Grain market review: Coarse Grain

by Teresa Acklin
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   World coarse grain trade in 1994-95 is expected to remain basically flat compared with 1993-94, a pattern that should persist over the longer term.

   In recent projections for the 1994-95 season, the International Wheat Council estimated world trade in coarse grains at 82.1 million tonnes, down about 1% from the expected 1993-94 trade total of 82.8 million. Despite the minimal change, the 1994-95 estimate would be the lowest coarse grains trade figure in at least 10 years.

   World coarse grains trade peaked at almost 103 million tonnes in 1989-90, sparked by near-record purchases by the former Soviet Union. In the following year, trade dropped by 20%, and annual trade has ranged from 82 million to about 92 million tonnes ever since.

   One reason for the stagnant trade figures is the decline in F.S.U. imports. In 1989-90, the F.S.U. imported about 23.2 million tonnes of coarse grains and took 18.3 million in 1991-92.

   But since then, F.S.U. imports have declined steadily, along with the region's plunging livestock numbers and a shrinking availability of cash and credit to buy grain. The I.W.C. estimated F.S.U. imports in 1994-95 at a mere 5.1 million tonnes.

   But the F.S.U. situation is only part of the explanation for the stagnant trade outlook, the I.W.C. said. Other factors also are at work, and these are likely to continue to discourage a signficant trade rebound.

   A primary factor is the worldwide use of alternative feed ingredients. Materials such as tapioca and oilseed meals have become more attractive as feed manufacturers seek to balance nutritional factors with ingredient prices in their formulations.

   This trend is particularly noticeable in Asia, the I.W.C. said. For instance, South Korea's non-grain feed ingredient use comprised 45% of total feed inputs in 1993-94, up from 37% five years earlier.

   The availability of competitively priced feed wheat also has hurt demand for coarse grains, the I.W.C. noted. Two consecutive years of adverse weather in primary production areas and the resulting below-average-quality crops skewed wheat-coarse grains price relationships, making feed wheat a viable alternative to coarse grains.

   Even though this season's Northern Hemisphere wheat harvest promises improved quality, feed wheat supplies already in marketing channels could dampen demand for coarse grains until later in the crop year, the I.W.C. said.

   Yet another reason for expected sluggish coarse grains trade is the gradual liberalization of trade in meat products, expecially in Asian countries. The liberalizations have stimulated imports of beef, pork and poultry, rather than feed grains, a trend that is expected to continue as provisions of the General Agreement on Tariffs and Trade are implemented. This development will tend to limit major expansion in coarse grains trade, the I.W.C. said.

   Although the global trade outlook is static in total, certain markets will experience growth, the I.W.C. said. These include South America, where 1994-95 imports may jump by 12% from 1993-94.

   Total world consumption in 1994-95 should rebound to about 835 million tonnes from 825 million in 1993-94, assuming no problems develop with the U.S. maize crop, the I.W.C. said. Use in 1993-94 was down from the previous year primarily because of the flood-reduced U.S. maize crop.

   Consumption of coarse grains in developing countries set a record 345 million tonnes in 1993-94, despite competition from cheap feed wheat. The I.W.C. noted that privatization of the grain trade and relaxation of import controls might have contributed to this development by unleashing demand to satisfy expanding meat production, particularly poultry.

   World coarse grains stocks as the 1994-95 crop year began were estimated at 114 million tonnes, or 14% of use. Production in 1994-95 is forecast at 838 million tonnes.

   If no production-cutting weather problems develop in major growing areas, 1994-95 use should jump by 10 million tonnes. This would result in stocks at the end of 1994-95 of 117 million tonnes, up only slightly from 1993-94, and the stocks-to-use ratio would remain at 14%.