Agricultural raw materials

COTTON

World cotton prices continued trending down in 1999. The Cotlook 'A' index, an indicator of world prices, plummeted to $1.09 per kilo in September 1999, about 30 percent lower than a year earlier. Greater production, weak demand and, in particular, the substantial decline in the price of man-made fibres, were responsible for the lower prices. The 'A' index declined further to a 13-year low, $0.98 per kilo, in December 1999 largely due to expectations of a more abundant supply than in the previous season and increasing exports from major producing countries, including China, Pakistan and the United States.

World cotton production is estimated at 19 million tonnes for the 1999/2000 crop year (August to July), up nearly 500 000 tonnes from 1998/99. Although the area under cotton in China fell about 15 percent to 3.9 million hectares as the government reduced its procurement price, production could still amount to 4 million tonnes because of higher yields. Adverse weather had a negative effect on US cotton production for a second successive season. However, since the cotton marketing loan programme provided an incentive to farmers to plant 9 percent more land to cotton during the 1999/2000 season, output is expected to reach 3.65 million tonnes, about 600 000 tonnes more than in 1998/99. After bad weather reduced production in 1998/99, Pakistan is expected to report an increase of about 20 percent to 1.8 million tonnes in 1999/2000. Expanded area and improved yields contributed to higher production in Uzbekistan and Turkmenistan. Thus total production in the area of the former USSR will reach nearly 1.8 million tonnes, about 23 percent more than in 1998/99. Production in the EC is expected to reach a 3 year high of 520 000 tonnes in 1999/2000. In Brazil, an increase in planted area resulted in a 5 percent increase in production. Lower world market prices and adverse weather induced a 5 percent decline in plantings in India, although production declined only marginally because of higher yields. It is estimated that production in Australia in 1999/2000 will fall to 700 000 tonnes, a reversal of its upward trend over the past few years, as planting areas declined by about 20 percent.

The total volume of trade in 1999/2000 is expected to rebound from the depressed level of 5.3 million tonnes in 1998/99, to 5.8 million tonnes. Exports from the United States are expected to recover from 915 000 tonnes in 1998/99 to 1.5 million tonnes, largely due to the economic recovery in Asia. Exports from the area of the Former USSR are expected to shrink to 1.26 million tonnes, 6 percent less than in 1998/99, given the increase in domestic mill consumption. Exports from Australia in 1999/2000 are forecast to remain at the previous season's level of around 650 000 tonnes, despite reduced production. Exports from China were 161 000 tonnes in 1998/99, but are expected to increase significantly to 310 000 tonnes in 1999/2000 as the recent cotton marketing reforms gave producers more freedom to market their output.

With gradual recovery from the financial crisis, cotton importing countries in Southeast Asia increased their intake in 1998/99. This trend is expected to continue in 1999/2000. After jumping 20 percent in 1998/99, imports by Indonesia are likely to reach 515 000 tonnes in 1999/2000, 3 percent more than the previous season. Imports into the Republic of Korea increased from 288 000 tonnes in 1997/98 to 330 000 tonnes in 1998/99. As the economic recovery induced higher domestic consumption and an increase in textile exports, cotton imports into the Republic of Korea should increase by a further 9 percent to reach 360 000 tonnes in 1999/2000. Imports into Thailand are expected to reach 295 000 tonnes in 1999/2000, about 9 percent more that in 1998/99 and 10 percent more than 1997/98. After contracting from 1.2 million in 1996/97 to 790 000 tonnes in 1997/98 and then to 500 000 tonnes in 1998/99, China's imports are likely to increase slightly, largely due to the higher imports into Taiwan Province and Hong Kong SAR. By contrast, imports by Mexico and Turkey continued to rise over the past few years and are expected to reach 397 000 and 383 000 respectively in 1999/2000. Lower domestic production and the increased exports of textiles in these two countries contributed to the significant increase in imports of raw cotton.

The world cotton price has declined for five consecutive years and is expected to remain under pressure in the short term, reflecting higher world production and increased exports from China and the United States. Global cotton consumption in 1999/2000 is expected to be 19.1 million tonnes, which is slightly higher than production. However, given the huge stocks of nearly 10

million tonnes at the end of 1999, the slightly higher demand will have little impact on prices. Thus, cotton prices are unlikely to recover significantly in the remainder of the 1999/2000 season, despite some recovery in the global economy. However, as global demand continues to pick up, cotton prices may be expected to strengthen in the future.

