FAO/GIEWS - Food Outlook No.5 - November 1999 p. 6

TRADE ^1/

Higher demand could lead to 4 percent growth in world cereal imports in 1999/2000

Since the previous report the forecast for world cereal trade in 1999/2000 has been raised further by 3 million tonnes, to 221 million tonnes, mainly reflecting stronger demand for wheat and coarse grains than anticipated earlier. At the forecast level, world imports of cereals would exceed the previous year's volume by 8 million tonnes, or nearly 4 percent. The anticipated expansion in world cereal imports is shared equally between the developed and the developing countries. However, among the developed countries, the bulk of this year's increase in cereal imports is likely to be concentrated in only a few nations while in the developing countries, and in particular those in the Low-Income Food-Deficit category, the rise in imports would be shared by several countries. With regard to the outlook for individual cereals, the anticipated expansion in world cereal trade would reflect higher import demand for most cereals, with the exception of rice.

International trade in wheat and wheat flour (in grain equivalent) in 1999/2000 (July/June) is put at 102 million tonnes, up 1 million tonnes from the September report and 4.6 million tonnes, or 5 percent, more than in the previous year, mostly reflecting increased imports by several countries in Asia, Europe and North Africa.

OVERVIEW OF WORLD CEREAL IMPORTS
FORECAST FOR 1999/2000

In Asia, total wheat imports could rise by over 2.5 million tonnes from the previous year, due to larger import demand in several drought-affected countries, most notably the Islamic Republic of Iran. Increased imports are also forecast for Pakistan, although following the recent political developments in that country, the final outcome is uncertain. Also China (Mainland) is expected to return to the international market and purchase more wheat than last year's reduced volume. In the Philippines, with stronger demand from the milling sector, imports are forecast to rise slightly. By contrast, because of low maize prices, the Republic of Korea is expected to purchase more maize and reduce the portion of its wheat imports that are normally destined for animal feed. Lower imports are also anticipated in Bangladesh and India, following bumper crops. Imports by Indonesia are also forecast to decline, mostly due to domestic economic conditions and the balance-of-payments constraints.

In Africa, total wheat imports in 1999/2000 are now put at 23 million tonnes, up slightly since the September report, and nearly 1 million tonnes above the previous year. As in most years, imports by the countries in North Africa would account for about 70 percent of the total. This year, imports by Morocco are expected to increase by about 700 000 tonnes, to 2.8 million tonnes, following a sharp decline in production due to drought. Algeria is also expected to import slightly more, while imports by Egypt, the world's largest wheat importer, are likely to remain close to the previous year's volume of around 7 million tonnes. Imports into most countries in the sub-Saharan region would be similar to the previous year. However, imports by South Africa are forecast to double to 1 million tonnes, following two consecutive years of poor crops.

Aggregate wheat imports into Europe are forecast at 10 million tonnes, up 1.8 million tonne from the previous year. Several countries are forecast to raise their imports this year, including Albania, Croatia, Slovakia and the Russian Federation. Imports by the Russian Federation are put at 3.5 million tonnes, up 1.4 million tonnes from the previous year, although the final outcome will depend greatly on the eventual food aid and/or concessional trade arrangements with the EC and the United States. In Latin American and the Caribbean, aggregate wheat imports are put at about 17.4 million tonnes, slightly below the previous year's estimated volume. However, imports by nearly all other countries in the region are likely to remain similar to their 1998/99 volumes. The only major exception would be Brazil, where imports could fall slightly because of larger carryovers and good crops.

With regard to wheat export prospects, given this year's higher world demand and lower export availabities in several smaller exporting countries, including Hungary, Romania, the Syrian Arab Republic, Turkey and Ukraine, a sharp rise is forecast for exports from the five traditional major exporters. Total exports by the major exporters in 1999/2000 (July/June) are currently put at 91.3 million tonnes, up 10 million tonnes, or 12 percent, from the previous year's volume. The main beneficiaries are likely to be Canada (up 4.6 million tonnes), the EC (up 2.3 million tonnes) and the United States (up 3 million tonnes), while exports by Argentina and Australia are expected to remain nearly unchanged from the previous year.

The forecast for global trade in coarse grains in 1999/2000 (July/June) has been raised to 96 million tonnes, up 1.5 million tonnes from the previous forecast and 3.7 million tonnes above last year's estimated import volume. The latest upward revision mostly concerns countries in Africa and South America. With regard to individual types of coarse grain, this year's expected rise in trade is seen mostly in maize, barley and sorghum. World trade in maize is currently put at 69 million tonnes, some 2 million tonnes above the previous year and highest since 1995/96. World barley imports are forecast to expand by over 1 million tonnes, to 17 million tonnes, which would be the largest volume since 1994/95. Sorghum imports are put at 7 million tonnes, close to the volume registered in 1997/98 and 400 000 tonnes above the previous year. Among the other coarse grains, a small reduction is expected in rye imports while oats and millet imports are unlikely to vary much from the previous year.

Aggregate imports into Asia are expected to reach around 54 million tonnes, some 1 million tonnes more than in the previous year. The largest increase is expected in the Republic of Korea, where this year's maize imports could increase at the expense of smaller wheat purchases, reflecting a more favourable maize price outlook on international markets. Imports of coarse grains (mostly barley and maize) by the Islamic Republic of Iran are also forecast to rise significantly as a result of drought. In Africa, imports are forecast to exceed 13 million tonnes, nearly 2 million tonnes more than in the previous year. Imports of barley and maize by most countries in North Africa are expected to remain close to the previous year's volumes. However, in the sub-Saharan region, total imports (mostly maize) could exceed 5 million tonnes, some 1.5 million tonnes more than in the previous year following this year's poor harvests in several countries.

