1997 World Grain Review

by Teresa Acklin
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   (Refer to magazine for Wheat, Maize Soybean prices.)

   Wheat stocks in 1996-97 rebounded from perilously low levels at the end of 1995-96, thanks to near-record global production, including record harvests in three of the world's five major exporting countries. The increased wheat availability contributed to a 17% drop in prices during the season, while worldwide consumption jumped by 5% to nearly 580 million tonnes, a record high. The production gains outpaced the increase in use, permitting a slight rebuilding of stocks, although the stocks-to-use ratio remained near historically low levels.

   Global maize production reached a record in 1996-97, helping to alleviate concerns following the lowest stocks carry-in level in more than 20 years. World maize prices during the season tumbled by 15%, which encouraged an increase in use to a record 571 million tonnes. The season saw a small rebuilding of stocks, but, as with wheat, the maize ending stocks ratio remained historically tight.

   World production and use of soybeans both set records in 1996-97, but unlike the situation with wheat and maize, increases in soybean use outstripped production increases for the second straight marketing year. The result was a further drop in carry-over stocks as 1997-98 began, to less than 10% of use. World soybean prices during 1996-97 worked higher, with the season average import price exceeding U.S.$300 a tonne for the first time since 1988-89.

   As of press time, global use of wheat, maize and soybeans in 1997-98 was projected to set records, while production of wheat and soybeans also was expected at record highs.

Wheat, wheat flour

(1,000 tonnes)
1 — United States
Total: 33,594
Destinations:
Egypt4,854
Japan3,087
China2,714
Philippines1,799
Pakistan1,661
Other19,479
2 — CANADA
Total: 16,850
Destinations:
China5,657
Japan1,463
Algeria1,130
E.U.1,076
Brazil1,048
Other6,476
3 — EUROPEAN UNION
Total: 12,500
Exports by destinations not available at press time.
4 — AUSTRALIA
Total: 12,029
Destinations:
China2,236
Indonesia1,676
Iran1,592
Japan 1,145
Egypt 742
Other4,638
5 — ARGENTINA
Total: 4,907
Destinations:
Brazil3,740
E.U.505
Otherr662
TOP IMPORTERS
(all sources)
China12,100
Japan6,101
Egypt6,000
Brazil5,600
Russia4,200

Flour

(1,000 tonnes)
1 — EUROPEAN UNION
Total: 4,589
Destinations:
Algeria859
Libya565
Sudan325
Angola174
Yemen141
Other2,525
2 — TURKEY
Total: 871
Destinations:
Iraq410
Algeria92
Georgia89
Libya58
Azerbaijan45
Other177
3 — UNITED STATES
Total: 790
Destinations:
Yemen141
Haiti124
Bosnia106
Georgia57
Egypt41
Other321
4 — JAPAN
Total: 559
Destinations:
Hong Kong290
Egypt130
Vietnam51
Singapore43
Thailand33
Other12
5 — HUNGARY
Total: 338
(July-December 1995 only)
Destinations:
Russia152
Belarus69
Slovakia50
Yugoslavia33
Bosnia24
Other10
TOP IMPORTERS
(all sources)
Algeria1,044
Yemen859
Libya667
Russia530
Iraq417
Sudan328

Soybeans

(1,000 tonnes)
Calendar 1996
1 — UNITED STATES
Total: 25,566
Destinations:
European Union8,315
Japan3,770
Mexico2,648
Taiwan2,614
Korea1,536
Other6,683
2 — BRAZIL
Total: 3,600
Destinations:
E.U2,961
Japan358
Korea109
Other172
3 — ARGENTINA
Total: 2,094
Destinations:
E.U1,634
China213
Other247
TOP IMPORTERS
(all sources, 1995-96 marketing year)
E.U14,240
Japan4,780
Taiwan2,650
Mexico2,400

Barley

(1,000 tonnes)
1 — AUSTRALIA
Total: 3,375
Destinations:
China912
Saudi Arabia635
Japan550
Brazil230
Taiwan132
Other916
2 — E.U.
Total: 2,850
Exports by destinations not available at press time.
3 — CANADA
Total: 2,603
Destinations:
United States796
Japan479
China449
Saudi Arabia398
Colombia147
Other334
4 — UNITED STATES
Total: 1,181
Destinations:
Saudi Arabia373
Japan278
Mexico260
Other270
5 — SYRIA
Total: 551
Destinations:
Jordan404
Other147

