WORLD SUPPLY AND DEMAND FOR GRAIN 1974/75 (WITH EMPHASIS ON FOREIGN DEMAND FOR US WHEAT AND CORN)

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CIA-RDP85T00875R001900030195-0
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November 7, 2008
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December 9, 1974
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Approved For Kelease 25X1 LVVO/ I I/V/ - GIA-Kup8b 1uu8IbKuu1 9u003 Approved For Release 2008/11 /07 5TOO875 ROO 190003 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 a.Vrvl I1J7ti4I II L. WORLD SUPPLY AND DEMAND FOR GRAIN, 1974/75 (WITH EMPHASIS ON FOREIGN DEMAND FOR US WHEAT AND CORN) On file Department of N Agriculture release instructions apply. OFFICE OF ECONOMIC RESEARCH CENTRAL INTELLIGENCE AGENCY 9 DECEMBER 1974 ;;: Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 CONflr rITIP.L 25X1 WORLD SUPPLY AND DEMAND FOR CORN, 1974/75 Introduction This u?daces our 23 September report on alternative estimates of world export supply and demand for grain (excluding rice). It compares CIA estimates with those of USDA* and, for wheat, with the International Wheat Council. The analysis is aimed at determining the foreign import demand for US wheat and corn in the 1975 marketing year (MY).** A forecast of the 1974/75 world grain supply/demand still must be very tentative. Supply and export availability estimates include forecasts of coarse grain not yet planted and wheat harvests not completed in the Southern Hemisphere, and final results yet to be published on coarse grain output in the Northern Hemisphere. Demand analysis is hindered by limited knowledge on the full impact of sharp price rises on utilization of grain for feed both here and abroad. Also, there is an incomplete understanding of how worldwide inflation is affecting effective demand. Appendix A provides a discussion on the grain situation in individual countries. All references to USDA estimates in this report refer to those contained in the Foreign Agriculture circular FG23-14, 7 November 1974 and supplemental information. ** The marketing year for wheat is 1 July-30 June and for corn, 1 0.:tober-30 September. Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Principal Pindin s The 1974/75 world grain situation has tightened over the past 2 months. Total grain production (excluding rice) has dropped another 17.5 million tons, largely feed grains, to 911 million tons.* Thus, a 6% decline in output is now forecast rather than the increase projected in early summer. Most of the recent deduction comes from short corn harvests in the US, Western Europe and the USSR. Wheat production shows only minor changes, but the quality of the grain harvested in Canada a0d Western Europe is below a year ago. Grain consumption will be down less than production leading to a further drawdown in ending stocks. USDA estimates, and we agree, that ending stocks will fall by 20 million tons. Most of the reduction will occur in US and USSR holdings. Similarly, the US will account for a larger share.of the decline in consumption than the rest of the world; estimated for the US at 16% for feedgrain and 4.5% for wheat. CIA agrees with USDA's forecast that the world import demand for wheat is now 64 million tons (excluding antra EC-9 trade). Uncertainties about India and Middle East *Metric tons are used throughout this report. Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 intentions could push demand higher. The International Wheat Council places wheat import requirements 2 million tons higher. We estimate maximum export availability of wheat at 64.4 million tons by drawing down Canadian and US stocks. The tight supply/demand balance portends further upward pressure on wheat prices in the coming weeks. CIA estimates total foreign demand for US wheat and flour in FY 75 at last year's level of 31 million tons (1139 million bushels), 2.4 million tons higher than USDA. This level of export would reduce US ending stocks to a new low of under 5 million tons (179 million bushels). Canadian shipping problems and likely higher import demand by India could put additional pressure on US wheat supplies by January. The 1974/75 supply situation for corn is tighter than for wheat. Additional cuts last month in US corn production estimates -- the world's largest producer and exporter -- are directly reflected in a 17% drop in total export availabilities from MY 1974 to 36.6 million tons. This is a maximum level and implies a drawdown in US stocks by 30 September 1975 to only a 3 1/2 week supply. CIA agrees with USDA that foreign demand for corn will be down but projects less of a reduction. Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 CO,:, 107'1TI:1 L Our import demand estimates closely approximate the export availability of 36.7 million tons. Excess demand, however, will occur if the EC does not hold total corn imports to no more than 9.6 million tons or the Soviet Union makes additional purchases. CIA estimates that export demand for US corn in MY 75 will be 23.5 million tons (925 million bushels). This compares with USDA's projection of 22.9 million tons (900 million bushels) CIA's higher level of export could be met only if domestic consumption falls lower than now projected by USDA. A further drawdown in stocks is not considered feasible. Domestic use and import demand estimates are still uncertain due to uncertainties about adjustments that are being made in livestock feeding in both the US and abroad -- especially the EC -- because of (1) higher feed prices, (2) impact of economic slowdown on consumer expenditures, and (3) government actions that might be taken to protect national livestock industries. US export shipments of both wheat and corn have moved at a slower rate so far this marketing year than a year ago. Activity has picked up in the past month. For the 3 week period ending 29 Nov;mber, inspections of grain for export moved - 4 - Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 At an annual rate for both wheat And corn that exceeded USDA and CIA projections tor MY 75 (see ChartsI. This shipping information is only an indicator and does not in itself imply a larger export demand than now projected. Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 V 'I!E1\ T Vv' EE1"IIV i.XP31 ]T Slti 1"I V f ,Psi ` i1U10 Thee ? week moving average of inspections for export, converted. to annual rate. f.itl. BU. LEI I I I i I ~ i i? I J JAN. FEB. MAR. APR MAY JUNE ? +t. R' C 0 ii i ~'6.1: J f. ~j Ia {J Three ? creek rloviag average of inspections for export, converted to annual rate. 16 0 0j- - .1 "913/74 V 0 V;*. 1974/75 AUG. SEPT. OCT. NOV. DEC. loo- .? 197 ..~ 3/14 1200 -- 1000 y~ I CIA 000.1 I _ 600 1914/75 A Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 WHEAT: SuP.iLY/DEMAND SITUATION 1974/1975 World Production of Wheat, 1974/75 1. World wheat production, according to recent USDA estimates, is expected to fall 15 million tons short of last, year's record output of 367 million tons. An International Wheat Council (IWC) press release on 26 November also gave a production forecast that ranged from 15-17 million tons below 1973/74. CIA considers both of these estimates to be on the high side -- partly based on more recent information -- and has reduced USDA's projection by about 5 million tons to 346 million tons, 21 million tons or 6% below last year (Table 1). 2. Important differences in production forecasts for major exporting countries are those for Canada, Argentina and the USSR. We have estimated the impact of unfavorable weather on wheat yields to-be mcr,- serious in the USSR and Argentina .than USDA. For the USSR, the CIA estimate is 5 million tons lower than USDA's 90 million tons. In Argentina, drought damage has lower :d earlier wheat estimates by .7 million tons, and the final estimate could be even lower. On the other hand, frost damage to the Canadian wheat crop was less than expected. The quality of the crop is the worst in years, however, with nearly 30% of the crop -- usually 1% -- classified Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 ~----- ?? Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 ~~i~li?~r~ri: i Ir?!. Table 1 World Wheat P.Produiction/ (In Million Metric Tons) Country or Projection Region ' 1'97'4-75 1973-74 -/ CIA USDA Argentina 6.7 5.8 6.5 Australia 12.0 11.4 11.0 Canada 16. 5 14.2 13.4 East Europe 31.6 33.4 33.9 India 24.9 22.1 22.5 West Europe 50.7 55.3!/ 55.3 USSR 109.7 85.0 90.0 USA 46.6 48.5!/ 48.5 Other 68.3 70.6b/ 70.6 TOTAL 367.0 346.3 351*.6 Production data include all harvestings occuring in the July-June year shown. No Lidependent estimates made, accepted those of USDA. Estimates as of 31 October 1974, Wheat Situation, ERS/USDA, November 1974. Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 as feed quality. Reports from both East and West Europe indicate that wheat harvest results were better than expected 2 months ago. Nevertheless, the protein ccntent of wheat throughout Europe iv.: lower than last year raising import requirements for hard wheats. Export Availabilities 3. The estimated availability of wheat for export in FY 75 has increased by about 5 million tons since September. This resulted from a larger than expected harvest in Western Europe and by additional drawdowns in US and Canadian stock's. There is agreement between CIA, USDA, and the IWC estimates that export supplies could exceed the 62 million tons traded in FY 74. We forecast a maximum export availability of 64.4 million tons as compared with 65.6 million tons by USDA and 68.1 million tons by the IWC (see Table 2). The IWC projection c,i 14.6 million tons for Canada is unrealistic. Transportation problems have already slowed wheat shipments behind a year ago c-o that Canada will have difficulty moving as much as 10.5'to 11.0 million tons in FY 75. 4. Australia, Argentina, -.nd the EC all have exportable surpluses larger than in FY 74. Both Argentine and Australian shipments, however, will. be limited to the amounts shown on Table 2 by transport constraints rather than supply. This Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 World Expor. is of Wheat and Flour ' ' . . ' ' ' Million Metric Tons P N Estimates as of 1 November 1974. Estimates reI ased 25 November 1974. High end of range used Based on reducing end-of-year carryover grain the current USDA estimate of 7.3 million tons to 4.8 million tons. This level is considered the minimum without disrupting orderly marketing of wheat. Availabilities FY 75h/ Country FY 73 FY 74 CIA USD1.5 Argentina 3.5 1.1 2.2 2.7 2.5 Australia 5.5 5.5 8.6 9.0 8.5 Canada 15.6 11.7 11.0 10.5 14.6E/ West Europe 7.3 5.8 6.8 7.5 6.0 USSR 1.3 5.0 3.3 4.5 4.0 US 32.0 31.1 31.0-/ 29.9/ 31.0c-/ Other 2.7 1.6 1.5 1.5 1.5 TOTAL 67.9 61.8 64.4 65.6 68.1 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 could change for Argentina if drought damage to the December wheat harvcjt proves as bad as some early reports, The CIA and IWC estimates of US export availability at 31 million tons will require a. drawdown in stocks to a historical low of 4.8 million tons (178 million bushels). 5. Three major sources of uncertainy that could reduce the wheat export supply estimates -- other than the transport problem -- are (1) whether the Canadian Government or wheat board authorize at least a 2 million ton dLpw down in stocks for export, (2) whether more wheat than now estimated will be used to feed livestock in the EC, and (3) whether the US domestic consumption of wheat is as low as the 713 million bushels now projected by USDA. World Import Demand for Wheat, FY 75 CIA agrees with USDA forecasts *that total world import demand for wheat is about 64 million tons (excluding intra EC-9 trade). This represents an increase from September forecasts of 5 million tons for USDA and 3 million tons for Cu.. 7Import demand estimates have been revised upward due to revised sizeable actual expected purchases of Wheat in the past month by the USSR, South Asia, and Africa. The needs of South Asian countries, especially India, are not fully reflected in these estimates. IWC estimates imports ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 for this region at about 2 million ton:; higher than CIA. Should financial aid become available to these countries, 'an additional import of 2 million tons would be realistic. Our estimates of 'demand are based on current aid programs plus the ability of the country to purchase;in commercial markets. 7. Compared to a year ago, the largest increase in import demand is nearly 6 million tons for the Asian region. This reflects the shortfall in grain output for India and Bangladesh, and" affluence of the Middle East region. Better harvests and/or drawdown of stocks will reduce the import requirements of Western 'Curope, the USSR, and South America. S. Projections of FY 75 import demand for wheat continue to be uncertain due to factors difficult to analyze. These include: ?Unknown influence of high feed grain prices on use of wheat for feeding livestock; ?Whether India may divert more foreign exchange or receive more financial aid for grain purchases than now forecast; and ?Stockpiling policies of certain Middle East countries. Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Fore ijn Demand for US Whoa t- 9. CIA forecasts FY 75 export demand for US wheat and flour at 31 million tons (1,139 million bushels), 2.4 million tons above USDA's forecast of 28.G million tons (1,050 million bushels)*. This compares with exports of 31.1 million tons last year (see Table 3). Our predicted demand for US wheat exports has risen 3 million tons since September. Major upward adjustments were made in sales to the USSR, Inaia, and Iran, whichmore than offset the 1.3 million tons cancelled by the PRC. 10. CIA estimates by region and selected countries are compared to those of USDA and to shipments plus outstanding export contracts (SOES) as reported by grain brokers to USDA in Table 3. Unlike the situation at this time a year ago when the SOES exceeded the projected exports for the entire year, on 17 November 1974 it represented 88% of projected exports for the year. Only for the European area does the SOES exceed USDA or CIA estimates. Based on last year's experience, some of these contracts -- largely those between US brokers and West European subsidaries -- will not be fulfilled. *Mid-point- oe USDA's projected range of 1,000-1,100 million bushels. Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Dentinntion 0 inr,tnnL TABLE EST' '1ATED DEMAND FOR US WHEAT AND FLOUR EXPORTS, FY 75 ON THOUSAND fETRIC Torts) Forecast FY 75b, sots / FY 74 CIA USDA- 17 November 1.974 Western Ileminphore: kuwilo 7D4 850 11=2 t 1 ? .. 3.550 980 Chile 600 700 Colombia 472 320 Peru 490 700 Venezuela 607 540 Central America 299 335 Others 145 630 m Sub-total 5, , USSR Eastern Europe European Community Other West Europe Sub-total 2,725 1,340 851 800 2.477 2,665 693 X4 6 535 5,_4 Asia: Japan 3,067 3,200 India 1,620 4,000 Taiwan 849 590 People's Republic of China 3,190 1,700 Korea, South 1,588 1,700 Iraq 459 ? 445 ..Iran 584 1,900 Israel 449 300 Philippines 385 480 Bangladesh 730 700 Indonesia 315 30 Pakistan 544 550 South Vietnam 119 100 Turkey 329 750 Other 834 985 Sub-total 1370" 1773-0 850 762 1,100 323 500 201 340 161 600 243 500 319 1,060 205 667 , , 1,300 1,154 700 625 2,500 3,910 300 106 4,,800 5,795 3,100 2,157 2,800 2,914 500 236 1,750 1,750 1,368 557 1,695 269 7,600 324 (700) 319 109 (450) 314 0 942 437 15 1 TIMIT Africa: Algeria 1,046 1,000 275 Egypt 713 1,000 296 Morocco 599 400 487 Nigeria 368 270 165 Sudan 1 656 170 59 OL 'rs 335 155 Sub-total 3,175 1 437 - 14 - Cuu; lnccmnt ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 ILLEGIB Total Wheat TAIL[ 3 - c.QN,_'I Forecnnt MY 75 SOTS, MY 74 CIA . UAY 17 Novembor 1974 Flour and Products d 800 Total Wheat and Flour 31,067 31,000 28,590 23,504 Unspecified Destination --- --- Total Wheat (known and unspecified destination) a Marketing year, 1 July 1974 through 30 June 1975 Statistical data shown were supplied by FAS/USDA on 25 November 1974. EC/ Wheat Shipments inspected for export 1 July 1974 through 25 October 1974 plus Outstanding Export sales as of 27 October for the balanci of FYP1975 Flour in grain equivalent included with individual country's wheat import projections in grain equivalent. - 15 - Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 11, The smaller amount of US wheat on export contracts so far this year probably reflects less panic buying, delayed purchases in hopes of lower prices, and commercial market participants approaching the market in a more orderly fashion. US sales can be expected to pick up substantially during the next 2 months for the following reasons: ?Major importers such as Japan and India are not covered; Some switching from Canadian to US wheat because of quality problems, especially for Canadian durum; ?Deterioration of grain export prospects for Argentina; ?Transport or labor problems expected to constrain Canadian rovem- nt of wheat. 12. The major difference, between USDA and CIA export forecasts are in Asia and to a lesser extent Western Europe. The difference on Mrica is less than 100,000 tons if you add the 800,000 tons of flour export to USDA's estimate. Flour is included in the CIA country estimates but not USDA's. The major difference in Asia is centered on India. We estimate India's imports at 4 million tons -- a minimum -- or 1.2 million tons more than shown by USDA. Known purchases plus announced PL-480 commitments already total over 3.5 million tons. USDA officials privately agree that the final figure may be raised Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 25X1 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 to 4 million tons. For Europe, c:e cst,,Utated that the EC import demand will be up slightly from FY 74 to compensate for a poorer quality wheat harvest and to reflect some shi':t from Canadian to more, US durum wheat. 