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Wheat

Production recovered in 1992

Global wheat production recovered from the sharp drop in 1991 rising 3.5 percent in 1992. All of this production increase was due to higher yields while harvested area was reduced. Total output in the developed countries recovered sharply, particularly in the United States, due to a lower set-aside and higher prices. Output also rose in the countries of the former USSR and in Australia, mainly as a result of improved weather. However, unfavourable weather led to smaller harvests in most other developed countries, including Canada, South Africa, a number of EC countries, Poland and Romania. Aggregate 1992 wheat production in the developing countries also expanded, mainly due to exceptionally good weather conditions in most parts of Asia. By contrast, prolonged drought depressed the harvest in Africa, while adverse weather problems resulted in slightly reduced production in Latin America.

Reduced import demand and trade in 1992/93

World imports of wheat in 1992/93 fell 7 percent below the previous year's record level. The factors influencing international trade in 1992/93 included bumper harvests in several major importing countries and sharply reduced demand by the world's two largest wheat importers, China and the countries of the former USSR.

Aggregate wheat imports by the developing countries declined 9 percent to 67 million tonnes in 1992/93. Most of the decline occurred in Asia, where imports fell by 17 percent, following a record crop in China. A notable exception was India, importing 3 million tonnes of wheat in 1992/93 to offset below-target domestic grain procurement. In Africa, notable increases occurred in Morocco, as a result of a drought reduced crop, and in Nigeria, where imports doubled following the lifting of its previous import ban. While unfavourable weather conditions led to larger imports into Somalia, higher domestic output reduced those by Egypt, Libya, and Sudan. Wheat purchases by Latin America and the Caribbean increased slightly in 1992/93 from the previous year except in Mexico, where a smaller output and the low quality of the 1992 crop triggered larger imports.

Total imports into the developed countries in 1992/93 fell slightly to 32 million tonnes. Larger purchases by South Africa and several non-EC European countries offset, to a large degree, the fall in shipments to countries of the former USSR, where the harvest was above average. A combination of smaller crops and reduced domestic government procurement boosted imports by Poland and Romania.

Despite the contraction in global wheat trade in 1992193, all major exporters increased shipments with the exception of Canada, where the lower quality and smaller size of its 1992 crop resulted in a 10 percent decline. However, wheat exports from several smaller exporting countries fell significantly in 1992/93. In Eastern Europe, only Hungary and Bulgaria remained in the export market, but their combined sales were well below 1991/92 levels. In Asia, Turkey exported only half as much as the previous year's record.

The value of world wheat exports in calendar 1992 rose 20 percent and average export unit values by 17 percent reflecting substantially higher prices during the first half of the year. The wheat import bill of the developing countries increased by nearly 25 percent to over $11 000 million in 1992.

Consumption up, less used for food in 1992/93

Global utilization of wheat was one percent larger in 1992/93, but was still slightly below the long-term trend. Most of the estimated rise in wheat utilization was for food, maintaining annual per caput food consumption at 71 kg. The increase in wheat consumption was slight in the developed countries, primarily in the countries of the former USSR, where subsidized wheat bread substituted other more costly food. By contrast, global feed use declined by 6 percent. The contraction in feed was mainly in the developed countries, particularly in Europe where poor weather reduced supplies. Total wheat consumption rose by about 2 percent in the developing countries. Food use of wheat increased, especially in Asia, but the use of wheat for feed fell from the relatively high levels of the previous year. In Africa, the per caput consumption of wheat was maintained largely through higher imports to offset the sharp drop in production caused by the widespread drought.

Higher stocks and lower prices in 1992/93

Higher production in 1992 and reduced import demand was reflected in a 5 percent expansion of global stocks for crop years ending in 1993. World carryovers at 143 million tonnes remained, however, considerably below the record levels of the mid-1980s. The major wheat exporters accounted for most of the increase in stocks, while inventories were drawn down by half in Eastern Europe as a result of a sharp fall in production. In the developing countries, wheat stocks were built up substantially in some parts of Asia. By contrast, stock reductions occurred in North Africa and China.

