niger. Regarding the new paddy season, most western African countries benefited from abundant and well distributed rainfall as of the end of August, raising expectations of good paddy crops in Burkina Faso, Chad, Côte d’Ivoire, and Senegal. However, shortages of seeds in Mali and Niger have been reported, as drought and locust infestation afflicted the two countries last year. Production in Nigeria is also expected to rise strongly. The Government, which is engaged in the promotion and the dissemination of improved rice varieties, recently approved the allocation of Naira 1 billion (US$7.4 million) for the mass reproduction of Nerica rice seedlings over five years. The project falls within the Rice Initiative launched by the Government to raise the country’s self-sufficiency in rice.
Elsewhere in Africa, most countries have completed their 2005 rice season. It was concluded positively in Madagascar, which recorded a 12 percent increase in output this season, while a small contraction occurred in Mozambique.
With most of the paddy planting complete in Central America and the Caribbean, FAO’s forecast of production in the subregion remains at about 2.5 million tonnes, 3 percent above the poor 2004 crop, but still short of the levels achieved between 2000 and 2003. Several countries have continued to face adverse growing conditions, in particular Cuba, one of the largest rice producers in the subregion, which is anticipated to harvest its smallest crop since 2000. In the Dominican Republic, the sector was affected by heavy rainfalls and flooding early this year. However, owing mainly to stronger institutional support, in particular through a 32 percent increase in credit loans, paddy production could grow by 10 percent. As excessive rainfall was reported to have caused losses in Costa Rica, especially in the main producing region of Chorotega, production is likely to drop below last year. Crop prospects in the rest of the subregion remain generally positive, especially in Mexico, Nicaragua and Panama, which are all poised to harvest larger crops this season.
Most countries in South America have concluded or are about to conclude their paddy season. Production in the subregion is set to increase by 500 000 tonne compared with 2004, to 23.8 million tonnes. Most of the growth reflects developments in Brazil, which alone accounts for more than half of the regional aggregate. Based on results from a sixth field survey, production in the country is estimated to have grown by 3.1 percent this year. Official forecasts in Ecuador and Peru also point to larger crops compared with the 2004 season. By contrast, in Argentina, production is estimated to have fallen marginally, as improved yields did not completely compensate for a decline in plantings. In Chile, low temperatures at the pinnacle formation stage depressed yields and production. In Colombia, a contraction of rice area, associated with falling prices, is anticipated to bring about a 5 percent contraction in output this season. The Government is launching a set of measures to address the price decline, in particular the reactivation of incentives to millers to keep rice under storage during the peak supply months in August/September. The severe floods which damaged crops in Guyana early this year are estimated to have brought about a sharp reduction in output. To enable producers facing damage to replant their crops, the Government has launched a flood relief package, providing seeds and some compensation payments to affected farmers. A reduced paddy crop is also estimated to have been harvested in Uruguay this year. Rice market prices have fallen considerably in the country, bringing hardship to producers, many of whom may face difficulty in securing credit to finance cultivation next season. The outlook for production in Venezuela has worsened somewhat, with plantings now set to contract in the wake of falling producer prices associated with large supplies in 2004. Producers have been asking the Government to raise the institutional price of the crop above last year’s level of Bolivar 514 per kilogramme (US$239 per tonne), to reflect rising costs.
In the United States, Hurricane Katrina, which hit the Louisiana Gulf Coast on 29 August, appears to have caused only minimal damage to rice crops in Louisiana and Mississippi and, according to the latest USDA estimate, production in the country is now expected to approach 2004’s exceptional level. In Australia, the 2005 crop estimate has been reduced to a record low, reflecting a further downward revision to drought-affected yield estimates. Drought may also have impaired crops somewhat in the European Union, which, together with a contraction in plantings, is anticipated to result in a 3 percent reduction in production. Elsewhere in Europe, in Ukraine, an expected improvement of yields should lead to an increase in production. Production is also expected to rise in the Russian Federation, reflecting positive crop prospects in Krasnodar, the main producing region.