Barley

(1,000 tonnes)
1 — AUSTRALIA
Total: 3,375
Destinations:
China912
Saudi Arabia635
Japan550
Brazil230
Taiwan132
Other916
2 — E.U.
Total: 2,850
Exports by destinations not available at press time.
3 — CANADA
Total: 2,603
Destinations:
United States796
Japan479
China449
Saudi Arabia398
Colombia147
Other334
4 — UNITED STATES
Total: 1,181
Destinations:
Saudi Arabia373
Japan278
Mexico260
Other270
5 — SYRIA
Total: 551
Destinations:
Jordan404
Other147
TOP IMPORTERS
(all sources)
Saudi Arabia2,900
Japan1,529
China1,413
United States810
Russia800

Sorghum

(1,000 tonnes)
1 — UNITED STATES
Total: 4,757
Destinations:
Mexico1,633
Japan1,616
European Union899
Israel357
Other252
2 — ARGENTINA
Total: 811
Destinations:
Japan349
Mexico131
Other331
3 —AUSTRALIA
Total: 594
Destinations:
Japan484
Other110
TOP IMPORTERS
(all sources)
Japan2,298
Mexico1,765

Maize

(1,000 tonnes)
1 — UNITED STATES
Total: 52,681
Destinations:
Japan14,900
South Korea7,333
Mexico6,268
Taiwan5,600
European Union2,351
Other16,229
2 — ARGENTINA
Total: 6,949
Destinations:
Iran1,007
South Korea665
European Union579
Malaysia561
Venezuela519
Other3,618
3 — SOUTH AFRICA
Total: 1,640
Destinations:
Japan449
Malaysia212
Venezuela207
Other772
TOP IMPORTERS
(all sources)
Japan15,976
South Korea8,963
Mexico6,379
Taiwan5,727
European Union2,925

RIce

(1,000 tonnes)
calendar year 1996
1 — THAILAND
Total: 5,280
Destinations:
China632
Malaysia470
Indonesia469
Iran368
Nigeria340
Other3,001
2 — INDIA
Total: 3,556
Destinations:
Bangladesh614
Saudi Arabia449
South Africa321
Indonesia267
Russia248
Other1,657
3 — VIETNAM
Total: 3,100
Exports by destinations not available at press time.
4 — UNITED STATES
Total: 2,624
Destinations:
Mexico301
Japan213
Turkey209
Canada165
Haiti163
Other1,573
5 — PAKISTAN
Total: 1,663
Destinations:
Western Africa373
United Arab Emirates226
Saudi Arabia106
Iran102
Other856
TOP IMPORTERS
(all sources)
Iran1,350
Indonesia1,233
Philippines900
China850
Brazil800
E.U.800

   Major grain exporting and importing ports

(Exports of grain in tonnes, 1996 unless otherwise noted)
Exporting ports
Prince Rupert, Canada3,410,000
Vancouver, Canada12,249,000
Thunder Bay, Canada7,663,645
Duluth, Minnesota, U.S.4,399,585
* Puget Sound, Washington, U.S.7,743,000
* Portland, Oregon, U.S.17,995,000
Houston, Texas, U.S.10,192,000
* South Louisiana, U.S.63,502,000
Corpus Christi, Texas, U.S.982,000
Paranagua, Brazil8,867,000
Santos, Brazil1,490,000
Sao Francisco do Sul, Brazil1,558,000
Rio Grande, Brazil3,091,000
Rosario, Argentina5,196,303
Necochea, Argentina2,601,295
Buenos Aires, Argentina539,556
Bahia Blanca, Argentina2,227,296
* San Martin/San Lorenzo, Argentina4,123,871
Immingham, U.K.812,600
Tilbury, U.K.561,877
Southampton, U.K.878,100
Nantes, France504,000
1 Rouen, France4,900,000
+ Amsterdam, Netherlands946,000
+ Rotterdam, Netherlands2,528,000
* River Weser, Germany1,300,000
+ Ghent, Belgium361,168
1 Kwinana, Australia4,160,153
1 Albany, Australia1,813,933
1 Adelaide, Australia732,810
1 Geelong, Australia1,793,807
1 Esperance, Australia792,826
1 Port Lincoln, Australia1,083,176
1 Geraldton, Australia1,791,325
Brazil data are February 1996-January 1997, soybeans and products only.
*Denotes port area, including grain facilities in the vicinity of the named port city.
+Agribulk total, including grain, oilseeds and fats and animal feedstuffs
1 1995-96
2 Wheat only
Importing ports
(Imports of grain in tonnes, 1996 unless otherwise noted)
Tilbury, U.K.541,500
Ghent, Belgium2,904,527
+ Rotterdam, Netherlands10,674,000
+ Amsterdam, Netherlands7,654,000
Pusan, South Korea1,661,000
Ulsan, South Korea1,800,000
Inchon, South Korea10,544,000
Dalian, China993,253
Tianjin, China1,456,719
Shanghai, China1,004,224
Nanjing, China1,132,803
Jiulong, China1,252,592
Zhanjiang, China681,828
Huangpu, China1,106,718
2 Kobe, Japan786,349
2 Nagoya, Japan626,495
2 Yokohama, Japan861,729
2 Osaka, Japan403,610
2 Hakata, Japan561,259
2 Chiba, Japan 926,847
* River Weser, Germany1,800,000
Ningbo, China815,262
+ Nantes, France2,260,000
Note: Data for China are reported by customs district.
* Denotes port area, including grain facilities in the vicinity of the named port city.
+ Agribulk total, including grain, oilseeds and fats and animal feedstuffs
1 1995-96
2 Wheat only