13. The US can export 31 million tons of wheat this year by a drawdown in carryover stocks for the third successive year. Given this level of export and accepting USDA's Outlook Board projection of 19.4 million tons (7.3 million bushels)* for domestic consumption, carryover stocks on 30 June 1975 would be down to a historical low of 4.9 million tons (179 million bushels). USDA's smaller level of export would permit a small increase (19 million bushels) in carryover stocks. 14.. It should be pointed out, that total US inspections of wheat for export in the 1 July-22 November period were running 4.6 million tons behind a year ago. These data imply an annual rate of export of 28.3 million tons of wheat (excluding flour) or approximately the same as USDA's current *Mid-pointt of USDA estimate. Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 cr)t:r. -,rrtr,V 25X1 projection. During the post 3 weeks, however, inspections for export have increased and are running at an annual rate of over 30 million tons. We believe that wheat shipments will continue to pick up in the coming months, with larger movements to the USSR, Middle East and South Asian countries. An even larger bulge could occur in shipping after 1 January if the Canadian longshoremen go on strike as some predict. CORN: SUPPLY/DEMAND SITUATION 1974/75 15. The world supply/demand situation for feedgrains in 1974/75 has tightened further in the last month. While sluggish economic conditions have brought some relief on the demand side through the declining demand for meat, supply conditions have further deteriorated Ln recent weeks. The November production estimates for the US indicate an additional decline of 17.5 million tons in feedgrain production frcn a month earlier. Crop damage from dry weather in the USSR and Eastern Europe has also taken place, resulting in decreases of 2 and 4%, respectively, in feedgrain production -- largely corn -- from last year. A good Southern Hemisphere corn crop earlier this year has helped ease the supply situation but transport problems in Argentina and South Africa still cloud the export picture. Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 C()I:r1 T Wor. i.d Production of Corn, 1974 75 16. World production of ,fecdgrains in 19?4/75 is now projected to be down by over 6 percent -- to 564 million metric tons in 1974/75 compared to 603 million tons in 1973/74. Had world production lived up to March expectations, there would have been a 15 million ton increase in world feedgrain production rather than a 39 million ton decrease. Amost 34 million tons of the decrease from last year is in the US alone. World production of corn has declined similarly, with production of the major exporters down by 120u- to 141 million tons in 1974/75. .Although production in Argentina, South Africa, and Thailand is estimated to be up by nearly 7 million tons, it was not enough to offset a 26 million ton shortfall in the US corn crop. Production in the EC is estimated at 14.6 million tons, a 9% drop from 1973. USSR output also declined by about 2 million tons or 15J below last year. Table 4 Estimated Corn Production of Major Exporters (million met ric tons) Exporter 1973Z74 1974/75 US 143.3 117.4 Argentina 9.9. 10.0 South Africa 11.0 Thailand 2.3 140.7 ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 tCp; ;r-jr ?ITIAI! Export Avail.abili..i05 17. Corn export availability will be sharply limited in MY 19752'bythe production shortfall because stocks are at the lowest level in 20 years. The total export availability of the four major exporters is down by 4.5 million tons (see Table 5). While corn exports of non-US supplies should be up by almost 3 million tons barring further tran:.port difficulties, those of the US will be down by nearly 8 million tons. Another 1.6 million tons should be available for export from the EC Brazil, anO. Indoensia-- 230,000 tons more than last year-- raising maximum total export availability to 36.6 million tons. Table 5 Corn Exports of Major Exporters (million metric tons) Exporter MY 74 Forec?.dt MY 75 US 31.5 23.5* Argentina 2 5.7 South Africa 1.2 3.9 Thailand 2.0 1.9 Total 39.1 35.0 *This represents an export availability assuming USDA's lowest estimate of domestic use and ending stocks; the ending stocks figures of 2G5 million bushels is 3.5 weeks domestic supply and represents the lowest level to which stocks could be drawn wit.houL seriously disrupting the domestic market. a/ The Marketing year. (MY) for corn is 1 Octcbcr-30 September, unless otherwise noted. ILLEGIB ~ Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 H A N A N IIAL World Import Demand for Corn 18. Worldwide import demand for corn in MY 75 is estimated at 36.7 million metric tons -- a 17% drop from last year. The Lower import demand is due mostly to dcp,:euscd livestock markets and high grain, prices. Livestock producers in Europe -- largely the EC -- are expected to feed about 20 less grain livestock.because of the unfavorable ratio of feedgrain Prices to livestock prices. A good wheat crop will permit the EC to feed over 2 million tons more of soft wheat than last year and to cut corn imports by 1.8 million tons. The USSR, contrary to earlier expectations, has entered the corn m;.;rket for over 2.2 million tons so far this year. On the other hand, the ?RC is expected to cut corn imports -- used for human consumption -- by more than 1 million tons due to a good grain crop this year. 19. Importing countries are not actively pursuing policies designed to decrease feedgrain usage, so the decrease in overall import demand is due solely to market forces. The USSR is adhering to its goal of producing more meat to upgrade Soviet diets. Japan is supporting domestic livestock prices via meat import restrictions, thus shoring up the demand for imported feedgrains. The EC is protecting its domestic livestock industry by both limiting meat iciports and supporting domestic livestock prices. The largest decrease in corn or feedgrain 21 - Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 C(7^~f I;,r':r:t1. 25X1 usage'secri,?; to be occuring in the US -- currently forecast by USDA at 17% -- where the relatively unprotected livestock industry is badly lepr.esscd with no immediate relief in sight. In Europe and Japan, the total grain fed to livestock and in turn import requirements could still fall below current forecasts if grain prices strengthen and those for livestock products weaken further. Foreign Demand for US Corn 20. CIA estimates foreign demand for US corn in MY 75 at 23.5 million tons -- 600,000 tons above USDA's November estimate of 22.9 million tons.* Shipments plus rtitstanding export sales (SOES) and 17 November already totaled 31.9 million tons, more than the US, exported in MY 74. A comparison of CIA and USDA estimates are shown in Table 6. Major differences in estimates are centered in Europe and Asia. 21. CIA estimates the EC total import needs from third countries at 9.6 million tons of corn -- a drop of almost 16% from the 11.4 million tons imported last year. We estimate that the EC will receive 1.6 million tons of corn from Argentina and 1.0 million tons from South Africa, leaving 7.0 million tons of corn to be obtained from the US or 29% less than the 9.9 million tons last year. USDA also estimates EC imports of US corn at 7.0 million tons. However, both of these estimates *This is the mid-point of USDA's estimate range of 22.3-23.5 million tons. ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 ILLEGIB TABLE G DEMAND FOR U.S. CORN EXPORTS, MARKETING YEARS J 1974 AND 1975 SIn Thousand Metric Tons) Forecast MY 75 SOESE/ Destination MY 74 CIA USDAW 17 November 1974 Western Hemisphere: Mexico 1,194 650 -- - 387 Canada 813 600 -- - 647 Other 795 825 -- - 466 Sub-total 2,80$ 2,075 1,90 0 b Europe: US SR 3,016 1,100 1,10 0 1,092 Ea stern Europe 908 2,400 2,15 0 2,216 East Germany 152 (1,000) -- - (709) Poland 483 (1,000) -- - (1003) Other 273 (400) -- - (504) Eu ropean Community 3,854 7,000 7,00 0 14,102 Ot her West Europe 3,986 3,225 2,10 0 2,131 Greece --- (250) (10 0) (346) Spain -- - (1,800) (1,80 0) (1,2461 Other -- - (1 175 (20 0) (53': Sub-total l ~ 13,725 12,35 0 1 ,54' Japan 6,38 2 6,100 7,00 0 6,762 Taiwan 30 5 200 0 23 People's Republic of China 1,46 5 50 0 0 South Korea 38 1 490 1. 1,10 0 559 Other 46 3 535 ( 373 Sub-total 8,99 6 _ 7,375 8,10 0 7,717 73 4 335 13 0 Total corn 3 1,17 8 23 510 22,48 0 28,911 Products 40 6 J 38 1 --- Total corn and products 3 1,58 4 23,510 22,86 1 28,911 Unspecified destination 3,034e/ Total 31,945 iba/ d/ 1 October through 30 September of year shown. Provided by FAS, USDA: numbers are approximate. Corn shipments inspected for export 1 October 1974 through 1974 plus outstanding export sales as of 17 November 1974 for the balance of the 1975 marketing year. Data compiled from USDA, SRS, Grain Market News and from USDA, FAS, Exports. Products included with individual countries' corn import estimates. Includes 90,000 tons of unsold corn shipped abroad on broker's ac..:ounts. ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 are based in part on the, EC Commission's import estimates and informal commitments to attempt to hold US corn imports from the US to this level.* The EC as of 17 November had already contracted for 14.1 million tons of US corn in MY 74 according to US exporters. However, past experience indicates that (1) all of this will not necessarily be delivered (contracts can be cancelled), (2) corn from other countries may be used to fulfill the contracts, (::) part of the grain will be transhipped to other European countries. 22. Total corn import demand for "other West Europe" is estimated at 5.1 million tons with the US share at 3.2 million tons cot::iared to the USDA estimate of 2.1 million tons. Since USDA has not provided a complete country breakdown for the region we are unable to pinpoint the discrepancy. Total requirements for Eastern Europe are estimates at 2.8 million tons with 2.4 million tons from the US. USDA places US corn exports to Eastern Europe at 2.2 million tons. While the?SOES for Eastern Europe and other West Europe combined are lower than our estimates, we believe that transhipments from the EC to both regions will make up the discrepancy. 23. The difference between CIA and USDA estimates for Asia center on Japan with our estimates being about 900,000 tons lower. With Japan's total corn import requirements estimated 25X1 ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 at 8.2 million tons and with arrar-ged imports of 1.0 million tons from Thailand and 1.1 million from South Africa, we agree with the US Agricultural Attache that Japan will need only 6.1 million ton;; fromthe US. SOES to Japan were about 6.7 million on 17 November but we except Japan to cancel some contracts as they did last year. 24. The estimates of both world import demand and US export demand are indicators of market pressures rather than estimates of final exports. Using our estimate of US corn export demand and USDA's latest estimates of domestic production and usage, US stocks as of 30 September 75 would be drawn down to 5.9 million tons, equivalent to about 3 weeks domestic use. Since ending stocks on the order of 6.7 million tons is the minimum required to ensure orderly marketing, US corn exports of 23.5 million tons are not feasible unless dormest_ic use falls below USDA's estimate. Consequently, some additional upward price pressure is indicated unless there are decreases in demand which are not apparent now. 25. Corn moving out of the country began slowly this marketing year, but has picked up in the last few weeks. US corn exports in the 1 October-29 November period were 1.1 million tons less than in the same period last year. Whil:: ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 thi;u ln%pl.icL an annum rate of export only 22.0 mil.l.ion ton:;, sliyhLly 1csS than t1SDn';; estimate, the last 3 wee}::; rate of export: .i.mpl.i.c, an annual rate of 28.5 million tons. This rate exceed; both USDA and CIA export projections for MY 1975. Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 APPE14D IX A SITUATION IN SELECTED COUNTRIES ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 MTEFJ.Lci APAN ............. MALAYSIA ......................................... AKI STAN EOPLES I~EPUB I C OF ~H I N . . . . . . . . . . . . . . . . . - . , . . . . . . , , , . . , . . . . . . , , . 1 6 NDONESIA .........................................................RAN ... .. . ................... 19 RAQ . . . . . . . . I . I I . I I I I I 1 . , , , . . . , . . a . . . . . . . . . . . , 2 PERU...........................................12 VENEZUELA ..................... .. . ..................13 As ANGLADESH . . . . . . . . AMBODIA OL0t113IA..................... EXICO MA.J Q R_-f_); (_OI;IERS ARGENTINA .......................................... Au$TRALI1............... ANADA OUTII AFRlcn .......................................b WESTERS1 ~.;RCPE AN'n THE EC 7 C AJQ[3_._II'1-TRT_E S WE TERN HEMISPHERE ................................. 0 /R A Z I L . . . . . II . . . . .. . . . . . 11111911111114 . . . . . . . . . 1 C. HILE PHILIPPINES ......................................26 AUDI RABIA .................................... OUTH IOREA ......................................./ SOUTH VIETNAM ....................................29 SRI LANKA ........................................3(1 TAI4IAPI .................................irr..,....31 HA ILAI:D,,,,...,,, J2 EU 9OPE ............................................. Ll ASTERN EUROPE .......... ::~4 USSR, . I S S S S I . . . . . . . . so . . . . . . . . . . . . . . . . . . . . . . . . . 0036 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 CC, "*: 1)r 141 I'll E9NIL-trS-_c-(-Ii T O. `A, . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . .. . . . g G Y P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0R000O .........................................1; OCgANI/ ...........................................4 EW LEALAND .....................................43 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 11/XJ91LEXP1 RTERS. Arc ont-Inii Prolonged drought and hot winds have seriously damaged Argentina's wheat crop and will probably cut the 1974/75 harvest now in progress to 4.8-5.4 million ton!;; some 20% below last year's production. While higher support prices have been announced for corn and sorghum, they are inadequate in view of higher costs and inflationary expecta'`ion:;. Consequently, feedgrain production may drop by as much as 52. Despite an overall net reduction in production of major grains large carryover stocks should provide maximum export availabilities of 2.5 million tons of wheat and 10.5 willion tons of feedgrains in US MY 75. Historically, however, actual grain shipments have fallen below estimated availabilities because of inadequate transport and storage facilities, and 1974/75 will be no exception. Lags in deliveries have been reduced somewhat this year, but shipments are still running `.behind schedule and major bottlenecks can be expected by mid-1975 as corn and sorghum harvests strain handling capacity. Therefore, actual exports of grain will probably be no more than 10.3 million tons or 90% of maximum handling capacity. Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Prof cctcc Production Ex,Ior. is / Exports ~?/ 1973/74 1974/75 MY 74 MY 75 Wheat 6.5 4.8-5.4 1.1 1.9-2.5 Corn 9.9 10.0 5.7 5.7 Sorghum 5.92/ 4.82/, 2.8 2.7 1/ 2/ 1 July-30 June for wheat; 1 Oct-30 Sept. for corn and sorghum. Losses from handling in 1974 were 1.2 million tons and in 1975 are estimated at only 0.3 million tons. This year about one-third of the Argentine wheat exports will go to Europe, the USSR and Italy being the only purchasers; Asia and Africa will each get about one-fourth and the remainder will go to South American countries. The USSR and a few other European countries are taking about 40% of the Argentine corn exports; Asia, ? primarily the PRC, about one-fourth;, and Latin American countries, including Cuba, the remainder. :1 IA1, Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Auatra.1i.a Australia's last December-January (1973/74) wheat harvcs L totaled about 12 million tons, third largest on record, resuILincj mainly from a more than 20 Percent increase in acreage. Taking into account carryover stocks and a projected output of_ 11 4 million tons from the upcoming 1974/75 harvosL, the Australians have 8.5-8.7 million tons available for export during FY 75, about 2 1/2 million tons more than during FY 74. A large share of this amount has already been sold. The area sown to barley, Australia's second largest grain export, declined last year because of the expansion in wheat acreage. Still, a good crop was harvested and production in 1974 was up nearly 40% over 1973. The outlook is for a harvest of some 3.2 million tons next spring, which should leave 1.9 million tors of barley available for export during FY 75, compared an estimated 1.2 million tons exported during FY 74. Production Expor 1973/74 1974/75 Exports Availability FY 74 FY 75 --------------------million tons-------- -----------) 12.0 11.4 6 8.5 - 8.7 Barley 2.4 3.2 1.2 1.9 Canada Wheat: Estimates for Canada's 1974 wheat harvest have ranged from 13.4 million tons to 14.3 million tons -- down from last year's level of 16.5 million tons. Early official ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Cdg,rndian c tim.:itcs placed the harvest: at 14.3 million tons but did not take into account killing fr.orzs in late September. Tht, USDA recently adjusted its estimate of the Canadian halve-,t dorm Lo ] . 