FAO has raised its forecast for global rice trade in calendar year 2005, to 27 million tonnes, which would be 1 percent above the previous year, and reverses earlier expectations of a contraction. However, looking ahead to the next year, early indications for calendar year 2006 suggest a contraction is in prospect, and could be quite significant, by 4 percent, to about 26 million tonnes. Much of the decrease would be on account of smaller exports by India, the Republic of Korea, Pakistan, Viet Nam and Egypt compared with the relatively high levels they are foreseen to ship in 2005. By contrast, exports from Thailand are likely to rebound with increases also foreseen for the United States. The decline in world imports next year would mainly reflect smaller deliveries to the Philippines but also to Bangladesh, Indonesia, the Islamic Republic of Iran, Nigeria and the Russian Federation.
Although little has changed overall compared with last year, the current outlook for trade in 2005 points to large variations in the relative contributions of the major market players. In particular, a contraction in Thailand’s sales by 23 percent could be compensated by increased shipments from India, Pakistan, Viet Nam, the United States and Egypt.
India’s rice deliveries have been particularly high between January and May and may reach 4.2 million tonnes over the full year, 18 percent more than in 2004. Sales by Pakistan also surged between January and July and are now expected to reach a record by the end of the year. The country’s future export prospects improved significantly following a trade agreement with China in July 2005 paving the way for imports to this country. Following the lifting of the 3.8 million tonne export limit, Viet Nam is now set to ship 4.5 million tonnes, which would be 11 percent more than last year. Exports from the Republic of Korea are set to double, following an agreement with the Democratic Republic of Korea for the delivery of 500 000 tonnes. By contrast, prospects for sales by Thailand have been lowered well below the record volume shipped last year. The expected contraction reflects reduced availabilities from the 2004 season but also the support policy of the Government, which led to prices being above those prevailing in other markets. Similarly, exports by China are likely to fall, although current low prices may induce the Government to intensify sales in the coming months. Outside of Asia, Egypt is seen to export a record 1 million tonnes, underpinned by strong demand from countries in the Near East and in central and eastern Europe. Argentina and Uruguay are also set to raise their shipments, although flows from those countries were reported to have been disrupted by farmer protests in Brazil. According to the USDA, rice exports by the United States might rise to the second highest level in history, sustained by much lower export prices. There is some concern, however, over the impact of Hurricane Katrina on exports, given the serious damage it caused to waterways, grain elevators and to the New Orleans port facilities.
On the import side, the latest FAO forecasts point to substantial increases in rice deliveries to Asian countries, now expected to reach 12.9 million tonnes, almost 9 percent more than last year. The increase should reflect much larger movements of rice into Bangladesh and the Philippines, where relatively poor 2004 crops have resulted in strong domestic price increases this year. Similarly, rising domestic prices induced Indonesia to relax its ban on rice imports first in August , when it consented to let rice varieties not produced locally to be brought in and, later in September, when it authorized the state logistic agency Bulog to import 250 000 tonnes. As a result, the country is now anticipated to take around 1 million tonnes, up from 900 000 tonnes in 2004.
Based on current forecasts, imports by African countries may fall by 5 percent to 8.2 million tonnes, reflecting smaller deliveries to Nigeria. The Government recently authorized two firms to import 100 000 tonnes of husked rice at half the prevailing tariff of 100 percent, but has not yet officially renounced to its ban on rice imports as of 2006. In South Africa large wheat and maize crops this year are estimated to depress rice import demand. By contrast, based on exporter’s sales figures, shipments to Senegal are set to rise, while those destined to Niger may double to more than 300 000 tonnes to address severe cereal shortages earlier this year.
In Latin America and the Caribbean, imports by Brazil, Peru and Nicaragua are anticipated to fall as locally produced supplies rise. Shipments to Mexico are expected to change little from last year. By contrast, record purchases are expected to be made this year by Cuba, reflecting continuing shortfalls in production. Increased quantities are also likely to be taken by Costa Rica.
In the rest of the world, Australia is estimated to purchase 100 000 tonnes of rice, mainly in the form of husked rice, to ease domestic supply shortages. The United States recently lowered its import forecast, which now points towards a contraction from last year. Purchases by the European Union are still expected to be of the order of 900 000 tonnes. In August, the European Commission reached an agreement with WTO partners concerning imports to the EU of milled or semi-milled rice and of broken rice. As in the case of husked rice, flexible tariffs will be applied, depending on the level of actual imports relative to pre-determined reference levels. Although early this year, the Russian Federation more than doubled the tariff applied on rice imports, imports to the country are anticipated to remain close to last year level, reflecting, to some extent, delays in the implementation of the new tariff rates.