In Europe, total coarse grains imports could surpass 7 million tonnes, 1 million tonnes more than in the previous year. The largest increase is expected in the Russian Federation (up 800 000 tonnes), while imports by several other countries, including Poland, Romania and Slovenia, are also forecast to increase due to a reduction in domestic production. In Central America, Mexico, the region's largest importer, is expected to increase its sorghum purchases, but reduce slightly its maize imports. In South America, the forecast for Brazil's imports has been raised this month to 1.3 million tonnes, up 400 000 tonnes from the previous report, but still slightly below the previous year. The latest upward revision mostly reflects expectation of faster increase in domestic feed use. Good maize crops are likely to result in lower imports in several other countries in South America.

Turning to exports, aggregate coarse grains shipments from the five major exporters in 1999/2000 (July/June) are forecast at around 81 million tonnes, similar to the previous year's estimated volume. Among the major exporters, shipments by Argentina could rise most (by about 700 000 tonnes), followed by the EC (400 000 tonnes) and the United States (200 000 tonnes). By contrast, exports from Canada are likely to remain at last year's level, while a decline is expected in barley shipments from Australia, of about 1.5 million tonnes. With the total volume of exports from the five major exporters remaining unchanged from the previous year, the rise in this year's world import demand is expected to be met mostly by larger exports from China, given this year's good crops and large stocks. By contrast, supplies from a number of other smaller exporting countries, such as Turkey and the Republic of South Africa, are expected to be limited due to lower domestic production.

Although the volume of international rice trade in 1999 (January/December) is not expected to reach the record established last year, it is likely to be larger than earlier anticipated. Based on import purchases and/or commitments to date by some of the major importing countries, the forecast for global rice trade in 1999 has been increased by 800 000 tonnes from the last report to about 23.5 million tonnes, but still 4 million tonnes less than last year's volume.

The forecast of imports by Bangladesh has been adjusted upward by 300 000 tonnes from the September report to 1.8 million tonnes, based on actual shipments to date. However, total imports in 1999 are expected to be less than the 2.5 million tonnes of the previous year because of a recovery in domestic production. Imports by the Islamic Republic of Iran are now forecast at 900 000 tonnes, 100 000 tonnes up from earlier expectations due to poorer production prospects. It is reported that the country is seeking another Government-to-Government deal with Thailand for an additional 300 000 tonnes of rice for delivery during late-1999/early-2000. The forecast of Nigeria's imports has also been increased, by 200 000 tonnes, to 850 000 tonnes based on continued strong purchases of parboiled rice, particularly from Thailand. Purchases by Brazil, Singapore, and Iraq were also raised by about 300 000 tonnes, in total. By contrast, shipments to China (Mainland), mostly of high quality rice from Thailand, are now forecast at 150 000 tonnes, 50 000 tonnes down from the previous report, reflecting slower than expected imports to date. In Indonesia, the world's largest rice importer, the Government changed its rice trade policy and banned private sector imports of lower quality rice grades, a move that is expected to greatly restrain imports. The forecast of Indonesia's imports in 1999 is unchanged at 3.5 million tonnes, which is about 40 percent down from 1998. Recent official reports indicate that the country aims to reduce, or possibly eliminate, rice import needs by the year 2001 through increasing rice production and encouraging consumption of alternative foodstuffs rich in carbohydrates. Total rice imports into the EC in 1999 are forecast to be close to last year's estimate of about 600 000 tonnes.

On the export side, the forecast for rice shipments out of China (Mainland) has been raised by 250 000 tonnes from the previous report to about 2 million tonnes. Official sources indicate that approximately 1.6 million tonnes of rice were already exported during the first eight months of 1999. The forecast of exports from Viet Nam has been adjusted upward by 300 000 tonnes to a record of 4.3 million tonnes, which is in line with the Government's revised target for 1999. Total exports for the first 9 months of the year are estimated at slightly more than 3.8 million tonnes, surpassing the volume shipped in the whole of 1998. The forecast of expected shipments from Thailand, the world's leading rice exporter, has been increased by 200 000 tonnes from the previous report to 5.7 million tonnes, which would be about 700 000 tonnes below last year's record. During the first nine months of the year the country shipped about 4.7 million tonnes of rice, for a monthly average of about 520 000 tonnes. For the rest of the year, monthly shipments would need to average about 300 000 tonnes in order to reach the forecast export volume. In Argentina, rice exporters continue the search for markets to absorb some of the country's excess supplies after a record harvest, since Brazil, its traditional customer and Mercosur partner, is likely to import less following increased domestic production. It is reported that, in an effort to help farmers deal with the resulting lower prices, Argentina's Provincial Governments have introduced plans to reduce interest costs on loans.

Global rice trade for the year 2000 is tentatively forecast to be close to the volume expected in 1999, assuming no major supply and/or demand shocks. The major players are expected to be the same, with Thailand, Viet Nam and the United States leading the way on the export side, while Indonesia, Bangladesh, the Philippines and Brazil will likely be the leading importers.