WORLD AGRICULTURAL PRODUCTION, PART TWO

October 1997

This reports includes the weather briefs, production briefs, and commodity feature articles from the full World Agricultural Production circular, with the exception of some of the statistical tables and charts. This report draws on information from USDA's global network of agricultural attaches and counselors, official statistics of foreign governments, other foreign source materials, and results of office analysis. Estimates of U.S. acreage, yield, and production are from the USDA Agricultural Statistics Board, except where noted. This report is based on unrounded data; numbers may not add to totals because of rounding. The report reflects official USDA estimates released in the World Agricultural Supply Estimates (WASDE-331) October 10, 1997. The report was repared by the Production Estiamtes and Crop Assessment Division, FAS, STOP 1045, 14th and Independence Ave., Washington, DC 20250-1045. Further information may be obtained by writing to the division, or by calling (202) 720-0888, 9516, or by FAX (202) 720-8880.

We plan to issue PART 2 of this circular every month, normally 5 working days AFTER the release of Part 1. The next issue of World Agricultural Production, Part 1, will be available electronically after 3:30 pm local time on November 12, 1997.

WEATHER BRIEFS

CHINA: AUTUMN RAINS FAVOR WINTER WHEAT ESTABLISHMENT

During August 1997, drought continued across the western North China Plain, reducing summer crop yield prospects. Eastern areas received beneficial rain from remnants of Typhoon Winnie and rainfall was above normal in Manchuria. During the week of September 7 - 13, widespread rain covered the North China Plain, easing drought and boosting topsoil moisture for winter wheat planting. Light rain aided filling summer crops in Manchuria. From September 14 - 27, drier weather prevailed across the North China Plain, favoring early summer crop harvesting and winter wheat planting. Dry, seasonably cool weather also favored summer crop maturation and harvesting in Manchuria. During September 28 through October 4, summer crop harvesting and winter wheat planting continued in the North China Plain, although light rain caused some fieldwork delays from central Shandong northward. This moisture aided winter wheat establishment. Showers also benefitted the far western winter wheat areas as moisture from southern China pushed north of the Yangtze River.

SOUTH AMERICA: SOME RELIEF FROM DRYNESS IN ARGENTINA, SOUTHERN BRAZIL IS MOIST

In August 1997, rainfall averaged near-normal in Santa Fe, Argentina but remained below normal across Cordoba. August rainfall averaged near to above normal across eastern Buenos Aires, Argentina northeastward into southern Parana, Brazil, favoring winter wheat development. August temperatures averaged 1 to 2 degrees C above normal across central Argentina and southern Brazil. During September 7 - 20, in Argentina, cool weather burned back early winter wheat growth across most of Buenos Aires. Light to moderate rain maintained soil moisture for reproductive-to-filling winter wheat in eastern Parana and Rio Grande do Sul, but slowed early winter wheat harvesting. During September 14 - 20, light rain provided some relief from dryness across Cordoba, but more rain is needed. During September 21 - 27, in southern Brazil, wet weather continued over Santa Catarina and Parana, and spread northward into Sao Paulo, Minas Gerais, and Mato Grosso Do Sul. Although the rain interrupted winter wheat harvesting in these areas, it boosted topsoil moisture for upcoming corn and soybean planting. This precipitation also spurred flowering in coffee areas. Mostly dry weather prevailed over winter wheat areas in Rio Grande Do Sul. In Argentina that week, light showers fell over Buenos Aires, moistening topsoils for winter wheat emergence and establishment. Farther north, mostly dry weather prevailed over Cordoba, Santa Fe, and Entre Rios, favoring early corn and sunflower planting. However, rain was needed in these areas for summer crop emergence and winter wheat development. From September 28 through October 4 in Argentina, much- needed rain fell over Buenos Aires, western La Pampa, Cordoba, Santa Fe, and Entre Rios, benefitting winter wheat and increasing topsoil moisture for early corn and sunflower planting. Soybean planting typically begins in early November. In southern Brazil, drenching rains occurred in Rio Grande do Sul, Santa Catarina, and Parana. The rain likely caused some flooding and halted winter wheat harvesting and corn planting. Farther north in Sao Paulo and Minas Gerais, light to moderate rain continued to spur flowering in coffee areas.