3 million tons and expects it to go lower. Recent comments from tht, Canadian Wheat Board, however, indicate that the final figu.:,,~ mi'.iht be close to the original 14.3 million ton estimate bei':iuse of recent good weather. The extent of the damage will be more fully known when the Canadian government releases its latest offi.iai estimates on 22 November. Production Exports Export Availability 1973/74 1974/75 FY 74 FY 75 Whi,at 16.5 14.2 11.5 10.5 Barley 10.2 8.8 2.7 2.7 Equally significant as the output shortfall is that tht? early frost adversely affected the quality of this year's harvest. Trade sources estimate that no more than 36u will griide No. 1 & 2 CWRS milling wheat as compared with 60%-70% in a normal year. Another 34% is expected to grade No.3 CWI(S milling. Utility wheat -- suitable only for feeding livestock -- is expected to account for about 30% compared to tho usual 1% of the crop. Despite a smaller output, exports could still reach about 10.5 to 11.0 million metric tons (assuming . 14.2 million ton harvest) if the Canadians draw down stocks by 2.3 million tons to 6.u million ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 by 31 July 1975. The 1 August 197 stocks at 10.3 million tons were equivalent co a ,two year domestic supply. Canada has not sold any major quantities of wheat since early July and officially suspended export sales in October pending new crop estimates. To date, about 7.7 million tons have been contracted for export. The level of wheat ex.-pc,':ts m ly be lower than 10.5 million tons dei es/linc, final discussions about size of stock carryovers, quality of harvest, and pricing policies of the Canadian Wheat Board. In FY 74, the Canadian Wheat Board raised its prices well a.7ove those of the US market in anticipation of shortages in the United States. If a similar policy is followed again this year, export volume would tend to be depressed, especially for sales to LDCs already hard pressed by high oil import costs. Also if feedgrain prices escalate, Canada may use its limited transport capacity to export more feedgrains instead of wheat. Feedgrains: Canada, a net importer of corn, probably will import 700,000 tors from the US in FY 75 compared to 785,000 tons in FY 71. 'rhe large amount of poor quality wheat harvested ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 CoNrInpJ I I,It will make more available for livestock feeding this year. The bar l -y harvest this fall is expected to reach only 8 .0 million tons, about 14% below the 1973 crop. Increased stocks, however, will proabaly make about 2.7 million.tons available for export in FY 75, the same as in FY 74. South Africa South Africa is the world's third largest exporter of corn. Most of South African corn exports during the US 1974/75 corn .aarketing year will come from the record 11 million ton crop harvested in 1!pril - June 1974. Carryover stocks from the 1973 harvest were at a record low. Assuming an average harvest in 1975, the government of South Africa will make surpluses available from the 1974 crop for export in MY .75 up to the transport capacity of about 4 million tons. This represents a dranatic increase over the 1.2 million tons exported in the previous US marketing year. Based on trends previous to last year's poor harvest, an can be expected to purchase about 1.1 million tens and the UK about 1 million tons. Taiwan has contracted for about 450,000 tons. Most of the remainder may go to other Asian countries and Venezuela. ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Cor:r!nuirlAV 25X1 Wester. n l.u rcii~c European grain production in 1974 has set a record of 139 million tons -- 4%% higher than last year -- according to preliminary estimates. The high output results from an expanded grain area of nearly 1 million hectares; yields are approximately the same as last year's level. Most of the increased area was sown to wheat, thus contributing to a boost in wheat output of 4.6 million tons or about 9%. Production of coarse grains may be up slightly to 83.7 million tons but has been hurt by dry weather. Major gains in grain production will be registered by Spain, France, Italy, and Sweden.' Wheat: Only about one million tons of wheat is expected to be available for export by Western Europe from other than the European Community (EC). Given the record harvest of wheat and large carryover stocks in the EC, an estimated 14-15 million tons should be available for export or for livestock feed. Because of the poor US corn crop with resultant high prices on the world market.and US official pressure on the EC to reduce feedgrain imports, the US will probably feed 2 to 3 million tons more wheat to livestock than lL-.st year. The EC is raising wheat export levies which should help keep internal wheat. prices below corn prices, stimulatincr ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 the use of wheat for livestock feud. Even tLough more wheat will be going to l,lvestock than last year, the record harvest and large stocks will enable the EC to raise exports of soft wheat to 5.8 million tons from last year's 5.4 million tons. Most of this wheat (including flour) will go to India, regular customers in Africa, and to fulfill food aid commitments. Considerable uncertainty surrounds the total export level at this time. The main wheat importing area in Western Europa is also the EC, which we estimate will import about 4 million tons (excluding intra-EC 9 trade) in FY 75, about the same as in FY 74. Hard wheat as well as d-.rum is used for mixing with the domestic soft wher,ts by the milling industry. The ultimate level and type of imports will depend not only on the size of the ',arvest but also on milling quality and protein content of the wheat. There are reports that the demand for high quality protein wheat by EC millers is greater than a year ago. The lower supply of high grade Canadian wheat will strengthen demand for US No.2 Hard Red Winter wheat. Feedgrains: Western Europe is a large net importer of feedgrain, especially corn. In FY 74, the region's net fecdgrain imports were 21.4 million tons. The US sold over 15 million tons Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 of these feedgrains -- mostly corn -- to the regior. including 11.5 million to the EC. According to a 1 November forecast of the USDA, Western Europe's FY 75 not imports of feedgrains are to drop 5.4 million tons to 16 million tons. This reduction is based on a drop of 1-2u in the total grain fed livestock coupled with the expanded feeding of dorrestic wheat. In turn, EC corn imports in MY 75 from the US are estimated at 7.0 m,:llion tons -- about 2.8 million tons less than last year -- out of a total import requirement of 9.6 million tons. The remaining corn import needs will be met by Argentina and South Africa. Considerable uncertainty remains in the estimate that the EC will significantly reduce US corn imports to 7.0 million tons. Export contracts for corn as reported by US brokers on sales to Western Euorpe are running at about 14 million tons. Undoubtedly these data are inflated as a hedge against possible imposition of US export controls and includes some corn for shipment to Eastern Europe in'other West European countries, but there is no way of knowing how much. Even if the EC does reduce corn purchases from the US, the corresponding decrease in EC wheat exports.will shift pressure from the US corn market to the wheat market. ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 C01'.!'1 1 . rJ l : ter _ flf'OM WESTERN HEMISPHERE Brazil Wheat: A 45% increase in wheat production to about 2.8 million tons is expected from the December harvest. This combined with some reduction in stocks will decrease the need for imports from 2.8 million in FY 74 to 1.5 million tons in FY 75. FY 75 wheat impor. s from the US are estimated at nearly 1 million tons, compared with 1.6 million in FY 74. Corn: The corn crop during MY 75 is expected to exceed moderately the 15 million tons produced last year. Brazil's e.cports probably will continue to recover from their suspension in 1973 and could reach 1.0 million tons in MY 75 although 700,000 t'oris is a more likely export volume. MY 74 expor? 