Total rice utilization is expected to approach 415 million tones in 2006, about 3 million tones more than last year. About 88 percent of the total should be consumed as food, with only 2 percent destined for feed and the remainder for other uses. On a per caput basis, rice consumption as food is anticipated to hover around 56.8 kg per head, slightly below the average of last year.
Following the downward revision of the forecast for world paddy production in 2005 (a large share of which will be consumed in 2006) the forecast for global rice inventories at the close of the 2005/06 marketing year has also been reduced, by 500 000 tonnes, and now stands at 94.9 million tonnes. This would be 3.5 million tonnes below their opening levels, and a drawdown for the sixth consecutive year.
Among traditional exporting countries, the cut in the size of world rice reserves would be particularly marked in China and India, which are seen to reduce their carry-over stocks by more than 1 million tonnes each. A more modest contraction is foreseen in the case of Egypt and the United States, while stocks are likely to remain close to their opening level in Thailand and increase in Myanmar and Viet Nam.
Several major importing countries are also expected to reduce the size of their inventories, in particular Indonesia, where they might fall by over 1 million tonnes, reflecting mainly low imports. Stocks might also end smaller in Bangladesh, the EU, Nepal and the Philippines, while the good production performance this year should boost them in Brazil.
Concerns over the availability of rice supplies at times of emergencies led the ASEAN countries, to agree in July on an increase of the East Asia Emergency Rice Reserve from 87 000 tonnes to 200 000 tonnes in 2005-2006.
International rice prices weakened somewhat in June and July, as reflected in the FAO All Rice Price Index (1998-2000=100), which lost 1 point in each of the two months, dropping to 100 in July, the lowest index value since February 2004. In August and September, prices regained some strength with the Index rising to 101 and 102 respectively, reflecting higher quotations especially of Indica (both of the lower and higher quality) and Aromatic rice. By contrast, the sub-index for Japonica rice stayed at 93 between July and September.
The weakness of international prices in June and July mainly reflected sluggish import demand and relatively large supplies following the harvests of secondary 2004 crops in some major exporting countries. Renewed competition from India and China also tended to depress prices. In August, however, the announcement of higher procurement prices in Thailand and the resumption of shipments to Africa and Iraq imparted new strength to the market. International prices have continued to firm in the first weeks of September, reflecting the return of Indonesia on the import market, strong sales to Africa and new contract for deliveries to Iraq. Thailand’s sale, in September, of 900 000 tonnes of government-owned rice through tenders was made at relatively high prices and did not depress the market. The price strength is expected to continue in the coming months, partly in reaction to rising production and marketing costs, which have been associated with the surge in oil prices. Prices are also expected to react strongly to new developments regarding crops and government policies.
Although recent new outbreaks of Avian Influenza (AI) extending westwards from Asia into the Russian Federation are raising concerns over potential disruption in the global meat industry sector, international meat markets in the past few months were characterized by a strong recovery from the previous wave of disruption caused by animal disease problems in 2004. An increase in demand for meat, as consumption returned closer to normal levels, and the reopening of many previously closed markets has put strong upward pressure on international prices in the first half of 2005. The FAO meat price index (calculated using trade-weighted indicative international meat prices) peaked at 109 points during the period, surpassing the previous high in the FAO database of 108 in February 1991.
Rising poultry and beef prices are the main contributors to this increase in the value of the index. By mid-year, the FAO price index for poultry was up more than 13 points since January, and up nearly 20 points since the onset of AI outbreaks in early 2004. International beef prices continue to remain strong due to constrained exportable supplies in the absence of North America beef in major markets because of Bovine Spongiform Encephalopathy (BSE) concerns. The strong growth in pig meat prices witnessed in 2004 has now slowed as consumers move back to poultry and beef consumption despite higher prices.
As global meat markets gradually recover from the animal disease and food safety concerns pervading markets in 2004, over the next few months prices will be influenced by numerous other factors. These include the recent damage from hurricane Katrina to ports and cold storage facilities on the Gulf of Mexico, which is expected to disrupt US poultry shipments over the short term, thus putting further upward pressure on global poultry prices. Uncertainty also surrounds the recent movement of AI westward towards Europe and potential consumer, industry, and policy responses to any further outbreaks. Looking even further ahead, however, in the absence of any escalation of animal disease outbreaks, meat prices in 2006 are likely to decline. One of the main factors which could result in a downward shift in all meat prices would be a rapid resumption of beef trade from the United States to Asia following any Japanese agreement to accept US beef.