Production 1
	1994-96 Average	1997/98	1998/99	1999/00*
		`000 tonnes
World total	19 581	20 030	18 551	19 000
United States	4 101	4 092	3 030	3 650
China 2	4 438	4 602	4 501	4 000
India	2 755	2 686	2 710	2 700
Pakistan	1 624	1 561	1 480	1 800
Area of former USSR	1 714	1 551	1 437	1 780
Turkey	754	838	871	840
Australia	459	689	726	700
EC	433	464	509	520
Argentina	367	295	203	170
Brazil	418	370	420	440
Egypt	281	342	230	218
Others	2 238	2 540	2 434	2 182
Source: ICAC - Cotton World Statistics, October 1999. 1 Season beginning 1 August. 2 Includes Hong Kong SAR. * Estimates.

Exports 1
	1994-96 Average	1997/98	1998/99	1999/00*
		`000 tonnes
World total	6 112	5 913	5 274	5 828
United States	1 738	1 633	915	1 500
Area of former USSR	1 653	1 349	1 338	1 264
Australia	373	575	650	645
EC	306	279	330	323
Argentina	255	220	166	92
Mali	153	193	215	228
Pakistan	123	74	1	5
Syria	142	230	180	180
Benin	121	134	138	148
Sudan	66	82	54	30
Egypt	44	70	111	80
China 2	54	20	161	314
Others	1 083	1 054	1 015	1 019
Source: ICAC - Cotton World Statistics, October 1999. 1 Season beginning 1 August. 2 Includes Hong Kong SAR. * Estimates.

Stocks 1
	1994-96 Average	1997/98	1998/99	1999/00*
		`000 tonnes
World total	7 740	9 401	9 892	9 800
China 2	2 952	4 094	4 366	4 207
India	783	981	942	1 011
United States	638	865	846	849
Area of former USSR	632	456	497	422
Pakistan	269	336	320	353
EC	266	215	244	247
Brazil	331	311	341	317
Argentina	212	240	215	171
Australia	176	310	388	424
Japan	119	86	82	72
Turkey	120	123	188	269
Others	1 240	1 384	1 463	1 458
Source: ICAC - Cotton World Statistics, October 1999. 1 Season beginning 1 August. 2 Includes Hong Kong SAR. * Estimates.

Imports 1
	1994-96 Average	1997/98	1998/99	1999/00*
		`000 tonnes
World total	6 139	5 742	5 429	5 828
EC	1 019	1 003	963	944
China 2	1 218	787	506	522
Brazil	418	410	292	308
Area of former USSR	359	334	307	352
Indonesia	462	419	500	515
Korea, Rep. of	358	288	330	360
Thailand	319	269	271	295
Japan	330	287	270	250
Turkey	223	399	250	383
Mexico	162	335	302	397
Others	1 273	1 211	1 438	1 502
Source: ICAC - Cotton World Statistics, October 1999. 1 Season beginning 1 August. 2 Includes Hong Kong SAR. * Estimates.

Prices 1
	1994-96 Average	1997	1998	1999 2
		US cents/kg
COTLOOK `A' Index	189	159	130	112
1 Season beginning 1 August. 2 Average from 1 January to 15 December 1999.

JUTE, KENAF AND ALLIED FIBRES

Export prices of raw jute recovered considerably in the first half of the current 1999/2000 season (July-June) after stabilising at a low level over the previous two seasons. Prices of BWD grade from Bangladesh ports reached about $300 per tonne in January 2000 compared to an average of $263 in the previous season. This was the highest level since September 1997, and largely reflected expectations of smaller crops. However, high stock levels prevented prices from rising more substantially, and they remained some 30 percent below the lower end of the indicative price range of $450 + $30 agreed at the Joint Meeting of the FAO Intergovernmental Groups on Hard Fibres and Jute, Kenaf and Allied Fibres in Rome in December 1998. Export prices of some jute products, particularly from Bangladesh, also showed signs of recovery in the first part of the current season.