600,000 tons. Chile Wheat: Wheat imports in FY 75 are forecast at 950,000 tons, below last year's level of about 1.1 million tons. Earlier forecasts for a substantial rise in wheat output and a big decline in imports have been revised because heavy rains and flooding delayed plantings and destroyed about 10% of the.winter wheat crop. Chilean wheat consumption is stagnating, in part, because of an April 1974 decree limiting wheat use to human consumption. It is estimated that 700,000 tons of the FY 75 wheat imports will come from 10 - Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 the U.S., 115,000 Lon:; more than durinU PY 74. About 200,000 ton:, of US wheat have been contracted for delivery in rY 75 of which about 100,000 tens have been shipped. The US is supplying 100,000 tons of wheat under a PL-480 credit and is expected to supply an additional PL-480 credit for 100,000 tons during rY 75. Corn: Corn imports this year are expected to decline slightly to 250,000 tons -- about 25,000 tons below last year. An excellent crop this year and forecasts for higher output next year will enable Chile to reduce imports while increasing tot?:.i1 consumption. The increase will be used mainly for animal feed. US corn will probably account for 150,000 tons of this year's imports compared with 126,000 tons last year. Colombia Assuming favorable weati-,!r conditions, production of most grains will increase substantially this crop year, reflecting success of government efforts to stimulate agriculture with credit, technical assistance, and price supports. Output of wheat is expected to increase by 807, to about 100,000 tons and corn by 30, to 760,000 tons. Elmination of the wheat import subsidy in mid-September, higher wheat prices, and a government program to encourage the use of wheat substitutes in baking will discourage imporL:; Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 in FY 75. The combined effect of these mea :ures will probably be to hold wheat imports at around 360,000 tons compared to 470,000 tons last year. About 90% of the wheat imports will come from the US. Mexico Wheat: Wheat production in FY 75 is estimated at 2.2 Corn: Widespread crop damage has estimate of corn import needs.in MY 75 to 1.3 million tons, mostly fran the US and Argentina. Corn production is now estimated at 8.1 million tons, 15% below initial forecasts. Early frost reduced the crop by an estimated 700,000 tons, and scattered damage has been reported from drought and hurricane Fifi. million metric tons, up 10% from FY 74. However, consumption is also increasing at a rate of about 10% per year and is expected to result in imports of roughly 850,000 tons, all from the US. Purchases of US wheatEor FY 75 already tota;.over 7,70,000 tons. Mexico took 706,000 tons of US wheat in FY 74. tripled the earlier Peru Wheat: Peru's FY 75 wheat production is e:-{-imated at about 160,000 tons, 710 over last year. The government expectcd to reduce imports this year by about 8% to 720,000 tons through ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 higher domestic price!] and government import restrictions. A more realistic estimate by the USDA attache puts import needs at about 965,000 tons if shortages are to be avoided. The higher estimate means that Peru will probably need about 700,000 tons from the US. About 374,000 tuns have been scheduled for delivery from the US during the l.,t half of this calendar year. Total imports could reach ncirly 1.2 million, however, if Peru's request for 200,000 tans on CCC credit is approved. Corn: Corn production will decrease slightly, about 3%y 'this year due to shifts from corn to cotton, production and short fertilizer supplies. Corn import needs could e::cecd 300,000 tons, 75% of which will be purchased from the US. About 220,000 tons of US corn went to Peru last year. Venezuela Wheat: Little wheat is grown in Venezuela and because shocks are low wheat imports in FY 75 should be around 600,000 tons compared to 580,000 tons in FY 74. Imports of US wheat are estimated at 540,000 tons in FY 75,of which over 300,000 tons are already our.chased. Corn: While 1974 corn production is expected to be 25?x, an increase in corn imports is expected in FY 75 up by least 300,000 tons from 275,000 tons in FY 74 -- because of ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 strong demand end government policy to incrua:;c poultry, Pork, and dairy production. Most of Venezuela's imports arc expected to be South African and Argentine corn. -- 14 - ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 ,,, A. ; Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 ASIA Bangladesh We estimate FY 75, foodgrain production at about 12 million tons, the same as last year. Although summer floods slightly damaged the last summer rice crop which normally accounts for 25% of production, the flooding should improve the major rice harvest starting in November which normally provides 60 of annual production. We estimate foodgrain imports in FY 75 at 2 million tons --- including 1.7 million tons of wheat and 300,000 tons of rice. (Imports in FY 74 totaled 1.7 million tons made up of 1.6 million tons of wheat and 100,000 tons of rice.) Imports of 2.0 million tons -- if achieved -- will maintain government rationing in urban areas for the remainder of FY 75 and allow for a slight increase in government relief. Insufficient imports during September and early October resulted in more hunger than usual prior to the major fall harvest. Bangladesh will remain vulnerable to such disruptions in imports. Imports already arranged for FY 75 total about 1.4 million tons, including 250,000 tons of PL-480 wheat and rice shipments. Acquisition of the remaining 600,000 tons is largely contingent on receipt of additional foreign assistance. Bangladesh will remain dependent on aid-financed grain imports ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 in the foresrcnhle future. Burma Wheat: Severe floods during August this year probably destroyed about 500,000 tons of rice, or about 10L of Burma's annual output-. This loss further eroded the country's precarious foreign exchange position and has accentuated the already tight domestic food situation. The rice destroyed was roughly. equal to past annual exports and represents a prospective loss of at least $150 million. Food shortages earlier this year led to civil rioting in June, prompting a halt in rice exports and government promises to alleviate shortages of food and other consumer goods through imports. Burma would like to import 40,000 tons of wheat in FY 75. The Burmese delegation attending the IMF/IURD Governor's meeting in Washington in late September sounded out US officials on aid, citing the recent flood losses as justification, but got no commitments. If aid is not forthcoming from other sources, Burma will probably import only about 15,000 - 20,000 tons of wheat in FY 75, mostly from Australia. Corn: Burma imports no corn, but produces about 140,000 tons of corn for domestic consumpt: on. Cambodia Wheat: Cambodia produces no wheat domestically, and corn production is a small fraction of pro-war levels. Wheat ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 imports come exclusively from the US ,and are expected to be 35,000 tons for FY 75. Corn: Corn, once an important export, now is imported primarily for animal feed. Domestic corn output is very sensitive to the ever-changing security situation. The Cambodians have requested 5,000 tons of corn in FY 75 from the US, and most of this amount will probably be delivered between now and the end of September 1975. India India faces serious foodgrain shortages which will persist at least until the 1975 fall harvest. Below normal monsoon rains damaged this year's fall crop which is estimated at 58-6C million tons, depending on conditions through the harvest. The 1973 fall harvcsttotaled G7 million tons. The current situation is analogous to 1972 when wide-spread food shortages were last experienced. While this fall's harvest should be larger than the drought-reduced fall harvest of 57 million tons in 1972, India is not better off than 2 years ago because: ?government grain stocks on 1 July 1974 were only 4 million tons compared to 9 million tons on 1 July 1972; and ?India has 25 million more people than in 1972. A poor harvest will increase pressure on the government's grain distribution system, which provides subsidized grain sales ILLEGIB - 17 - ,.s Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 in urban and other select deficit areas. In FY 74 11 million tons were di tributcd by the government, compared with 11.7 million tons in PY 73. A minimum of 12 million tons will be needed in FY 75. Judicious distributio:) of this grain by the government should reduce the incidence of urban food riots but will do little to alleviate widespread hunger in rural areas. Imports and government procurement of domestic grains make up government supplies. To distribute 12 million tons of grain, the government will need 6-7 million tons of imports in FY 75. We believe India will not push grain imports much above 7 million tons without more grain provided as aid. The remaininc,j grain for goverr, 2nt distribution will come from stocks -- 4 millic:. tons on 1 July -- and government procurement which we estimate at 2 million tons from the fall harvest. Procurement from the spring harvest will be too late to provide much for distribution in FY 75. To date India has arranged 6.0 million tons of grain imports,. as follows: ? 