1996-97 World grain year at a glance (in million tonnes and hectares)

      Wheat

SupplyDemand
Beginning stocks95.0Food use426.0Ending stocks99.0
Production581.0Feed use90.0
Total 676.0Other62.0Wheat area230.5
Total578.0Yield (tonnes per ha)2.53
Source: International Grains Council; U.S.D.A.

      Maize

SupplyDemand
Beginning stocks66.2Feed396.6Ending stocks86.3
Production591.0Other174.4
Total657.2Total571.0Maize area141.4
Yield (tonnes per ha)4.18
Source: U.S.D.A

      Soybeans

SupplyDemand
Beginning stocks16.7Crush115.7Ending stocks12.4
Production131.7Other20.2
Total148.4Total135.9Soybean area63.1
Yield (tonnes per ha)2.09
Source: U.S.D.A.

      Rice (milled)

SupplyDemand
Beginning stocks50.5All uses376.5Ending stocks54.2
Production380.0
Total430.5Rice area148.8
Yield (tonnes per ha)2.55
Source: U.S.D.A.

      Sorghum

SupplyDemand
Beginning stocks2.6All uses66.5Ending stocks4.4
Production68.2
Total70.8Sorghum area43.9
Yield (tonnes per ha)1.55
Source: U.S.D.A.

      Barley

SupplyDemand
Beginning stocks19.6All uses148.8Ending stocks24.1
Production153.3
Total172.9Barley area66.3
Yield (tonnes per ha)2.3
Source: U.S.D.A.
Totals may not add because of rounding.

Five-year trends: world grain

      Wheat

TRADE (in million tonnes wheat equivalent)
Percent
YearWheatFlourTotalchange
1992-9397.38.1105.4
1993-9485.08.493.4-11.4
1994-9583.39.793.0-0.4
1995-9681.18.589.6-3.7
1996-9784.29.093.2+4.0
Note: wheat and total figures include durum, semolina trade.
DISAPPEARANCE (in million tonnes)
YearFoodFeedOtherTotal
1992-93381.0106.561.0548.5
1993-94393.5105.062.5561.0
1994-95406.597.050.8554.3
1995-96414.088.053.0555.0
1996-97426.090.061.0577.0
PRODUCTION, ENDING STOCKS
(in million tonnes, U.S. dollars per tonne)
EndingExport
YearProductionstocksprice*
1992-93561.4135.9143
1993-94556.7127.0143
1994-95525.9103.0157
1995-96540.495.0215
1996-97581.8100.0178
* average price quotes for U.S. No. 2 hard red wheat, f.o.b.
U.S. gulf
Source: International Grains Council; U.S. Department of Agriculture

      Maize

TRADE (in million tonnes)
Percent
YearTotalchange
1992-9362.0
1993-9456.4-9.3
1994-9571.2+26.2
1995-9665.9-7.4
1996-9762.6-5.0
DISAPPEARANCE (in million tonnes)
YearFeedTotal
1992-93346.4513.1
1993-94339.2510.0
1994-95375.1540.3
1995-96367.4543.9
1996-97415.2571.0
PRODUCTION, ENDING STOCKS
(in million tonnes, U.S. dollars per tonne)
EndingExport
YearProductionstocksprice*
1992-93532.8104.898
1993-94475.472.7116
1994-95561.694.097
1995-96515.966.1160
1996-97589.784.7136
* average price quotes for U.S. No. 3 yellow maize, f.o.b. U.S. Gulf
Trade data are October/September years; all other data are aggregate of local marketing years; 1996-97 data are estimates.
Source: International Grains Council; U.S. Department of Agriculture.

