Grain market review: Coarse grains

by Teresa Acklin
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   Attractive prices and production shortfalls in certain countries have boosted coarse grains exports in 1992-93. But, the disruption of grain trade between major exporters and the republics of the former Soviet Union (F.S.U.) has so far prevented what could have been an even greater increase in world coarse grains trade.

   Uncertainty surrounding imports by Russia and the other republics of the F.S.U. held the focus of markets throughout the winter. In November, Russia went into default on payments to the United States, and business between the two countries was suspended. By mid-March, arrears had reached more than $500 million. In part because of the transition to a new administration in Washington, little action was taken by the U.S. Department of Agriculture to address the debt problems during the winter. Only in late March did the new Clinton administration appear prepared to take steps that would facilitate renewed trade.

   Significant outstanding sums also are owed to Australia and Canada, and both countries have suspended sales to the F.S.U. Barter has been used by F.S.U. republics to enable trade, but the volume has been small compared with what could be expected through money transactions.

   The debt problems have had a significant impact on world coarse grain trade. Coarse grains imports are projected at 95 million tonnes for 1992-93, according to the International Wheat Council, up 3 million tonnes from 1991-92 and compared with 84 million tonnes in 1990-91. Excluding the former Soviet Union, world trade in coarse grains is forecast up 8.8 million tonnes, or 22% from the previous year.

   Increased imports from last year are projected for eastern Europe and Canada. In both instances, the increases are attributed to crop shortfalls. Production in eastern Europe tumbled from the record levels of 1991-92, largely as a result of poor weather. Disruption due to civil strife in Yugoslavia and its former republics is cited as a second factor in the production decline for the region.

   In Canada, the stepped-up imports are due to widespread damage to the 1992 maize crop because of poor weather conditions.

   Encouraging stepped-up world demand for feed grains have been depressed prices, largely a result of record world production, driven by the largest U.S. crop ever. F.o.b. prices for U.S. maize declined to $96 a tonne as of January 1993, down $14 from a year earlier. World maize prices in 1992-93 are expected to be the lowest in five years.

   The U.S. 1992-93 maize crop was the largest ever. In fact, a world record production is expected to be achieved in 1992-93, even though non-U.S. production has been off from 1991-92.

   Production in the U.S. last year was 241 million tonnes, up 6% from 226 million tonnes in 1985, the previous record. Maize yields of 1.17 tonnes per hectare were up 10% from the previous record. While maize use in the U.S. is projected at a record 210 million tonnes, the surplus production put prices under considerable pressure.

   A few major producers in addition to the U.S. harvested more feed grains in 1992-93 than they had the previous year. Most notably, production in the F.S.U. was up 21%. Weather had been less than ideal in the former Soviet republics, and the production increase was larger than had been widely expected.

   Also producing more coarse grain this year than last was South Africa. At 8 million tonnes, production was up 5 million from the drought-ravaged 1991-92 crop.

   In addition to Canada and eastern Europe, the E.C. experienced reduced coarse grains production. The cut was due to drought in parts of the E.C. as well as reduced planted area. The downward trend in coarse grain area will accelerate in 1993 because of the impact of the reformed Common Agricultural Policy.

   The combination of dramatically increased world coarse grains production and a fairly modest increase in world use, albeit to record levels, has translated into a steep increase in projected ending stocks. According to the I.W.C., the coarse grains carryover from 1993 will total 146 million tonnes, up 23% from 118 million tonnes in 1992.