3.1 million tons of commercial US purchases, and 300,000 under PL-480; ?1 million tons of EC wheat including 300,000 as aid; ?430,000 tons of sorghum and 250,000 tons of wheat purchased from Argentina; ?500,000 tons of Canadian wheat, including 140,000 tons as food aid; ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 0340, 000 tons of Australian wheat including 40,000 as grant aid; and 0100,000 tons of Soviet wheat due from last year's grain loan. Indonesia Wheat: Since no wheat is produced in Indonesia, consumption needs are met by import.whi.ch will be about 730,000 tons in FY 75. The government has requested 100,000 tons of PL-480 wheat that will probably not be granted. About 140,000 tons have been scheduled through grant arrangements with Australia and Western European countries. The rcnainder will be purchased commercially mainly from Australia, with small amounts from Canada and the US. Corn: Corn production in Indonesia is sufficient to meet domestic needs, and no imports are planned for the period. Exports destined primarily for other Southeast Asian countries should reach 250,000 tons. Iran Wheat: Iran is buying nearly 1 million tons of wheat more than previously estimated. Lack of rainfall in April, May and June seriously affected dry-land wheat and a large portion of so-called irrigated wheat. FY 75 production has been revised down to 3.7 million tons, compared with 3.95 million tons harvested last year, and the consumption estimate ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 ILLEGIB has been revised upward to 5.4 million tons. Under pressure of lower output, increased consumption, and a desire to boost stocks, Iran will be in the market for an estimated 2.3 million tons of wheat in FY 75 with possibly 1.9 million tons of that to come from the U.S. In FY 74 the US supplied Iran with 90 of the one million tons of wheat imported. Corn:, A small percentage of the total supply of corn in Iran is produced domestically. The major portion of the balance has historically come from the US. The growing dermands of poultry and livestock for feedgrain has increased imports of corn into Iran from a yearly average of 25,000 tons in 1969-72 to about 100,000 tons in MY 74. Corn imports during :'.Y 77, will be about 250,000 tons, including 225,000 tons from tl.e US. Iraq Wheat production in 1974 is estimated at 1.6 million tons, compared with an average of 1.4 million tons during the past four years. Most of the wheat is produced by Kurdish farmers in the north, however, and poor crops in the south this year' plus rapidly expanding wheat use by flour mills near Bagdad and Basra has buoyed the rising trend in ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 wheat imports. Total wheat ;1nport n in FY 75 are estimated at 675,000 tons, compared with 525,000 in FY 74. About 410,000 tons of FY 74 imports wc.re from the US. This year we estimate that Iraq will take 445,000 tons of US -heat. Outstanding export sales plus shipments already made as of 17November stood at 557,000 tons, indicating'that actual shipments could go higher. Japan Wheat: Japan's FY 75 wheat imports still are expected to total about 5.7 million tons, up from 5.- million tons in FY 74. This 5% increase is in line with the long-term average, growth in consumption. ? Imports of US wheat will be much the same as in FY 74, or about 3.2 million tons. Australia will supply at least twice as much as it did last year. Japan's official wheat purchasing agent, the Food Agency, apparently has reverted this year to its normal habit of buying small amounts weekly over a several-month period. As ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 C0r;r;TIt I of 1.7 1JovcmUer., US wheat shipments to Japan combined with outstanding or(ler amou:ited to n.arly 2.2 million tons. Corn; The Japanese appear to have lined up more corn than they need. for MY '75. Excess orders for US corn could amount to at least 600,000 tons. Demand for imported feedgrain (corn and sorgbim-,) is expected to decrease by 2%-3% at most, to < total of 12.8 million tons. Of this, corn may account for as. little ac, 8.:: million tons. In view of arrangements already made with such other suppliers as Thailand and South Africa, demand for US corn should be on the order of 6.1 million tons down 300,000 tons from actual imports last year. Yet to date, shipments plus outstanding orders amount to 6.7 million tons. Malaysia Wheat: Traditionally Malaysian import requirements for grain have l:cen obtained from nations in the Southeast ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Asian region. Malaysian wheat imports from the US are expected to be about 10, 000 ton-I in FY 75 (down from 15,000 tons in FY 74), while most of the remaining 3G5,000 Lons of wheat requirement will come from Australia. Corn: Although 23,000 tons of corn were imported from the US during MY 74, this was an anomaly resulting from the shortfall of the Thai crop that year. Corn imports from she US could be as much as 15,000 tons in MY 75, with the remainder of the 200,000 to-,1 corn requirement coming from Thailand. Pakistan We estimate Pa);istan's FY 75 wheat imports at 1.2 million tons, 200,000 tons more than in FY 74. We attribute this increase to the lack of significant improvement in the 1974 spring wheat harvest over 1973 -- the spring harvest accounts for the major share of grain output -- and to poor prospects for the 1975 spring wheat harvest because of below normal monsoon rains last summer. Official estimates of the 1974 spring wheat harvest range from 7.5 to 8.0 million tons compared with 7.8 million tons in 1973. Pakistan recently raised its official FY 75 wheat import requirement from 1.14 to 1.5 million tons because of growing concern over the poor outlook for 1975 wheat production and rising domestic grain prices. We believe Islam-.;i.~aci will not push F'Y 75 grain imports to 1.5 ;pillion however, uiil o.ss ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Cc=. ~,l 25X1 large now aid commitments are forthcoming. So far, import of only 650,000 tons have been firmed up, including 300,000 -tons purchascd from the US and 100,000 tons under PL-480. Requests to several other potential food donors have met with only limited success, in part because neighboring South Asian countries are worse off. Pakistan will continue to seek food aid while pursuing commercial wheat purchases. The nation is in a reasonably good financial positio!i due to the recent rescheduling of its foreign debt, a $500 million aid commitment from consortium countries and several hundred million in loans from oil-rich Moslem countries. Nonetheless, import costs have soared while markets for its principal exports -- cotton and cotton textiles -- are sagging. ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 ILLEGIB Pc_c~~ln'_= The PVC h,1 rc dt,c:t :l fc~odrjr;i i n import:n from rtre:v i rnu:;1 y p3annecr for the cur.rvnt fiscal year, but the expiate ition for the reduction..; is not yet clear. ?'20p o!: iic.i,t..U; of Like r'cin.int:ry of Agri.ru] tore and Fore:: try ii vc:, r~r.ce_iieLed that 1974 grain production will be in exec .,?, of 250 million ton:;. of early ii vented drain crop,,; -- - normally acco;inL.ing for 407, of Local on Lpu l: -- were below norm,l due Lo drow;i,L in the north unrl early frost in t:,,- South. Expanded acreage could have kept production equal to 1973. ?i"'all crops -- still being harvested -- suffered from a poor monsoon this Greater water conservancy may have moneratec, the weather influent, but it in questionable whether the important fall harvest will exceed that of 1973. ?Growth in grain ou tpttt this year has a]. ,o been limited by holding the increase in fertilizer supplies to only 7 ~, compared with 1.6 in 1973. PRC wheat import reductions of about 23". coi,,qparud Lo previously anticipated FY 75 levels may indicate a bumper harvest or it may mean that China has temporarily placed reduced priority on its policy of replenishing grain stoeeks. In anj case, recent Chinese subchartering to other countries of more than fifty ships originally hired to carry US grain appears to indicate a reduced Chinese requirement frr U.S wheat. China's prime suppliers -- Canada and Australia -- are, however, not being affected. Generally, the PRC is cutting back corn imports and expanding those of wheat relative to FY 74. ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Colo II,CIJ rl.",I Whc i t : Total wheat. impcor. t:; probably will amountt, to abouL 6.9 mtl.li.on Lone, in I'Y 75, compared with 5.9 niflion torn; in FY 74. Source,; of the wheat this year will be 1.7 million ton:; from the US, 3.0 million tons from Canada, 1.6 million ton!