Global meat production is forecast to grow by 2.5 percent in 2005 to 267 million tonnes, supported by favourable returns in the meat industry sector. After two years with no growth, developed country meat production prospects are edging up slightly. Strong meat production gains expected in North America (in response to domestic demand) and Australia would more than offset lower production in the EU where policy developments have limited any significant growth over the past five years. By contrast, strong growth in export-oriented South America and recovering meat production in Asia imply that nearly 80 percent of the 7 million tonnes increase in meat production is expected to be located in developing countries. As developing countries expand their consumption of meat products to account for 58 percent of the global totals, up from 43 percent in the early 1990s, their meat consumption is expected to reach 31 kg per caput, up more than 1 kg per caput from last year and nearly double the level of 1990. This compares to an estimated consumption of 84 kg per caput by developed country consumers and the global average of 42 kg per caput.
Table 6. World meat statistics1
1 More detailed meat statistics are available on the Internet as part of the FAO World Wide Web (www.fao.org) at the following URL address: http:/www.fao.org/es/ESC/en/20953/21014/index.html.
2 Includes meat (fresh, chilled, frozen prepared and canned) in carcass weight equivalent; excludes live animals, offals and EU intra-trade. Up to 2003 EU (15), from 2004 EU (25).
Note: Total computed from unrounded data.
Driven by strong growth in developing countries, bovine meat production is expected to rise by 2.4 percent in 2005 to 64.2 million tonnes. Despite the lowest ever cattle inventory numbers in the FAO data base, beef output in developed countries is estimated up marginally, as high cattle prices and forage constraints stimulate slaughter levels in the United States and Australia. In Canada, an industry-led restructuring of the industry, in the wake of the BSE crisis, is enhancing slaughter capacity and stimulating higher beef output. This contrasts with the policy-induced reforms in the EU that are leading to a decline in European inventories and slaughter and contributing to gradual erosion in the developed country share of global beef output. Strong beef prices are supporting production gains in many Asian countries, including China, Indonesia, Philippines, and Viet Nam while enhanced contracting of male buffalos is pushing up output in others such as India and Egypt. Meanwhile, robust export demand is pushing up slaughter and production in South America, further increasing the developing countries’ share of global totals to 54 percent in 2005. The developing countries share first exceeded that of the developed countries in 2002.
Despite relatively strong prices and robust trade prospects, global pig meat production is expected to increase relatively little in 2005, to reach 102.7 million tonnes. In developed countries, output is set to increase only marginally, reflecting largely the fact that production in North America and Europe is relatively price unresponsive because of the nature of industrialized production units and environmental pressures. Export-led gains are pushing up South American production by 6 percent while strong demand in Mexico, Viet Nam and many other Asian countries are pushing up the developing countries’ share of global production to an estimated 62 percent in 2005, up from 61 percent in 2004 and 55 percent in 1995. However, production prospects in China, and potentially regional consumption, may be slowed by the recent outbreak of streptococcus suis, a highly pathogenic pig disease responsible for over 40 human deaths in China.
Global poultry output is forecast to grow by almost 4 percent in 2005 to an estimated 81.4 million tonnes. The increase is supported by rapidly rising consumption, in spite of continually rising prices and concerns about continued outbreaks of AI in 2005 and its spread westward. Production in Asia, which fell in 2004, is expected to increase by over 3 percent to 26.7 million tonnes. Despite continuing and sporadic disease outbreaks in some countries, such as Viet Nam and Indonesia, per caput poultry meat consumption in Asia is gradually recovering in 2005 after registering an unprecedented drop in 2004 to 7.4 kg per caput (for more on the market impact of AI see box).
Global ovine meat production in 2005 is foreseen to rise to a record of 13 million tonnes, up 2.8 percent from the previous year. Strong import demand is being met by drought-induced production growth in Australia and ongoing productivity improvements and a slight rise in the breeding flock in New Zealand. While lamb and mutton production in the United States is declining, inventories have recently reversed their long-term decline in response to the Ewe Retention Program. By contrast in Europe, production is declining in some major producing countries as ewe premiums have been decoupled. In Asia, which accounts for almost 60 percent of global output, strong prices are pushing up output by over 3 percent in the largest producing areas of China and Pakistan.
