Global flour exports projected to fall

by World Grain Staff
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by Morton I. Sosland

World flour exports in the 2006-07 season will likely fall by 5% from the previous year, according to the initial forecast issued in December by the International Grains Council (IGC).

At the same time, the IGC noted it had also forecast a similar reduction for the 2005-06 season, but that final numbers reveal the past crop year’s outgo was unchanged and was up 11% from the recent flour trade low in 2003-04.

The newly issued IGC projection of 2006-07 global flour exports was 9,250,000 tonnes in wheat equivalent. That is roughly equal to 148 million cwts in terms of wheat flour.

In 2005-06, world flour exports amounted to 9,780,000 tonnes in wheat equivalent, or 156 million cwts. That outgo was 220,000 tonnes more than the previous forecast issued by the Council in August. It exceeded the initial 2005-06 forecast of 8.6 million tonnes, issued a year ago, by more than 1 million tonnes.

The reason for the turnaround in world flour trade prospects was the surprisingly large imports by Iraq. The strife-torn country ranked as the world’s largest flour buyer for the second year. According to the IGC, Iraq imported 1.5 million tonnes of flour in wheat equivalent in 2005-06, which were three times the imports forecast for that country a year ago. In looking to 2006-07 prospects, the IGC has reduced Iraq’s flour imports to 1 million tonnes, compared with 1.5 million in 2005-06 and 1,025,000 in 2004-05. Imports in 2003-04, when the country was invaded by coalition forces, were 143,000 and in prior years, it was a minor player in world flour trade.

The IGC said Iraq’s flour imports were particularly large in the April-June 2006 period, and the quarterly import totals have been declining since the end of 2005. "The slowdown has been gradual due to continued security issues," the Council said.

Looking to the current crop season, the Council pointed out that further decreases were ahead for Iraq’s imports as domestic wheat flour production recovered. Noting the 1-million-tonne import forecast for 2006-07, the Council said this large size reflected "continued logistical problems in the milling sector."

In becoming the ranking wheat flour importer in 2005-06, Iraq overtook Libya, which has been the leading buy- er for a number of years. For 2006-07, Libya’s imports were forecast at 1,150,000 tonnes in wheat equivalent, which was unchanged from the prior season and in line with imports of 1,108,000 in 2004-05.

After Iraq and Libya, another strifetorn country, Afghanistan, provided the principal outlet for flour. Its imports in 2006-07 were projected at 600,000 tonnes, the same as in 2005-06 and down from the peak imports of 886,000 in 2004-05.

Angola has emerged as the largest buyer in sub-Sahara Africa. Its takings for 2006-07 were forecast at 500,000 tonnes, against 475,000 in the previous season and 446,000 in 2004-05.

Africa, projected to import 2,615,000 tonnes in 2006-07, and Far East Asia, forecast at 2.5 million tonnes, stood out in the IGC compilations as the leading continental destinations. Both projections were little changed from 2005-06, when Africa accounted for imports of 2,550,000 tonnes and Far East Asia 2,590,000.

In South America, Brazil’s flour imports continued to gain for the sixth year in a row. That country in 2006-07 was forecast to take 450,000 tonnes, compared with 415,000 in the prior season and 356,000 in 2004-05.

After Brazil in the Western Hemisphere, the United States was the ranking importer, at 300,000 tonnes, against 290,000 in 2005-06. Cuba imports were projected at 275,000 tonnes, the same as in 2005-06.

Leading flour importers in Asia included Hong Kong and Indonesia. Hong Kong has been a steady importer of 450,000 tonnes in wheat equivalent for a number of years.

In the case of Indonesia, the 2006-07 forecast was 475,000 tonnes, against 510,000 in the prior season and 536,000 in 2004-05. The recent peak in that country’s flour imports was 726,000 tonnes in 2002-03. The IGC commented on the Indonesian situation by saying, "Domestic and export demand for wheat-based foods, such as noodles, continues to grow, and wheat flour production has expanded by an average of 5% per annum. Wheat flour import duties, including additional tariffs on products from China and India, also continue to restrict import volumes."

At 9,780,000 tonnes in wheat equivalent, or 156 million cwts, world flour exports in 2005-06 were the largest in three years. That outgo compares with 9,724,000 in 2004-05, 8,783,000 in 2003-04 and 9.9 million in 2002-03, the recent peak. The IGC flour export trade statistics do not include durum semolina, which in recent years would add about 300,000 tonnes annually to the totals.

While the pace of flour exporting has been maintained in recent years, the current aggregate was well below the peak of 11,186,000 tonnes (nearly 180 million cwts) shipped in 1996-97.

As a result of the heavy takings by Iraq, Turkey’s new position as a major flour exporter was evident. Indeed, almost all of the flour moving into Iraq originated from Turkish mills.

Exports of flour by Turkey in 2005-06 soared to 2,245,000 tonnes (36 million cwts), a new record, compared with 1,848,000 in 2004-05 and 747,000 in 2003-04. The 2004-05 crop year was the first in which Turkey’s flour exports exceeded 1 million tonnes. In looking to 2006-07, the IGC projected a drop to 1.9 million tonnes, which while down 15% from the 2005-06 high, would still be the second largest for the country.

At the indicated outgo, Turkey’s exports in 2005-06 accounted for 23% of world flour trade. As recently as 2000-01, Turkey’s share of global flour trade was less than 5%.

With the expected reduction in Iraq business, Turkey was likely to look for expanded sales to Africa in 2006-07, the IGC said. The Council noted that the volume of the country’s flour exports will be influenced by reduced domestic wheat availabilities and "high world prices for any imported wheat used by the milling industry."

Turkey’s global leadership in flour exports in 2005-06 meant that its shipments exceeded the outgo from the E.U., which totaled 2,165,000. The E.U. had enjoyed the global flour trade leadership since the 1970s. The IGC projected a reduction to 2 million tonnes in E.U. flour exports in 2006-07, which nevertheless would restore its lead by a small margin over Turkey.

E.U. exports in 2005-06 represented 22% of global shipments, and the forecast for 2006-07 was the same. As recently as 1997-98, the E.U. shipped more than half of the flour moving in world trade.

The Council said the issuance of E.U. flour export licenses has slowed. "This slow pace partly reflects the fact that export refunds have not been granted since the first weeks of July," it said.

Holding third place in 2005-06 shipments and in 2006-07 projections was Kazakhstan, with annual flour exports placed at 800,000 tonnes. For the three preceding crop years, this member of the Commonwealth of Independent States shipped 700,000 tonnes annually.

In the 2006-07 projections, the IGC put the prospective flour exports from four countries at 500,000 tonnes, or 8 million cwts, each. These four are Argentina, which is the principal supplier to Brazil, China, Pakistan and the United Arab Emirates.

Next in the export ranking in the past year was Japan, with shipments of 400,000 tonnes, which was little changed from several previous seasons.

Australia and Canada were projected to export in the current year 325,000 and 350,000 tonnes, respectively. That was closely in line with prior seasons.

This left the U.S. at the nadir of flour-exporting countries. American shipments in 2006-07 were forecast at 300,000 tonnes, or 4.8 million cwts, the same as in 2005-06 but dramatically below the recent high of 931,000 tonnes in 2000-01. This also means that for the second successive year, U.S. flour exports will be the same as U.S. flour imports.