The UN Food and Agriculture Organisation (FAO) expects a modest recovery in global trade in cereals in 1999-2000 though the international prices of both wheat and rice are anticipated to remain subdued for some more time.
Its first forecast of the international trade in wheat, rice and coarse grains indicate a total volume of 212 million tonnes, about five million tonnes higher than last year's reduced trade of around 207 million tonnes.
The bulk of the increase in trade is anticipated to come from larger wheat imports.
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The transactions in coarse cereals are expected to rise only a little while those in rice are expected to decline.
Based on the current indications, international wheat trade in 1999-2000 (July-June) could swell to 99.5 million tonnes, up five million tonnes from last year's reduced imports and close to the volume imported in 1997-98. A good part of this increase would be accounted for by the Russian Federation where the imports are expected to double from last year's 1.5 million tonnes to nearly three million tonnes in 1999-2000.
Wheat imports are also predicted to rise in some Asian countries like China, Iran and Pakistan because of lower production.
The FAO feels the rise in wheat import demand would mean higher export opportunities mainly for the five major wheat-exporting countries. However, given the small size of the increase, the possibility for any single exporter to expand its market share would be rather limited.
Besides, large export supplies in other countries, such as India, Turkey, Kazakhstan, Hungary and Ukraine, could also intensify competition. There are ample supplies in India, part of which could eventually be exported, the FAO's global food outlook report states.
Regarding prices, the report points out that the underlying supply and demand fundamentals provide little hope for any immediate recovery. Wheat futures for September and December deliveries have also been on a sliding path. This is in sharp contrast to the situation during the corresponding period last year when wheat futures were not only higher but also steady.
In the case of rice, the FAO tentatively assumes that the trade would decline further from last year's level because of improved production prospects for 1999-2000. This is especially true of those importing countries which were instrumental in pushing up the volumes of international rice trade to above-average level in the previous two years.
The FAO expects rice prices to remain subdued, compared to the levels observed last year, assuming normal growing conditions for the rest of 1999 calendar year. However, any significant shortfall in production in major importing or exporting countries could change the price scenario.
The global trade in coarse cereals is anticipated to remain generally stagnant for the fourth consecutive year at around 92.5 million tonnes.