A declining trend since 1995 in prices of raffia grade polypropylene, the raw material for synthetic products competing against jute, kenaf and allied fibres, was reversed during the course of 1999 when they increased to $782 per tonne in western Europe from $640 in the corresponding fourth quarter of the previous year. As the prices of jute rose at a similar rate in 1999, there was little change in the competitiveness of jute vis-à-vis polypropylene.

At the growers' level, prices of jute relative to alternative crops, particularly rice, the most important crop competing for land, remained more remunerative in India than in Bangladesh. The ratio of jute to rice prices fell to 0.54 in Bangladesh, but remained much higher at 1.64 in India in the 1998/99 season.

World production of jute, kenaf and allied fibres is forecast to decline by about 14 percent to some 2.5 million tonnes in 1999/2000. Low prices coupled with a prolonged drought at the time of

sowing reduced production, particularly of white jute, both in Bangladesh and in India, the two largest producers. Production is forecast to fall by some 8 percent to 1.4 million tonnes in India and by 26 percent in Bangladesh to 630 000 tonnes in 1999/2000. Production is forecast to fall also in China, Thailand and Vietnam.

World exports of raw jute contracted to about 340 000 tonnes in 1998/99 from 458 000 in the previous season due largely to a sharp decline in consignments to China. Imports into China fell to about 100 000 tonnes in the season from 166 000 tonnes previously. Despite this drop, imports both in 1998/99 and in 1997/98 were at historically high levels, due to a policy of transporting large quantities of grain from the three north-east provinces to south China for consumption. As this policy has been discontinued, the volume of jute imports into China in 1999/2000 is likely to decline to more normal levels of about 20 000 tonnes. Imports of jute fibre in 1998/99 by Pakistan, traditionally the single largest importer, remained at about their previous level of 80 000 tonnes. India continued to be a significant importer of jute fibre, with its imports increasing almost three-fold to 153 000 tonnes in 1998/99.

At the opening of the 1999/2000 season, stocks of fibre in the major producing countries, at about 970 000 tonnes, were equivalent to some 44 percent of annual mill use. Bangladesh opened the season with some 318 000 tonnes in stocks, while India had about 434 000 tonnes. Although smaller crops in 1999/2000 would lead to a drawing down of raw fibre stocks for the major producing countries, inventories would still remain larger than normal at the end of the season. Prices of fibre would remain depressed and would therefore be expected to result in another year of low production in the 2000/01 season. Export prospects for the 1999/2000 season are limited as global demand remains depressed due to market losses to synthetic materials, coupled with the likelihood of more modest purchases by China.

Production of fibres 1
	1994/95- 1996/97 Average	1997/98	1998/99	1999/2000 Provisional
		`000 tonnes
World total	3 107	3 842	2 949	2 542
India	1 590	1 953	1 530	1 400
Bangladesh	914	1 243	852	630
China	364	430	350	300
Thailand	118	106	102	100
Myanmar	39	25	21	20
Viet Nam	12	15	22	19
Nepal	14	14	14	14
Brazil	14	12	9	12
Indonesia	6	4	7	7
Sudan	3	3	4	4
Egypt	4	8	9	9
Others	29	30	30	28

¹ Crop year beginning 1 July.

Exports of fibres and products 1
	1994/95- 1996/97 Average	1997/98		1998/99		1999/2000 Provisional
		`000 tonnes
FIBRES 1
World total	321		458		340		293
Bangladesh	294		433		317		270
China	3		1		1		1
Europe 2	10		13		11		11
Myanmar	2		5		5		5
Nepal	1		0		0		0
Thailand	4		3		3		3
Viet Nam	4		2		2		2
United States	2		1		1		1
Others	1		0		1		1
PRODUCTS 3	1994-96		1997		1998
	Average
World total	840		701		752
Europe 2 Bangladesh China	75 457 33		72 379 13		67 396 6
India	206		192		243
Nepal	10		10		10
Singapore	3		2		1
Thailand	35		11		10		11
Turkey	3		1		2
United States	2		3		2
Others	16		18		15
1 Marketing year beginning 1 July. 2 Includes eastern European countries (excludes countries of the area of the former USSR). 3 Products in calendar year.

