World Grain Situation

Trends, Conditions and

Outlook

CNASParr Rosson

Professor & Director

Center for North American Studies

Department of Agricultural Economics

Texas A&M University

Overview

World Supply/Demand Balance

Major Producers & Consumers

Market Conditions Affecting the Major

Grain Traders

Prices

World Macroeconomic Conditions

Indicator 2003 2004 2005 2006

Real Growth (% CH)

World 2.4 3.8 3.0 3.1

Asia/NIC/Emerging * 6.4 7.4 6.6 6.4

Latin America 1.3 5.8 4.3 4.4

Eurozone 0.5 1.9 1.3 1.8

Countries

United States 3.0 4.4 3.6 3.0

Canada 2.0 2.8 2.6 3.0

United Kingdom 2.2 3.1 2.5 2.3

Japan 1.4 2.6 1.0 2.0

China 9.1 9.5 9.0 8.3

India 7.3 7.1 7.2 6.5

World Wheat Supply and Demand

Source: Grain: World Markets and Trade, FAS/USDA

1980 1985 1990 1995 2000 20050

100

200

300

400

500

600

700MMT

0

50

100

150

200

250Million HA/T rade MMT

Area Harvested Production World T rade Consumption

World Rice Supply and Demand

Source: Grain: World Markets and Trade, FAS/USDA

1980 1985 1990 1995 2000 20050

100

200

300

400

500

600

700MMT

0

20

40

60

80

100

120

140

160

180Million HA/T rade MMT

Area Harvested Production World T rade Consumption

World Corn Supply and Demand

Source: Grain: World Markets and Trade, FAS/USDA

1980 1985 1990 1995 2000 20050

200

400

600

800MMT

0

20

40

60

80

100

120

140

160Million HA/T rade MMT

Area Harvested Production World T rade Consumption

World Barley Supply and Demand

Source: Grain: World Markets and Trade, FAS/USDA

1980 1985 1990 1995 2000 20050

50

100

150

200MMT

0

20

40

60

80

100Million HA/T rade MMT

Area Harvested Production World T rade Consumption

Wheat Production & ConsumptionAverage: 2001 - 2005

Source: Grain: World Markets and Trade, FAS/USDA

379.6357.5

Production Consumption0.0

100.0

200.0

300.0

400.0

500.0MMT

United States China India Russia EU-25

Rice Production & ConsumptionAverage: 2001 - 2005

Source: Grain: World Markets and Trade, FAS/USDA

286.9299.2

Production Consumption0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0MMT

China India Indonesia Vietnam Bangladesh

Corn Production & ConsumptionAverage: 2001 - 2005

Source: Grain: World Markets and Trade, FAS/USDA

484.6449.7

Production Consumption0.0

100.0

200.0

300.0

400.0

500.0

600.0MMT

United States China Mexico Brazil EU-25

World Wheat TradeAverage: 2001 - 2005

Source: Grain: World Markets and Trade, FAS/USDA

United States

25.3%

EU-25

13.5%

Argentina

8.8%

Australia

13.5%

Canada

13.0%

Other

25.9%

27.514.7

9.6

14.7

14.228.2

EU-25

8.5%

Brazil

5.6%Egypt

6.5% Japan

5.2%Algeria

4.3%

Other

69.8%

9.3

6.1

7.15.7 4.7

76.2

Exports 108.7 MMT

Imports 108.7 MMT

Iraq Wheat Supply and Demand

Source: Production, Supply and Demand, www.fas.usda.gov/psd/

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

Area

Harvested

(1000 HA)

1220 1800 1800 1800 1800

Production 650 1800 2000 2200 2200

Imports 2801 1579 1925 2800 3300

Beginning

Stocks2200 2000 1500 300 0

Supply 5651 5379 5425 5300 5500

Feed

Consumption0 200 750 800 700

Non-Feed

Consumption3651 3679 3975 4500 4500

Exports 0 0 400 0 0

Demand 3652 3879 5125 5300 5200

Ending Stocks 2000 1500 300 0 300

1,000 MT

Former Soviet Union Wheat Situation

96.9100.3

59.7

87

2002 2003 2004 20050

20

40

60

80

100

120

Million Metric T ons

Production

Stocks

(Russia, Kazakhstan, Ukraine)

Former Soviet Union Wheat Exports

25.7

7.8

14.8

18.7

2002 2003 2004 2005 F0

5

10

15

20

25

30

Million Metric T ons

(Russia, Kazakhstan, Ukraine)

Wheat Market Overview

Former Soviet Union Re-emerging As Wheat Exporter

Improved Rail & Port Infrastructure in Kazakhstan Stimulate Exports

Argentine Exports Expected to Decline Due to Short Crop from Dry Weather

China’s Imports Drop Due to Excellent Crop

U.S. Weekly Wheat Export Prices(Gulf Ports)