The average quoted price for US Hard Winter No. 2 in 1992/93 was 5 percent lower than in the previous year reflecting the reduced demand. The price of $142 per tonne was, however, above that actually paid by many importing countries on account of the continuing large volume of sales attracting subsidies under the Export Enhancement Programme and other export subsidization arrangements. By comparison, the price of unsubsidized Argentinean wheat averaged $123 per tonne in 1992/93, $9 per tonne above the 1991/92 average.

Production unchanged in 1993

Global wheat output in 1993 was estimated at 566 million tonnes, virtually unchanged from the previous year. Harvests in the developed countries were down slightly. In the United States and Canada production was somewhat below the 1992 levels, but still above the average of the previous five years. The reduction in the United States was despite relaxation in the Area Reduction Programme with the set-aside for wheat reduced to zero. Moreover, excessive moisture during the growing season lowered the average protein content and hence the quality of their wheat supplies. Smaller crops were also estimated for countries of the former USSR due to contraction in the area sown and a delayed harvest. In Europe, the EC's production fell due to an increased area set aside and reduced support prices under the reformed Common Agricultural Policy as well as to drought in a few countries. However, this decline was partially offset by increased crops in several Eastern European countries.

Wheat production in the developing countries rose, mainly on account of record or above-average crops in Asia. However, wheat output in Africa remained close to the reduced level of the previous year, following another year of drought, particularly in northern Africa. In Latin America, a slight increase in production in Argentina was offset by a smaller crop in Brazil.

Developed countries to import less in 1993/94

International trade in wheat was forecast to decline further in 1993/94, by 6 percent, because of larger crops in several of the major importing countries. The developed countries would account for all of the decline, principally Poland, Romania and the countries of the former USSR, while imports by the developing countries were forecast to remain unchanged. The likely increase of imports into North Africa, because of drought-reduced production, were expected to be offset by declines in Asia, particularly China, India and Pakistan. With the expected contraction in global import demand, shipments from the major exporters would fall by some 9 percent in 1993/94. Among major exporters, only Australia was expected to increase deliveries following a recovery in output. By contrast, aggregate shipments from smaller exporters were anticipated to remain at the previous year's reduced level with larger exports from Turkey and Sweden offsetting smaller shipments from Hungary, Bulgaria and Saudi Arabia.

Increased global utilization predicted for 1993/94

Global utilization of wheat in 1993/94 was forecast to increase by 2 percent to 567 million tonnes with all of the rise likely to occur in the developing countries. There, consumption of wheat as food was expected to grow, notably in a number of Asian countries with higher production. The use of wheat as feed was also anticipated to increase substantially in 1993/94 as the abundance of low quality wheat was likely to compete successfully with other grains in animal feed rations.

Stocks to contract in 1993/94

Global wheat stocks were forecast to be drawn down by 3 percent, to 139 million tonnes, for crop years ending in 1994. For some major exporters, the expected lower production and higher domestic consumption were likely to reduce wheat stocks, irrespective of the bleaker export prospects. The most significant decline in stocks could occur in Canada resulting from the anticipated downturn in production. By contrast, carryover stocks held in the United States were expected to expand as exports were likely to fall. The abundance of low quality wheat was expected to maintain downward pressure on its international price with keen competition among exporters. However, the market for high quality wheat was likely to be characterized by scarcity and upward pressure on prices.

Production

¹ Clean weight basis.

Utilization

¹ Other uses include: seed, industrial use and waste.

Exports¹

¹ Trade season July/June.
² Excluding trade between member countries.

Imports¹

¹ Trade season July/June.
² Excluding trade between member countries.

Value of exports

¹ Including trade between EC member countries.

Closing stocks

¹ At the end of national crop years.
² Government stocks only.

Export unit value

¹ Including trade between EC member countries.

Prices¹

¹ Trade season July/June.
² Argentine ports f.o.b.
³ Ordinary protein, United States Gulf ports f.o.b.
⁴ United States Atlantic ports f.o.b.
⁵ July to December 1993.

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