Closing stocks 1
	1996/97	1997/98	1998/99	1999/00 Estimate
		`000 tonnes
World total 2	621	1 019	969
Bangladesh	175	367	318	101
India	329	482	434
1 As at 30 June of the second year shown. 2 Includes only Bangladesh, India, Myanmar, Nepal and Thailand.

Prices (fob)
	1996	1997	1998	1999
		$/tonne
Jute (BWD Grade)	454	302	259	279
Polypropylene (Raffia)	832	837	651	649
		$/100 yards
Hessian (40" x 10 oz)	26	21	17	17*
		$/100 bags
Sacking (B-Twills)	61	59	45	41*
* January-June 1999

Imports of fibres and products
		1994/95-	1997/98		1998/99
		1996/97
		Average
		`000 tonnes
FIBRES 1
World		308	461		453
Australia		5	5		5
Brazil		13	11		6
China		18	166		100
Côte d'Ivoire		20	25		15
Egypt Europe 2		13 33	25 29		18 24
India		45	54		153
Indonesia Pakistan		9 78	8 85		6 80
Thailand Turkey United States		13 7 6	2 3 2		2 1 2
Others		49	46		42
PRODUCTS 3
		1994-96	1997		1998
		Average
World		825	773		716
United States Europe 2 Australia		72 305 78	66 276 38		64 239 38
Japan		42	35		27
Algeria		10	5		5
Egypt		12	12		10
Sudan		46	34		46
Iran, Islamic Rep.		39	59		43
Syria		53	52		42
Turkey		41	56		68
Indonesia		8	4		3
Others		159	137		132
1Marketing year beginning 1 July. 2Includes eastern European countries (excludes countries of the area of the former USSR). 3Products in calendar year.

HARD FIBRES

Sisal and Henequen

Prices of both African and Brazilian sisal fell sharply towards the end of 1999 reflecting a slackening of demand and an accumulation of stocks during the year. Prices for East African 3L grade in December 1999 at $710 per tonne were almost 30 percent lower than a year earlier, while those of UG grade at $550 were 35 percent lower. Prices of Brazilian No.3 sisal declined less, however, by 25 percent to $430 per tonne, slightly reducing the high price differential between African and Brazilian sisal which has existed since 1996.

Export prices of sisal twine fell in line with those of fibre in 1999 to around $16 to $17 per bale in western Europe compared with $17 to $19 in 1998. A similar weakening was evident in the United States. Prices of polypropylene twine in the United States increased towards the end of 1999 reflecting the impact of a rise in oil prices on production costs of propylene.

World production of sisal, henequen and allied fibres is estimated to have fallen to about 305 000 tonnes in 1999, down from 316 000 tonnes in the previous year. Brazil, which accounts for about 35 percent of world production, is reported to have produced 110 000 tonnes in 1999, a contraction from its 1998 level, due to the effect of a drought. Production in Kenya and Tanzania also was curtailed due to lower yields, particularly in Tanzania, the result of low levels of investment in sisal estates.

Global exports of sisal fibre and products are estimated to have declined in 1999 after remaining fairly stable in the previous two years. Exports from Brazil, the largest exporter, fell sharply and those of Kenya also contracted, while shipments from Tanzania remained stable. Continued adoption of advanced hay baling methods that need less twine led to a further loss of market for both sisal and polypropylene twine, particularly affecting sales of Brazilian fibre.

Abaca

Abaca prices recovered in the course of 1999 from a declining trend experienced since 1997, reflecting the effect of a typhoon in the Philippines which reduced supply of the higher grades of fibre late in 1998 and into early 1999. The indicator price (the average of S2, G and JK grades) recovered from $1 216 per tonne ($127 per bale, f.o.b.) in October 1998 to $1 437 per tonne c.i.f. ($154.7 per bale, f.o.b.) in August and September 1999, but some weakening was evident in the final months of the year, particularly for lower grade fibre. World production of abaca in 1999 is estimated to have remained at about its year earlier level of 86 000 tonnes. A slight rise in production in the Philippines offset a decline in Ecuador.

World exports of abaca fibre and manufactures in 1999 declined by about 9 percent to some 68 000 tonnes in fibre equivalent terms largely due to a fall in exports of pulp from the Philippines. Exports of pulp from this country are estimated to have fallen to about 13 000 tonnes in 1999 from 16 000 in 1998. Exports of cordage also fell from the unusually high level of 1998, while exports of fibre increased. Exports of abaca from Ecuador, which is mainly in the form of fibre, remained stable at about their year earlier level.