$152$150$153

$148 $150 $148 $149 $151 $149$151

$142$138

$133$138 $140

$132 $132

$138

$130$130

5/27 6/3 6/10 6/17 6/24 7/1 7/8 7/15 7/22 7/29$80

$100

$120

$140

$160

$180

No. 2 SRW No. 1 HRW

$/Metric Ton

World Rice TradeAverage: 2001 - 2005

Source: Grain: World Markets and Trade, FAS/USDA

India

16.7%

Vietnam

14.4%Pakistan

7.0%

Thailand

30.7%

United States

12.6%

Other

18.5%

4.5

3.91.9

8.3

3.4

5

Indonesia

7.0%

Nigeria

5.9%

Philippines

5.2%

Saudi Arabia

4.4% EU-25

4.1%

Other

73.4%

1.9

1.6

1.4

1.21.1

19.9

Exports27.1 MMT

Imports27.1 MMT

Iraq, 1 MMT

Iraq Rice Supply and Demand

Source: Production, Supply and Demand, www.fas.usda.gov/psd/

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

Area Harvested

(1000 HA)3 12 28 50 50

Product ion 26 26 50 101 101

Imports 1178 672 889 1000 1200

Beginning

Stocks- - - - -

Supply 1645 1239 1022 1067 1317

Consumption 1095 1139 1022 1017 1067

Exports 0 0 0 0 0

Demand 1095 1139 1022 1017 1067

Ending Stocks 550 100 0 50 250

1,000 MT

Rice Market Overview

Thailand is the World’s Leading Exporter

More Competition from Vietnam & India

Growing in Importance

Indonesia a Major Importer

Growing Demand in Cuba, Nigeria & Saudi

Arabia

China Currency Strengthening Likely to

Increase Asian Rice Prices

World Rice Prices

20

00

20

01

20

02

8/2

003

1/2

004

8/2

004

1/2

005

8/2

005

$0

$100

$200

$300

$400

$500

Thai, FOB Bangkok U.S., FAS Gulf Ports FOB, Vietnam

$/Metric Ton

Source: Producers Rice Mill (producersrice.com)

http://www.ers.usda.gov/Briefing/rice/Gallery/gallery2005/USRiceSupply.gif

http://www.ers.usda.gov/Briefing/rice/Gallery/gallery2005/USRiceUtilization.gif

World Corn TradeAverage: 2001 - 2005

Source: Grain: World Markets and Trade, FAS/USDA

United States

59.6%

China

12.2%

Brazil

4.7%EU-25

1.8%

Argentina

14.8%

Other

6.9%

45.8

9.43.61.4

11.4

5.3

Egypt

6.0%

Japan

21.8%

S. Korea

11.2%

Taiwan

6.1%

Mexico

6.9%

Other

48.0%

4.6

16.78.6

4.7

5.3

36.8

Exports76.7 MMT

Imports76.7 MMT

Iraq Corn Supply and Demand

Source: Production, Supply and Demand, www.fas.usda.gov/psd/

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

Area Harvested

(1000 HA)50 50 50 50 50

Product ion 50 60 60 60 60

Imports 0 0 35 50 50

Beginning

Stocks0 0 0 0 0

Supply 50 60 95 110 110

Consumption 50 60 95 110 110

Exports 0 0 0 0 0

Demand 50 60 95 110 110

Ending Stocks 0 0 0 0 0

1,000 MT

Corn Market Overview

Recovering Demand in Latin America

Brazil, Argentina, Colombia, Peru, El Salvador

& Ecuador Experience Strong Demand Growth

Consumption Has Grown 3.4%/Year for 5

Years

Increased Animal Feeding Main Reason for

Greater Demand

Less Export Competition in Near Term

U.S. Monthly Corn Prices(No. 2 Yellow, Gulf Ports)

$103$107

$110$112$117

$120

$129$131$128

$120

$110

$95$95$93$95$97$95$93

$100

$93$95$99

Sep Dec Mar Jun Sep Dec Mar Jun

2003 2004 2005

$60

$80

$100

$120

$140

$160$/Metric T on

Iraq Barley Supply and Demand

Source: Production, Supply and Demand, www.fas.usda.gov/psd/

2001-2002 2002-2003 2003-2004 2004-2005 2005-2006

Area Harvested

(1000 HA)1200 1300 1300 1300 1300

Product ion 550 1000 1150 1250 1250

Imports 0 0 0 0 0

Beginning

Stocks37 17 82 132 82

Supply 587 1017 1232 1382 1332

Feed

Consumption100 350 400 600 600

Non-Feed

Consumption200 250 300 300 300

Exports 270 335 400 400 300

Demand 587 1017 1232 1382 1332

Ending Stocks 17 82 132 82 132

1,000 MT

Summary

World Grain Markets are Characterized as

Highly Dynamic

Wide Swings in Price

Uncertainty About Weather & Other Forces

Impacts of Exchange Rates

Influenced by Policy and Trade Restrictions

Except for Rice, World Supply/Demand for

Major Grains In Balanced

Tight S/D Balance Can Lead to Large Price

Increases & Higher Food Costs for Consumers