-, from Au ntralia, 0.4 million tons from Argentina, and 0.2 million tons from the EC. Corn: For the US marketing year, about 800,000 tons pf corn will be Imported, nearly all from Argentina. There are still a}x t 50,000 tons of US corn on the books. China is not expected to buy more US corn because of dissz.tisfaction with quality. Philippines Wheat: Projected imports of wheat for the Philippines are about 630,000 ton, for FY'75, up from 524,000 tons in FY 74 when foreign purchase's were held down by high costs and domestic pricing problems. Three-fourths of this year's imports will come from the US and the maior part of the remainder will come from Canada. Corn: Corn production will be up slightly this year, but corn imports are expected to increase by 10,000 tons to at least 100,000 tons in MY 75. Imports from the US will be about 80,000 tons. The Philippines has asked for 50,000- 60,000 tons through the PL-480 program and .intends to get the balance through commercial transactions. If aid is not ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Cr)tli':'1-01T1: I forthcoming, the full 80,000 ton:) pr.ol)dbly will be purchased. Importvci corn, which Is used by commercial feed miller. ,, relczc:.es domeut.ic white corn for human consumption. Saticii Arabia Wheat: Improvements in rural living standards, which will trigger a shift in diets from millet and sorghum to wheat and rice, account. for the estimated increase in total wheat imports to 600,000 metric tons in FY 75 from 475,000 tons in FY 74. With expanding US-Saudi relations, wheat ir)ports from the U:' during FY 75 can be e::pcectcd to increase to about 400,000 tons from an estimated 150,000 tons in I'Y 74. Corn: Saudi Arabia's corn imports reached about 32,000 tons in 1965 but remained below that level in 1966-73. Now facilities to prepare poultry feed from imported corn will push corn impart needs to around 30,000 tors in MY 75 with about 1.0,000 tons expected from the US. South Korea Wheat: In F? 74, South Korea imported 1.6 million tons of wheat and 30,000 tons of wheat flour, all from the US. Domestic production from the June-July harvest is down 8. to 150,000 tons, _u-j consumption is increasing. Demand in FY 75 is estimated at 1.8 million tons. Assuming no change in stock::,25X1 imports in FY 75 will tonal about 1.7 million tons. Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Corn: In the 1973/74 marketing year, South Korea imported an estimated 465,000 tons of corn, including some 420, 000 tons from the US and about 45,000 tons from Thailand. In MY 75 requirements for food corn arc estimated at 500,000 tons, while those for non-feed purposes should total about 150,000 tons. Production of corn from the September-Octobar harvest is estimated at 60,000 tons, the same as last year. Since no change in stocks is indicated, MY 75 corn imports are estimated at 590,000 tons. Most of the corn -- about 490,000 tons -- will be sought from the US. Small amounts m+,y to purchased from South Africa and other countries. Rice: Rice imports in FY 74 amounted to just over 210,000 tons. Last year's October-November crop totaled 4.2 million tons, and this year's harvest will be slightly larger despite adverse weather conditions during the summer. Government stocks were low at the start of FY 75, and rice consumption will likely increase as a result of a poor barley crop this fall.- In FY 75, Korea plans to import some 430,000 tons of US rice, including 200,000 tons on a conm:crcial. basis and the remainder on a concessional basis financed by ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875R001900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 $8G million of PL-400 asrA:.trance. Korea's ability to finance grain imports during FY 75 is being adversely affected by soaring oil import costs and a slowdown of export growth. The balance of payments current account is expected to be about $1.5 billion in the red in 1974, compared with last year's $300 million deficit. Korea has accelerated its foreign borrowing to meet its increased financing needs and has avoided a significant d.rawdown of its foreign exchange reserves. Official reserves remain at just under $1 billion, which covers less than two month's worth of imports. Through Septemi.?er, Korea obtained $910 million in new commercial credits, at least $350 million in official loans and equity investments, and borrowed somo $50 million from the IF. Korea's need for foreign cal i-nl will remain essentially unchanged in FY 75. During this period, the US will provide some $180 million in official economic assistance, including nearly $155 million in PL-480 aid.. This amount should help cover the larger deficit -- roughly $300 million more than was forecast! in early 1974. The remainder will be financed largely by increased borrowing from the Mr. South Vietnam Wheat: Wheat consumption in South Vietnam has declined by about 750 from last year due to domestic prices that have ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 CON,?1r,rr,;;i4I increased by as much a!; 300;,. Because of this, the government has reduced its request for PL-480 wheat to 100,000 MT, down from the previously estimated 240,000 ton requirement. The current request anticipates a slight rise in wheat consumption from the depressed levels of last fiscal year. Corn: Vietnam produces some corn for both human and animal. consumption, and previous PL-430 imports have been used for animal food. Because of recent gains in the production of be h feed corn and sorghum, the Saigon government is not requesting any corn imports under PL-480 and is unlikely to import any from other sources. Sri Lanka Sri Lanka's foodgrain situation is tight. It could further deteriorate early in 1975 if the major rice crop which is harvested starting in February declines from last year's record 750,000 tons. It is too early, however, to forecast the harvest because it depends on rains during the November-February northeast monsoon. The government is hoping for a good harvest as high world grain prices, foreign exchange shortages, and difficull-'i es in securing food aid are limiting calendar 1975 import pl,A. to 750,000 tons of rice, flour, and wheat -- 100,000 tons less than actual 1974 imports. Arrange- .ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 ments to date fall 200,000 tons short of the ,e minimum 1975 import plans. Taiwan Wlheat: - In FY 74, Taiwan imported just over 700,000 tons of wheat, of which about GG5,000 tons came from the United States. About 640,000 tons were consumed and the remainder went into stocks. According to Taiwanese statistics, stocks at the start of FY 75 stood at 300,000 tons, and will probably be drawn down by 40,000 tons during the year. ~~cause of high wheat prices, doiaestic consumption this year is cxpectc, to be slightly reduced to some 630,000 tons, while domes-tic production will be minimal. As a result, imports in FY 75 will total an estimated G00,000 tons. The great bulk -- some 590,000 tons -- will be bought from the United States. The remainder will be bought from Australia which supplied 16,000 tons in FY 74. Corn: Domestic demand in 1974/75 probably will total about 1.2 million tons, while production is estimated at only 90,000 tons. At the beginning of the current marketing year, stocks totaled about 290,000 tons,sufCicicnt for nearly 3 months of consumption. A drawdown of about 50,000 tons is expected during the year. As a result, imports are likely to run about 1 million tons. Taiwan is scheduled to import ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 450,000 L-ons from south Africa, 350,000 tons from Thailand, and 20,000 tons from Argentina. The remaining 200,000 tons probably will be sought from the United States. Thailand Wheat: Thailand produces no wheat, so will. import almost 100,000 tons in FY 75, all of it on strictly commerical terms. Imports from the US arc expected to be about 35,000 tons, up from 30,000 tons in FY 74. Corn: Thailand is a large producer and exporter of corn. Production of corn for MY 75 is estimated at 2.3 million tons, compared with 2.4 million in MY 74. Since domestic consumption is between 300,000 - 400,000 tones per year, 2x:ports will decrease from 2.0 million in MY 74 to 1.9 million tons in MY 75. Thailand has commitments to sell Japan as much is 1.2 n?i11i.'. tons of its 1974-75 crop. Commitments to Taiwan are about 350,000 tons with the balance going to other Asian nations. Turkey For the second consecutive year, insufficient rainfall has damaged Turkey's wheat crop, the country's most important agricultural crop and pri'icipal staple food. Production this year will be about 8.3 million tons, up from 8 million tons last year but still a significant drop from 9.5 million tons two years ago, when Turkey was able to export 560,000 tons. ILLEGIB Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 Approved For Release 2008/11/07: CIA-RDP85T00875RO01900030195-0 With sLock already drawn down and food needs increasing, import of about 1.3 million tor in probably will be necessary in PY 75, up from 520,000 tons last year. Imports of US wheat this year is expected by the US AgriculLural Attache to increase to 750,000 tons, compared with 450,000 tons last year. OuLstandin