Coir

The market for coir appears to have strengthened in 1999, with prices of fibre strengthening by more than 10 percent compared with their 1998 values. World production of brown coir fibre is estimated to have recovered slightly in 1999 to some 287 000 tonnes, as a result of a further rise in production in India, the largest producer, which compensated for a decline of around 6 000 tonnes in Sri Lanka, the other main producer. Brown fibre production in India rose to 220 000 tonnes in 1999, as did that of white fibre to some 138 000 tonnes from 124 000 tonnes in 1998. Coir yarn production in India, the largest producer, is estimated to have risen by about 25 000 tonnes to 236 000 tonnes in 1999, pushing world production to 241 000 tonnes.

World coir fibre exports contracted slightly in 1999 to over 60 000 tonnes. Sri Lanka remained the dominant exporter with over 85 percent of the world total but exports from this country declined in 1999 to some 48 000 tonnes. Some recovery was achieved in the export of mattress fibre but this failed to compensate for a sharp decline in the export of twisted fibre. India, the single most important exporter of coir yarn, continued to increase its exports in 1999. India also dominated world markets in the export of coir manufactured products with some 35 000 tonnes in 1999, a substantial increase from the previous year.

Production of fibres
	1994-96 Average	1997	1998	1999
		`000 tonnes
Sisal and henequen	369	351	316	306
Brazil	134	145	116	110
Tanzania	28	21	23	24
Kenya	30	21	20	16
Abaca	79	81	86	87
Philippines	65	66	73	74
Coir fibre (brown)	200	237	282	287
India	138	169	210	221
Sri Lanka	62	58	62	57
Coir yarn 1	197	206	216	241
1 Including yarn from brown fibre.

Exports of fibres and products
	1994-96 Average	1997	1998	1999
		`000 tonnes
FIBRES
Sisal and henequen	81	60	74	62
Brazil	35	29	34	30
Tanzania	4	4	13	10
Kenya	24	18	19	14
Abaca 1	30	32	31	31
Philippines 1	18	18	19	20
Coir fibre	63	59	62	61
Sri Lanka	52	50	53	48
Coir yarn 2	20	19	19	21
India	16	16	17	18
PRODUCTS 3
Sisal and henequen	107	114	90	80
Brazil	64	82	63	52
Tanzania	16	7.	4	8
Abaca 1	36	39	45	37
Philippines 1	23	25	28	23
Coir (India)	25	25	27	36
1 In fibre equivalent 2 Including yarn from decorticated fibre. 3 From the fibre producing countries. .

Imports of fibres
	1994-96 Average	1997	1998	1999
		`000 tonnes
Sisal and henequen	81	60	74	62
Abaca	30	32	31	31
Coir fibre	63	59	62	61
Coir yarn 1	20	19	19	21
1 Including yarn from decorticated fibre.

Prices of fibres
	1994-96 Average	1997	1998	1999
		$/tonne, cif
Sisal
East African UG	745	781	823	688
East African 3L	822	925	965	871
Brazil N.3	559	647	578	527
		US $ / bale, fob
Abaca
S2	199	184	147	174
G	165	147	132	154
JK	151	145	121	126
Indicator (average)	168	159	134	153

NATURAL RUBBER

The International Natural Rubber Organization (INRO) Daily Market Indicator Price of natural rubber (DMIP) continued to trend down in 1999. Its monthly average fell to a 30 year low, 102 Malaysian/Singapore cents per kg in September 1999, more than 70 cents below the comparable period of the previous year. The price recovered briefly to 130 Malaysian/Singapore cents per kg before dropping again to 115 Malaysian/Singapore cents in December 1999. The depressed price reflects largely the significant accumulation of stocks in 1998 as higher production in major producing countries was not matched by growth in demand.

