Grain import demand falters

After expanding over the past five years, world grain trade seems
set for a sharp decline. Import demand in the Middle East and
North Africa, in particular, is expected to be much lower during
the present crop year. Positive elements among other parts of
the global picture are very limited.
Signs of a downturn ahead for wheat and coarse grains trade
first started to emerge several months ago. Events since then
have confirmed and emphasized the generally negative prospects.
The reduction now looks likely to be far bigger than earlier
GLOBAL TRADE REVERSAL
According to recent International Grains Council forecasts, global
trade in wheat, corn and other coarse grains could fall by 23.4mt
(million tonnes) or 9.5% in the current 2009/10 crop year ending
June 2010. This large reduction, to an estimated 224.1mt, follows
an 8.1mt (over 3%) increase, to 247.5mt, in the previous 12
months. These changes are summarized in the table below.
Global grain movements have increased in all the past five
crop years, so the forecast downturn is a notable setback. The
IGC’s figures, which include land movements, although trade is
predominantly seaborne, show that there were small decreases
for two years after 2001/02. Then, after 2003/04, an upwards
trend emerged and continued. A cumulative 19% rise in annual
volumes over the next five years was recorded.
All the largest grain import demand changes around the world
during recent years have been caused by one crucial factor. Rises
or falls in domestic production of grain, within importing
countries, have been the greatest driver, greatly altering volumes
purchased from foreign suppliers. Varying weather conditions
affecting importers’ domestic crop output are typically the main
DIMINISHING IMPORTS
In the past crop year, 2008/09 ending June 2009, Europe’s grain
imports fell massively. Domestic European wheat, corn and
barley output had recovered in the previous summer, resulting in
lower foreign buying. But severe harvest shortfalls across the
Middle East caused an offsetting huge jump in that area’s imports.
Coupled with growth elsewhere, global trade continued increasing.
There are no signs of any similar positive drivers for 2009/10.
The outlook is dominated by expected downturns of around
20% in imports into both the Middle East and North Africa.
Almost three-quarters of the global grain trade reduction in the
current year probably will reflect this influence.
Middle East wheat and coarse grains import demand surged
during the past crop year, by over 50%, following poor harvests
which had been affected by excessively hot and dry weather. The
import total reached 49.7mt. Within this regional figure, greatly
expanded volumes into Iran were an especially notable feature,
rising from 3.2mt in the previous year, to 14.4mt. Many other
countries, including Iraq, Saudi Arabia and Syria saw higher
amounts.
In 2009/10, the IGC’s forecasts point to Middle East purchases
falling very sharply by 11mt or 22%, down to 38.7mt. Improved
harvests in the recent summer period were experienced across
the area, reflecting better weather. Iran’s imports are expected
to fall by almost half, reducing by 46% to 7.8mt. Several other
countries, including Syria and Turkey could see reductions.
North Africa also saw increased import demand in 2008/09,
although the rise was relatively modest, at 8%. Within the
current year a large decline of over 6mt or 18% is predicted,
down to 28.7mt. Favourable weather benefited crops in the
Maghreb countries, expanding domestic supplies. Consequently,
lower imports into Algeria and Morocco are likely, and these
changes may be accompanied by less buoyant demand in Egypt.
Among other significant import demand variations during
2009/10, some Asian buyers including Pakistan and Philippines
may need smaller quantities. China, a minor wheat and coarse
grains importer, is expected to require a stable 1.8mt volume.
The European Union’s total, after the previous year’s huge
CHANGES AMONG EXPORTERS
Import demand changes will be reflected in volumes sold by the
exporting countries. The biggest export volumes changes, based
on IGC figures, are likely to be seen in Argentina, the EU, and
Ukraine. Lower export availability due to harvest output
declines, in these countries, will have a noticeable impact.
Argentina’s wheat and corn crops in early 2009 were greatly
damaged by abnormally hot and dry weather. Exports in 2009/10
could be 48% lower at 11.6mt. Decreased domestic EU output,
and reduced competitiveness, may cause the area’s grain exports
to fall by 27%, to 22.1mt. In Ukraine, this summer’s harvest was
not as good as the exceptionally high output of the previous year,
and grain exports may be 37% lower at 15.6mt.
A related aspect affecting bulk carrier employment and
activity at ports is soyabeans/meal trade. The outlook for this
sector is more encouraging. After four years of rapid expansion,
global beans and meal trade declined by 4% in the 2008/09
marketing year ending September 2009, to 126.9mt, based on US
Dept of Agriculture figures. But resumed growth is expected in
the 12 months ahead, 2009/10, when the total could be up by
over 3mt (3%), reaching 130.2mt. While China’s imports may be
slightly down, at 39.7mt, other importers, including the EU at