Grain market review: Wheat flour

by Teresa Acklin
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   A period of steady growth in world wheat flour trade that began in 1987-88 apparently ended in 1992-93, according to estimates by the International Wheat Council.

   The I.W.C. projected 1992-93 wheat flour trade at 7.820 million tonnes. That figure is down 4.8% from 8.211 million tonnes in 1991-92, which was the highest trade total in 10 years.

   Much of the drop in trade stemmed from a 56% reduction in flour shipments to the former Soviet Union. The F.S.U. imported more than 1 million tonnes in 1991-92, making it the world's leading importer that year. But in 1992-93, F.S.U. imports reached only 460,000 tonnes.

   Flour shipments to other traditionally large customers also tended to decline in 1992-93. Libya, the number-two importer in recent years, retained its ranking in 1992-93, although the country's imports dropped by 17% from the previous year. And the aggregate of flour exports to Syria, Yemen and Vietnam in 1992-93 was slightly lower than in 1991-92.

   Only Egypt saw a significant increase in flour imports, reversing a steady trend of annual declines that began in 1987-88. Shipments to Egypt in 1992-93 reached 850,000 tonnes, up 75% from the previous season. Steps toward liberalization of Egypt's wheat flour importing policies contributed to the surge.

   Overall, world flour trade has expanded in the last seven years, as trade in 1992-93 was 33% higher than in 1985-86. But at the same time, flour trade patterns have been undergoing gradual changes.

   The top two exporters have not shifted. The European Community is the largest exporter, followed by the U.S. Together, the two countries dominate the export trade, accounting for a total of more than 70% of all flour exports annually.

   But other exporting leaders have changed. Canada, the number three exporter in 1985-86, dropped to sixth in 1992-93. Argentina replaced Canada in the top five, exporting about 240,000 tonnes, mostly to Bolivia and Brazil.

   Turkey also has emerged as a top exporter in recent years, even though its 1992-93 flour exports dropped to 500,000 tonnes from nearly 950,000 the previous year.

   Changes also have occurred in importing patterns during the last seven years.

   For example, in 1985-86, flour shipments to the top five importers accounted for 55% of world flour trade. Exports to Egypt alone represented 34% of trade.

   But these percentages have dwindled steadily each year, and by 1992-93, shipments to the top five importers accounted for only 35% of world trade. The F.S.U.'s 1-million-tonne import level in 1991-92, by far the largest amount shipped to any destination that year, represented only 13% of world trade.

   Wheat flour trade now is spread among a larger number of importers than seven years ago. For example, in 1985-86, only eight countries imported 100,000 tonnes or more; in 1992-93, the number of countries had doubled to 16. At the same time, shipments to countries that formerly imported negligible amounts of flour have been increasing.

   Prospects for 1993-94 flour trade remain problematic, according to the I.W.C. It projected imports by the F.S.U. would decline further, while the trend of decline in Egypt's imports was likely to resume.

   But the I.W.C. said relatively high demand from numerous countries in Africa, Near East Asia and Central and South America should help to underpin trade, preventing a sharp downturn.

   World flour trade also will be influenced by the use of export subsidies, such as the U.S. Export Enhancement Program and E.C. restitutions.

   The U.S. in July 1993 announced EEP initiatives for 1.745 million tonnes of wheat flour during 1993-94. Some 47 countries, including the republics in the F.S.U., are eligible to buy.

   The extent to which the flour is sold depends on how aggressively the program is pursued; in 1992-93, actual flour sales completed under EEP were less than 50% of the total designated for sale under the program by U.S.D.A. The average subsidy increased in 1992-93 to about $103 a tonne, the highest average in the EEP's five-year history.