Global production declined marginally to 6.68 million tonnes in 1999. Production in Thailand, the world's largest producer, remained above 2 million tonnes, only about 60,000 tonnes short of its record level set in 1998. Production in Indonesia reached 1.74 million tonnes in 1999, about 2 percent higher than the previous year. Much of the increase in production comes from smallholders - who account for more than 80 percent of total production - because they tend to tap more rubber to maintain their income when the price is low. Malaysia saw little change in its production compared with the previous year, which may signal the stabilization of Malaysian production after many estates and smallholders switched from rubber to palm oil production over the past few years. Production remained static in India and Sri Lanka, as the low price deterred increases in production. China and Vietnam saw their production continue to increase as their new plantings of the past few years came to maturity.

Consumption of natural rubber was estimated at about 6.72 million tonnes in 1999, slightly higher than the level of the previous year. Nearly half the natural rubber used globally is for tyre production. Higher demand for motor vehicles, and hence for tyres, stimulated by the stronger economic growth of 1999 in several key markets, contributed to the slightly stronger demand for natural rubber. Consumption is estimated to have increased by more than 5 percent in China and India. Indonesia, the Republic of Korea, Malaysia and Thailand also registered higher consumption

compared with the depressed level in 1998. Total consumption in developed countries showed little change in 1999 as higher demand in Australia, Japan and Europe offset lower consumption in North America. With global consumption estimated to have exceeded production in 1999, world stocks are estimated to have contracted slightly.

In 1999 world gross exports were 4.54 million tonnes, about the same as in 1998. Increases in exports from Indonesia, Vietnam and several African exporting countries offset decreases from Thailand, Malaysia and Sri Lanka. Exports from Indonesia reached a record level of 1.7 million tonnes, about 4 percent higher than the previous year, while exports from Thailand contracted more than 2 percent to 1.78 million tonnes. Exports from these two countries account for more than two-thirds of world exports. Exports from Vietnam have continued to increase and, with 175 000 tonnes net exports in 1999, it is now the world's fourth largest exporter. The downward trend in exports from Malaysia halted in 1999 at 420 000 tonnes, which is just 1 percent lower than the previous year, reflecting more stable production. Liberian exports continued to recover to reach nearly 80 000 tonnes, its record level in the 1990s. The United States, the largest importer of natural rubber, reduced its purchases slightly in 1999 largely due to the stock build up in 1998 when a record quantity of nearly 1.2 million tonnes was imported. China is expected to report slightly lower imports, which largely reflected higher domestic production of natural rubber, while imports by the Republic of Korea increased by nearly 10 percent to 310 000 tonnes in 1999.

World rubber prices could continue to be under downward pressure in the near future due to more intensive tapping by smallholders in some countries, such as Indonesia, and increased production capacities in others, such as Vietnam, where considerable investments have been made over the past few years. Moreover, the disposal of the buffer stock of about 140 000 tonnes due to the dissolution of the International Natural Rubber Organization (INRO) will also dampen any significant increase in the world price. In fact, the BMIP slipped below 110 Malaysian/Singapore cents per kg in the early January in 2000.

Production
	1994-96 Average	1997	1998	1999 Estimates
		`000 tonnes
World	6 037	6 380	6 700	6 680
Thailand	1 831	2 033	2 216	2 150
Indonesia	1 446	1 505	1 714	1 740
Malaysia	1 091	971	886	870
India	501	580	591	590
China	409	444	450	465
Sri Lanka	108	106	96	100
Viet Nam	166	201	219	235
Côte d'Ivoire	78	108	109	110
Nigeria	83	65	80	78
Brazil	47	58	66	68
Others	276	309	273	274

Source : IRSG - Rubber Statistical Bulletin Vol. 53 No. 12 - October 1999.

Exports
	1994-96 Average	1997	1998	1999 Estimates
		`000 tonnes
World	4 327	4 450	4 550	4 540
Indonesia	1 334	1 404	1 641	1 700
Thailand	1 668	1 837	1 839	1 780
Malaysia	757	587	425	420
Sri Lanka	70	61	41	40
Viet Nam	122	151	165	175
Nigeria	66	53	65	60
Liberia	18	67	75	80
Guatemala	25	28	33	30
Cambodia	31	32	33	30
Others	237	230	233	225

Closing stocks1
	1994-96 Average	1997	1998	1999* Preliminary
		`000 tonnes
World
Producing countries	483	500	730		725
Consuming countries	723	660	760		745
Stocks Afloat	537	630	420		460

¹ As at 31 December.