Recovering confidence in meat, combined with a gradual opening of markets, is leading to a surge in global meat trade, expected to jump in 2005 by an unprecedented 10 percent to a record 20.8 million tonnes. This follows the first year-on-year decline in a quarter of a century when reports of BSE in early 2004 and human fatalities related to AI poultry in Asia led to escalating food safety and animal health concerns and consequential trade restrictions. The shifting market shares that characterize markets affected by disease outbreaks continue to accelerate in 2005, with competitively positioned South American products set to capture 33 percent of the global export markets, up from 10 percent a decade ago.
Strong international beef prices, as North American exportable beef supplies remain in cold storage or on the hoof, are being supported in 2005 by strong growth in beef trade, estimated up by 11 percent to 6.7 million tonnes. This increase follows a one-percent drop in trade in 2004 as importers scrambled to replace products from North America which historically accounted for 25 percent of global exports. Supply deficits and price movements in 2005 continue to be exacerbated by high domestic beef prices in the EU, which combined with the increase in the value of the Euro and the first drop in export restitutions in four years, is maintaining - for the third year - Europe’s position as a growing net beef importer. In fact, in 2004/05 nearly 131 000 tonnes of beef were imported at full duties, much of which was sourced from South America.
Global beef demand, fuelled by higher imports by Mexico, Japan, the Republic of Korea and the Russian Federation (which, after the United States, is the world’s largest beef importer) are prompting strong growth in exports from Australia, despite low cattle inventories. In South America, annual growth in exports has averaged between 20 and 40 percent since 2003 with the region expanding its export share on global beef markets from 17 percent in 2000 to an estimated 43 percent in 2005. Brazil, which became the world’s largest beef exporter in 2004, is likely to increase shipments by 22 percent in 2005, despite unfavourable exchange rate movements, pushing up their share of global exports to more than one quarter. High prices, and bilateral trade agreements, have also prompted increased shipments from India and some non-traditional exporters such as Chile. Strong trade gains for developing countries are pushing their share of global trade to an estimated 53 percent in 2005, similar to their share of global beef production.
As markets shut and consumption slipped in 2004 in response to AI, international movement of poultry products dropped an unprecedented 8 percent during the year. However, trade in 2005 is surging, and forecast to recover by 11 percent to reach a record 8.4 million tonnes. Strong trade prospects are supporting production growth in both the United States and Brazil, two countries, which while accounting for 35 percent of global production, supply more than 70 percent of global exports.
Despite rebounding beef and poultry consumption and trade, exports of pig meat also remain strong in 2005 with trade expected to expand 7 percent to 4.7 million tonnes. While a slight slow down in Japanese imports is expected, imports by other Asian countries, such as the Republic of Korea and Singapore are supported by relatively strong economic growth and, in Korea’s case increased government environmental restrictions and limitations on animal numbers which restrict growth in production. In China, a mid-year decision by the Government not to issue import permits for pork used in processing may constrain growth in trade for that market, while the outbreak of streptococcus suis is expected to slow pig meat demand and exports. Benefiting from favourable exchange rate movements, US pig meat exports are forecast to increase by 22 percent, while shipments from Canada are also expected to be higher despite uncertainty created by an Australian court ruling limiting imports due to an animal health issue related to young pigs. Strong competition from Brazil in the Russian Federation market is constraining any growth in EU exports, despite increasing shipments from some accession countries to nearby markets. Meanwhile, bi-lateral trade agreements with Japan are supporting increased exports from Mexico and Chile.
Trade in sheep meat products is expected to reach 788 500 tonnes in 2005, up by 7 percent from the previous year, as tight global lamb supplies in key importing markets and falling Australian prices in early 2005 prompted strong shipments. Imports by the United States may remain constrained due to unfavourable exchange rate movements. In other markets, however, such as Japan, China, and many markets in the Near East, ovine meat prices remains competitive relative to other meats, prompting higher imports from both Australia and New Zealand, suppliers of an estimated 86 percent of global exports. Exports from other less traditional exporters, such as Argentina, Uruguay, China, and Pakistan are also increasing.