AUSTRALIA: TIMELY RAINS CONTINUE

During early August 1997, widespread soaking rains improved crop prospects over a broad area of southeast Australia and reinforced high yield expectations in Western Australia. The weather pattern across southern Australia remained active for the remainder of the month, bringing welcomed, albeit lighter, follow-up showers. Unfortunately, the beneficial rainfall did not extend northward into northern New South Wales or Queensland where topsoils had become too dry for vegetative-to-reproductive winter grains by month's end. However, temperatures trended below normal throughout the winter grains belts for much of August, slowing growth rates and generating significant frost and freezing conditions that constrained crop development. During the first week of September, soaking rains covered the primary winter grains growing areas of Western Australia, South Australia, Victoria, and southern New South Wales, followed by somewhat scattered showers during September 7 - 13. Rainfall tapered off toward the northeastern crop areas, with no rain reported over Queensland and a broad area of northern New South Wales. Seasonable temperatures fostered normal crop development, with frost likely confined to higher elevations. During September 14 - 20, widespread showers returned to the east, benefitting winter grains that ranged from filling in Queensland to vegetative development farther south. Heaviest rain was concentrated over central New South Wales, with moderate showers helping eastern sections of the Queensland winter grain belt. However, dry warm weather elsewhere from the Darling Downs northward only hastened maturity. Cotton and sorghum planting, typically underway by mid-September, may be facing difficulties from recent dryness. During September 21 - 27, generally light, scattered showers swept across winter grain areas of the southeast and west, with few locations recording more than 10 millimeters. Moderate showers covered coastal locations of New South Wales and southern Queensland. The moisture was favorable for newly planted sugarcane in southern growing areas, as well as sorghum and cotton in eastern-most locations. Summer crop areas west of Darling Downs need additional rainfall before planting can become widespread. From September 28 through October 4, dryness accompanied seasonably mild temperatures throughout the southeast. The gradual decline in rainfall since mid-September has left winter crops in need of moisture for their final stages of development. Elsewhere in the east, scattered showers fell from central New South Wales northward, aiding sorghum and cotton germination but hampering winter grain dry-down. On October 6, scattered and locally heavy showers were breaking out over Queensland's western summer crop areas, promising to provide needed moisture.

PRODUCTION BRIEFS

NORTH KOREA: CORN OUTPUT HURT BY DROUGHT

North Korea's corn output in 1997/98 has suffered from a serious summer drought that had centered on the northern half of the country. Because of the drought, production is now estimated at 800,000 tons, down 38 percent from last month and down 20 percent from last year's flood-reduced crop of 1.0 million tons. Moderate rainfall and cooler temperatures in August and September stabilized rice yield prospects but came too late to help the corn crop which had been damaged by high temperatures and dryness earlier in the summer.

CHINA: DROUGHT REDUCES CORN YIELDS

Corn production for 1997/98 is estimated at 105.0 million metric tons, down 5.0 million or 5 percent from last month and down 18 percent from last year's record crop. The revision is based on information gathered by USDA analysts during September field travel to several key corn-producing provinces. The team reported that corn output will be down significantly from last year due to the summer drought which affected nearly all provinces in the North China Plain and the Northeast. The largest production drops are expected in Shandong, Liaoning, Hebei, Henan, and Jilin provinces. Corn yield is estimated at 4.47 tons/hectare, down 14 percent from last year's record level and the lowest yield since 1989/90.

EAST EUROPE: HEAVY SUMMER RAINS PROMOTE CORN GROWTH

Through much of Eastern Europe from Hungary to Yugoslavia, corn production prospects are up. Production for Eastern Europe for 1997/98 is estimated at 28.5 million tons, up 9 percent from last month's estimate and 11 percent higher than last year. Widespread rains in July and early August have made the harvest of winter grains difficult but provided favorable moisture for summer crops. Corn production in the former Yugoslavia is projected at 9.5 million tons, 1.1 million tons higher than last month's estimate. Increased use of inputs along with favorable weather has boosted crop prospects. Romanian corn production is projected at 10.5 million tons, up 0.5 million from last month on the basis of higher yields. Hungarian corn production is projected at 6.2 million tons, up 0.7 million from September's estimate. For all three countries, this year's outlook will be the highest level for both production and yield since 1991/92.

EUROPEAN UNION: WHEAT PRODUCTION LOWER

The European Union wheat production estimate is lowered this month to 95.8 million tons from 97.1 million while harvested area is marginally lower. The decline comes from a 1.0 million ton drop in French production, and a 0.5 million ton drop in the United Kingdom. The season began with favorable autumn planting weather, but dry conditions in early spring put the crop at risk. Wheat in the main growing areas avoided damage as the rains began when the crop broke dormancy, but wheat in southern growing areas suffered yield loss. Late season rains made harvesting difficult, reducing wheat quality and further limiting yield. Nevertheless, the overall yield at 5.61 tons/hectare is second only to last year's record of 5.89 tons/hectare.