      Soybeans

TRADE (in million tonnes)
WorldPercent
Yeartotalchange
1992-9329.6
1993-9428.1-5.1
1994-9532.2+14.6
1995-9632.0-0.6
1996-9736.2+13.1
DISAPPEARANCE (in million tonnes)
YearCrushTotal
1992-9396.2117.4
1993-94101.3121.1
1994-95110.1132.2
1995-96112.1131.6
1996-97115.7135.9
PRODUCTION, ENDING STOCKS, PRICE
(in million tonnes, U.S. dollars per tonne)
EndingImport
YearProductionstocksprice*
1992-93116.920.2236
1993-94117.317.3268
1994-95137.523.5241
1995-96124.516.7291
1996-97131.712.4309
*average price quotes for U.S. No. 2 soybeans, c.i.f. Rotterdam
Source: International Grains Council; U.S. Department of Agriculture

      Rice (millled)

TRADE (in million tonnes)
Percent
YearTotalchange
199214.8
199314.9-0.7
199416.5+10.7
199521.0+27.3
199619.4-7.6
DISAPPEARANCE (in million tonnes)
YearTotal
1992-93354.1
1993-94358.7
1994-95367.1
1995-96370.8
1996-97377.0
PRODUCTION, ENDING STOCKS
(in million tonnes, U.S. dollars per tonne)
EndingExport
YearProductionstocksprice*
1992-93355.854.0244
1993-94355.551.5294
1994-95364.949.3290
1995-96372.050.5362
1996-97381.555.0338
* average price quotes for Thai milled rice, 100% 2nd grade, f.o.b. Bangkok All data on milled basis. Trade data are calendar years; all other data are aggregate of local marketing years; 1996-97 data are estimates.
Source: U.S. Department of Agriculture

      Sorghum

TRADE (in million tonnes)
Percent
YearTotalchange
1992-938.7
1993-947.1-18.4
1994-956.4-9.8
1995-966.3-1.6
1996-976.2-1.6
DISAPPEARANCE (in million tonnes)
YearFeedTotal
1992-9334.961.8
1993-9433.261.2
1994-9532.257.9
1995-9629.956.7
1996-9736.666.6
PRODUCTION, ENDING STOCKS
(in million tonnes, U.S. dollars per tonne)
EndingExport
YearProductionstocksprice*
1992-9365.45.8107
1993-9455.94.194
1994-9558.04.1108
1995-9655.22.7159
1996-9768.24.2144
* average price quotes for U.S. No. 2 yellow sorghum, f.o.b. U.S. Gulf; 1996-97 is nine-month average.
Trade data are October/September years; all other data are aggregate of local marketing years; 1996-97 data are estimates.
Source: U.S. Department of Agriculture

      Barley

TRADE (in million tonnes)
Percent
YearTotalchange
1992-9314.6
1993-9418.5+26.7
1994-9514.7-20.5
1995-9612.2-17.0
1996-9715.8+30.0
DISAPPEARANCE (in million tonnes)
YearFeedTotal
1992-93121.9167.1
1993-94124.8170.1
1994-95121.9167.5
1995-96105.1149.7
1996-97104.5148.9
PRODUCTION, ENDING STOCKS
(in million tonnes, U.S. dollars per tonne)
EndingExport
YearProductionstocksprice*
1992-93165.731.9118
1993-94170.232.7110
1994-95161.526.7115
1995-96142.019.0161
1996-97153.723.7144
* average price quotes for U.S. No. 2 Western, f.o.b. Portland; 1996-97 is nine-month average.
Trade data are October/September years; all other data are aggregate of local marketing years; 1996-97 data are estimates.
Source: U.S. Department of Agriculture

Mexican grain market in transition: Lack of domestic price discovery mechanisms creates difficulties for grain marketing, but industry hopeful Mexican commodities exchange will be established soon.

   By Stephanie Noecker

   In his recent speech on the wonders the new macro-economic strategy would work on the nation's agricultural base, Mexico's President Ernesto Zedillo read out a long list of objectives that must be met to pull the sector into modern times.

   As he and other agricultural authorities pledged to reduce record grain imports, eliminate deficits in production of staples such as milk and bring the cost of rural financing into the realm of possibility, one thing became painfully clear. The rest of Mexico may be on the fast track to modernization, but the agricultural sector has definitely been left, as it were, in the dust. Underfunded and technologically outstripped by its partners in the North American Free Trade Agreement, the sector must overhaul its processes, from cultivation to pricing and commercialization.