* 1999 price are Jan-Nov averages.

Imports
	1994-96 Average	1997	1998	1999 Estimates
		`000 tonnes
World	4 235	4 436	4 731		4 700
United States	1 005	1 044	1 177		1 160
Japan	688	730	678		720
China	367	362	411		400
Korea, Rep. of	296	299	282		310
Germany	197	212	247		250
France	179	192	223		240
Spain	126	146	159		160
Canada	115	133	148		140
United Kingdom	121	120	139		135
Brazil	102	100	115		116
Others	1 037	1 098	1 152		1 069

Prices
	1994-96 Average		1997	1998	1999* Preliminary
	national currency/kg
London (pence)
RSS1 cif	93.3		65.4	47.6	43.5
SMR 20 cif	89.8		64.1	44.6	39.5
Kuala Lumpur (M. cents)
RSS1 cif	346.9		278.7	281.3	233.4
SMR 20 cif	336.1		272.3	260.4	213.5
	Malaysia/Singapore cents/kg
INRO DMIP 1	268.0		209.3	191.0	161.0
* 1999 price are Jan-Nov averages. 1 DMIP is the Daily Market Indicator Price of the International Natural Rubber Organization.

HIDES AND SKINS

World demand for leather and leather products remained stagnant in 1999 for the second consecutive year as a result of persisting economic difficulties in major consuming countries. Consequently, prices of hides and skins continued to decline. The average hide price in 1999 was 13 percent below that of 1998, while sheepskin prices declined by about 30 percent. Demand remained sound only in the top leather garment sector, but this market is small and has a rather limited impact on the overall consumption of leather.

World production of bovine hides and skins levelled off in 1999 at around 5.6 million tonnes. Increased production by developing regions was more than offset by lower output in major developed producers. Brazil is now the second largest producer of bovine hides in the world (counting the EC countries separately) and is expected to remain the leading producer among the developing countries. Brazilian output rose by about 2 percent in 1999 to 637 000 tonnes with a further increase foreseen in 2000. In Argentina, production also increased in 1999 but a minor decline is likely to occur in 2000 as slaughtering declines in line with a reduction in cattle inventories. China continued to expand its output of bovine hides, sustained by demand from its domestic tanning industry.

In developed regions, the United States increased production marginally by about 1.2 percent to 999 000 tonnes as a result of higher slaughter rates. However, hide production is expected to decline in 2000 in line with slaughtering from reduced cattle herds. A continued contraction in breeding herds was responsible for a reduction in production in 1999 in Eastern European countries and in the Russian Federation, with no changes expected for 2000.

Declines in output were reported in Australia in 1999 where cattle slaughter decreased by about 8 percent due to the retention of stock for herd rebuilding and a recovery in live cattle exports. No major changes are expected for the year 2000. Production of bovine hides declined also in New Zealand which continued to rebuild its herd after the 1998 drought which forced farmers to slaughter stocks under the pressure of tight feed supplies.

Global exports of bovine hides and skins appear to have levelled off in 1999 at around 2.2 million tonnes.¹ The United States remained the leading exporter despite a decline in 1999 as a result of weaker import demand in major consuming countries. In the year 2000, exports of raw hides from the United States are likely to decline further as demand by the domestic tanning industry is expected to recover considerably. Exports from the Russian Federation declined further in 1999 while in Australia, exports of raw hides rose, sustained by larger purchases from Hong Kong and China. Shipments from developing countries, which now account for almost 16 percent of the world total, continued to rise in 1999 mainly as a result of some increases in exports from Brazil. Developing countries' exports are likely to continue to increase in 2000, boosted by the elimination, as from January 2000, of export duties on raw hides from Argentina, which had been imposed in the mid nineties to protect its tanning industry.

In 1999, Asian and Pacific countries accounted for more that 40 percent of global imports of bovine hides and skins. Although demand for processing by developing countries in Asia is slowly recovering, it remained weak in 1999 as a consequence of the economic difficulties faced in 1998 and early 1999. Thus, the capacity of small and medium size tanning industries to purchase raw materials for processing was curtailed, especially in the Republic of Korea. In 1999, Korea's imports increased by 2.3 percent to 235 000 tonnes and are expected to recover further in the year 2000. Nevertheless, Korean requirements are still 27 percent below the level of 1997. China is now the largest importer of bovine hides, and its requirements for 1999 and 2000 are expected to remain stable at an estimated level of about 570 000 tonnes. Imports of bovine hides and skins by Italy, now the world's second largest importer, declined by about 2 percent as result of a reduction in domestic demand for leather products as consumer spending shifted towards other luxury goods. Japan's import requirements for raw material continued to decline in 1999, due to weak domestic demand and greater competition from the tanning industries in lower-wage countries.

