Global wheat production declines
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CTA. 2003. Global wheat production declines. Agritrade, October 2003. CTA, Wageningen, The Netherlands.
Permanent link to this item: http://hdl.handle.net/10568/52669
The USDA Wheat Outlook for August 2003 contained revised projections for world...
The USDA Wheat Outlook for August 2003 contained revised projections for world wheat production, with projections down 11 million tonnes to 549 million tonnes. Some 5 million tonnes of this decline was accounted for by trends in the EU. The outlook points out that it is necessary to go back to 1995/96 to encounter lower average EU wheat yields. As a consequence EU-15 wheat exports in 2003/04 are expected to fall to 10.5 million tonnes, the lowest on record. This creates a situation where 'the EU faces sharply reduced grain supplies for animal feed because of reduced wheat and coarse grain production prospects'. This will create opportunities for increased exports of non-grain feed (cassava, oilseeds, corn gluten) for third country exporters. Argentina, Australia, Canada and the USA are expected to be the principal beneficiaries of this situation, although these opportunities will be limited by the increased use the EU will make of rye and rice stocks as a source of animal feed. The tight situation in the EU has led the European Commission to indefinitely suspend export subsidies on wheat so as to 'keep a lid on grain prices within the EU'. The tight situation is also leading to increased wheat prices on the world market. Two additional short USDA reports on developments in the wheat sector highlight how weather conditions have adversely affected production in both EU and non-EU European countries. Comment: These higher EU prices could serve to stimulate EU wheat production in the long term if they rise above the level projected and on which direct-aid payments were calculated. Higher than expected prices commonly results in 'over compensation' of EU wheat farmers, leading to increased incentives to produce. Thus while these recent trends are likely to mean that the anticipated external market effects of CAP reform will not occur in the short term, in the longer term increased volumes of EU wheat exports to world markets can be expected once normal climatic conditions return.
SubjectsMARKETING AND TRADE;
- CTA Agritrade (English)