   As key grain warehouses are being privatized this year, commercialization will get a shot of modernization. Remaining pieces of the puzzle, however, include the age-old problem of inefficiency of pricing.

   Producers seeking real-time knowledge of prices have long clamored for a local commodities exchange or bolsa agropecuaria. While proponents say they are getting closer, there is still more than one roadblock facing a truly functional commodities exchange.

   The need for the price setting mechanism is not in dispute. Victor Celaya del Toro, director of Economic Studies at the National Agriculture Council, calls the project “absolutely necessary.” Currently, says Mr. Celaya, the dearth of information is frightening. “Ask 100 producers what the going price is, and 90 won't know,” he says.

   The primary advantage of having such an exchange is it would give the nation's 3.3 million grain producers real-time information on prices. Given the lack of a bolsa, the government has adopted the strategy of indexing commodity prices to their trading price on U.S markets. The price for Mexican grain in Gunajauato, for example, is determined by taking the cost of U.S. grain in Guanajuato less the storage and financing costs involved in importing.

   Although this is far from the most efficient way of pricing a commodity, the creation of an open pricing mechanism has been hindered to date by a traditional dependence on the government to set prices. The government ceased to officially set prices on most grains four years ago, but a non-official reference price still exists in the form of the General Supply Company (Compania Nacional de Subsistencias Populares), better known as Conasupo. The scandal-ridden organization that buys grains at heavily subsidized prices still impedes an efficient privately run commodities exchange. Conasupo currently purchases around 40% of national maize production at prices that can be as much as 60% higher than the going rate on international markets.

   According to Antonio Anguiano of the National Agriculture Council (C.N.A.) in Guadalajara, “If a bolsa is going to work, it's fundamental that the goods that are traded therein are subject to the law of supply and demand. Any other practice can distort its operation.

   ” Luis Carlos de la Noe, general director of ProMexico, an association formed in Sinaloa to spearhead the exchange's creation, agrees.

   “Conasupo has to disappear,” he said. “The existence of an organization like the Conasupo inhibits participation of the private sector in price setting. The same thing happened in Argentina. The bolsa there has been around for 150 years, but every time the government has made a move to set prices, the bolsa has practically died.

   "Miguel Yoldi, director general of information technology and market analysis at Agricultural Commercialization Support Services (Apoyos y Servicios a la Comercializacion Agropecuaria, ASERCA), a division of the Agriculture Secretariat that will likely be the most closely involved with regulating the exchange, does not feel Conasupo necessarily competes with the function of an exchange as long as the government stipulates that it buy through the exchange as well.

   “If Conasupo buys through the bolsa, does that weaken or strengthen it?” Mr. Yoldi points out.

   Jose Ignacio Portillo of Merchants de Mexico, a company that sets up contracts for Mexican producers on the Chicago (U.S. futures) exchange, concedes Conasupo is not the whole problem. “There are dozens of products that could be traded on the bolsa, it's not just about grains,” he says.

Stable Policies Needed

   The real problem seems to be in setting up a long-term agricultural policy that producers and investors can believe in. Omar Edwin Perez of the Flour Industry Chamber doubts that the speculators needed to give a commodities bolsa liquidity will be interested in taking a risk on a Mexican futures market without some guarantee that the government will stay out of pricing policy.

    “What's needed is a certainty regarding policy on prices and subsidies,” he says. “Right now you don't know if tomorrow the government will reinstate its practice of across-the-board subsidies.

   ”Mr. Portillo agrees that producers, buyers, investors, intermediaries and the government have to be consistent in their push to modernize the sector and ensure its future. The companies snapping up the nation's distribution centers, a key piece of the puzzle, have no incentive to jump-start the sector by modernizing its infrastructure if there is no guarantee the agriculture business will be profitable, says Mr. Portillo. There is also the question of educating producers about an exchange's uses, he says, as well as a big job convincing investors.

   “We'll have to show them that there are other lucrative investment instruments in Mexico besides Cetes (Mexican peso-denominated debt certificates),” he says. “They can make money on coffee, sugar, wheat, etc.”