World production of sheep and lamb skins declined in 1999 largely due to a reduction in slaughtering from reduced flocks in main producers such as the Russian Federation and New Zealand, where producers were severely affected for the second consecutive year by drought conditions. No major changes in output of goat skins occurred in 1999 and global trade in sheep and goat skins is estimated to have remained largely unchanged.

While some improvement in prices might be expected in 2000, prospects for a significant recovery in the hides and skins market is limited by the slow rate of growth in demand evident in some consuming countries.

Production
	1994-96 Average	1997	1998 Prelim.	1999 Est.
		`000 tonnes
BOVINE HIDES AND SKINS
World total	5 557	5 697	5 621	5 606
United States	930	953	929	911
EC1	709	708	681	678
Brazil	491	524	596	608
Area of former USSR	719	617	562	542
China	390	467	485	485
India	384	392	389	394
Argentina	261	256	246	254
Developing countries	2 650	2 841	2 857	2 885
Developed countries	2 893	2 806	2 730	2 670
SHEEPSKINS
World total	375	375	382	379
China	38	50	52	52
New Zealand	44	44	45	44
Australia	38	35	38	36
Iran, Islamic Rep. of	29	29	29	29
Developing countries	169	188	192	191
Developed countries	213	185	191	188
GOATSKINS
World total	215	230	236	237
India	68	70	70	71
China	37	43	45	45
Pakistan	19	21	23	23
Developing countries	202	218	225	226
Developed countries	13	12	12	12

¹ EC trade is given as the sum of 15 countries, includes trade within the EC.

Exports
	1994-96 Average	1997	1998 Prelim.	1999 Est.
		`000 tonnes
BOVINE HIDES AND SKINS
World total	2 126	2 270	2 172	2 170
EC1	664	731	688	678
United States	669	651	610	601
Area of former USSR	274	268	258	242
Australia	59	63	61	63
Developing countries	259	291	310	345
Developed countries	1 867	1 979	1 862	1 825
SHEEPSKINS
World total	189	172	160	160
Australia	42	42	40	40
New Zealand	30	28	23	23
Iran, Islamic Rep. of	26	24	26	26
United Kingdom	19	17	20	20
Developing countries	42	39	43	43
Developed countries	148	133	117	117
GOATSKINS
World total	17	18	19	19
China	3	4	3	3
EC1	3	4	3	3
South Africa	1	1	1	1
Developing countries	11	11	12	12
Developed countries	7	7	7	7
1 EC trade is given as the sum of 15 countries, includes trade within the EC.

Imports
	1994-96 Average	1997	1998 Prelim.	1999 Est.
`000 tonnes
BOVINE HIDES AND SKINS
World total	2 168	2 502	2377	2 372
Italy	517	517	507	497
Korea, Rep. of	346	323	229	235
Japan	125	98	82	77
China	277	550	561	567
Developing countries	964	1 289	1 188	1 231
Developed countries	1 204	1 213	1 187	1 141
SHEEPSKINS
World total	185	177	146	146
EC1	69	57	52	51
Turkey	72	83	50	50
Korea, Rep. of	6	4	5	6
Developing countries	101	104	83	83
Developed countries	85	73	63	63
GOATSKINS
World total	21	19	15	15
EC1	7	6	5	5
Lebanon	3	3	4	4
Mexico	1	1	1	1
Developing countries	13	13	10	10
Developed countries	8	7	6	6
1 EC trade is given as the sum of 15 countries, includes trade within the EC.

Prices
	1994-96 Average	1997	1998	1999 .
	1991 April=100
Bovine hides	1257	128	113	100
Sheepskins	167	167	126	89
Goatskins	109	100	93	73
Source: International Trade Centre, Geneva.

¹ Includes intra-EC trade.