   Despite these doubts, internationalization of the agricultural market has prompted a need for realistic commodities prices, and the push for a bolsa is gaining momentum. ProMexico organized a January congress with technical advisors from exchanges all over the world as well as representatives from organizations such as the World Bank, the Inter-American Development Bank and the Inter-American Institute for Cooperation in Agriculture. With the plan for the bolsa “practically finished,” Mr. De la Noe says those organizations have promised technical support, and the I.A.D.B. has offered financial assistance as well.

   In addition, the National Banking and Securities Commission (Comision Nacional Bancario y de Valores, C.N.B.V.) authorized Mexico's futures market earlier this year, erasing doubts that Mexico was not ready to handle derivatives.

   Mr. Yoldi confirms that at long last the plan is getting off the ground. “It got a push with the impulse of the new derivatives market (MexDer),” he says. “Our intention is that the regulatory framework and the definition of the participants be ready by the end of the year. I doubt very much there will be operations in January, but I don't doubt it will be ready.”

   That may be overly optimistic considering that key regulatory issues, including who will do the regulating, have yet to be ironed out. Mr. Yoldi says ASERCA will be key, but the Agriculture, Commerce and Finance secretariats, and possibly the C.N.B.V., will also play a role. They will be responsible for setting up product quality standards and all operating restrictions.

   Beyond the technical details is the still undecided location of the bolsa and the fundamental issue of its function. While producers feel they need a bolsa that will trade futures as well as straight commodities, Mr. Yoldi says he doubts that will be the immediate scenario, adding that it may not be necessary anyway given that futures trading could eventually be carried out in Mexico in real time and registered on the Chicago bolsa.

Creating a Market Culture

   While that possibility exists, Mr. Portillo continues to push for a local futures exchange if for no other reason than to give the Mexican producer a delivery point. He says it will be hard enough to inculcate widespread effective use of the bolsa without users feeling that the price is being imposed by a distant market. “The producer must feel an affiliation to this exchange,” he says. “He must feel that it is his tool that he can use to solve his problems.”

   Moreover, says Mr. Perez, “An exchange is not for selling existing products, it's about financial instruments. An exchange is a virtual market, not an existing commodities market.”

   Mr. De la Noe of ProMexico foresees initial trading of commodities, followed by trading of term products that are planted and have a set delivery time and a third stage in which futures and options are introduced. He says that although technically, the bolsa could begin full-fledged operations from day one, it will probably be six months to a year from opening day until all the products are introduced simply because producers will have to become accustomed to the mechanism. “The culture surrounding price formation in Mexico is very delicate,” he says.

   Mr. Anguiano of C.N.A. agrees. “The real challenge will be to create a culture of futures trading among the producers and create an understanding of the bolsa as a tool and not simply a method of speculation,” he says.

   Mr. Portillo says education and publicity will likely be the most significant cost of opening the bolsa. “You can set up an office, put ‘commodities exchange' on the door and wear a tie to work,” he says. “But if you don't have clients, you don't have participants, you don't have a job.”

   Though he cites many educational initiatives on the part of both the private sector and government, he predicts much of the work will fall to banks and financial intermediaries who will ultimately have to promote the exchange by advising producers seeking credit on how to lock in their prices in advance, totally reversing the “I'll-take-my-chances” mentality that exists today.

   While the government is nominally in favor of the bolsa, the private sector will be the source of the funding. Mr. Perez points to lack of capable speculators as one of the reasons the project hasn't gotten off the ground since the government officially gave it the nod during the administration of Miguel de la Madrid. “I doubt that this type of speculator exists in Mexico,” he says.

   When it comes to the bottom line, however, few are willing to hazard a guess as to what the technological and physical infrastructure will cost. Mr. De la Noe roughly estimates start up costs at between U.S.$500,000 and U.S.$1 million but adds, it's a project that could have “a lot of zeros to the right.” So far, he says, seven agroindustrial companies have expressed interest in buying seats on the exchange and two Colombian firms, eager to participate in what they feel is a Mexican market with a lot of potential, have also asked about buying seats.

   Although nothing is certain as yet, Mr. Portillo, who has been involved in planning a commodities exchange for 10 years, acknowledges that “people are talking about the exchange more today than ever.” It is hoped, therefore, the momentum behind the project implies an imminent breath of fresh air for the beleaguered sector.

   “It will have a huge impact,” says Mr. De la Noe. “The experience of other countries indicates that having information on prices leads to a structural change in the sector. It turns farmers into agricultural businessmen.”

   Stephanie Noecker is editor of Bu$iness Mexico, the monthly magazine of the American Chamber/Mexico in Mexico City. This article was published in the July issue of Bu$iness Mexico and is reprinted with permission.

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