FRANCE: TOTAL OILSEED HARVEST BETTER THAN EXPECTED

French oilseed production is being revised higher this month to 5.7 million tons, up 0.5 million from September as rapeseed, sunflowerseed, and soybean production estimates increase period. French rapeseed production is estimated to have increased by 15 percent from 2.87 million tons in 1996/97. This year's yield of 3.40 tons/hectare compares to 2.93 tons/hectare average yield for the previous five years.

Despite sunflowerseed area being revised 2 percent lower this month, production is estimated higher based on stronger yields. Production is estimated at 2.10 million tons, up from 1.90 million tons last month and up from 2.00 million tons produced in 1996/97. Favorable weather this year is credited for the higher yield which is 2.35 tons/hectare compared to 2.06 tons/hectare average for the previous five years. Soybean production is also estimated higher this month at 0.28 million tons, up from 0.25 million last month, based on a higher estimate of planted area.

CANADA: STATISTICS CANADA ESTIMATES GRAIN CROP

On October 8, Statistics Canada released production estimates of principal field crops for the 1997/98 season. Estimates are similar to Statistics Canada for July for most crops, but the wheat estimate is 0.5 million tons higher. Statistics Canada's first estimate for 1997/98 corn production is pegged at 6.9 million tons while soybeans are forecast at a record 2.7 million.

Production

Crop              1997/98       1997/98       1996/97                                                               
                        (1000 metric tons)                                
                                
Wheat              23,557        23,024        29,801
Oats                3,430         3,477         4,361
Barley             13,615        13,589        15,562
Rye                   297           276           309
Mixed Grain           591           663           582
Corn                6,924            NA         7,380
Rapeseed            6,068         6,089         5,062
Soybeans            2,676            NA         2,165

Source: Statistics Canada, September 1997
* Previous Estimates July 1997
   

AUSTRALIA: 1997/98 BARLEY PRODUCTION FORECAST IMPROVES

Australian barley production for 1997/98 is forecast at 4.7 million tons, up 12 percent from last month due to improved growing conditions. However, the improved prospects still place the crop 29 percent below last year due mainly to lower yield projections. Western Australia barley areas are doing well. Eastern barley regions experienced drought conditions during the first portion of growing season. Cumulative precipitation during the first part of the eastern growing season was significantly below normal and resulted in varying degrees of crop stress. The first beneficial rains fell in the southeast in August and September, while in the northeast, rains fell in late September. Near to above-normal rain in August and September improved the situation in many areas, but yield potential remains below the five year average.

CHINA: RICE PRODUCTION RAISED BASED ON INCREASED AREA

Rice production in China is estimated at 136.0 million tons (milled basis), up 2.0 million from last month, but down 0.5 million from last season. Harvested area is revised higher to reflect an upward revision in the 1996/97 area by China's State Statistical Bureau. Harvested area for 1997/98 is forecast at 31.4 million hectares, virtually unchanged from last year. Yield is estimated at 6.19 tons per hectare, down marginally from last season's record level. The early- rice crop (which represents about one-fourth of total-rice) was reported to be about 1.5 million tons larger than 1996/97. Field travel by the USDA officials confirm area continues to be near last season's level and that the early-rice crop was excellent.

BRAZIL: CORN PRODUCTION LOWER DUE TO 1996/97 REVISION

The 1997/98 corn production in Brazil is estimated at 34.0 million tons, down 1.0 million from last month due to an area and production revision for the 1996/97 crop. Harvested area is revised to 13.6 million hectares, down 0.4 million form last month and down 0.3 million from 1996/97. Estimates for the 1996/97 have been reduced because the crop in the North/Northeast and second crop in Parana and Sao Paulo suffered from inadequate moisture. For 1997/98, planting is beginning and area is estimated to be lower than 1996/97 as producers are expected to plant additional land to soybeans.

INDIA: COTTON PRODUCTION FIGURES REVISED TO INCLUDE LOOSE COTTON

The production estimates for 1995/96-1997/98 have been revised to reflect the new policy of including loose cotton in USDA estimates. The Cotton Advisory Board (CAB) of India recently decided to include 500,000 Indian bales, or about 400,000 U.S. bales, of loose cotton in the annual production estimates beginning in 1995/96. The USDA has revised its estimates accordingly. Cotton production estimate for 1997/98 has been revised to 13.1 million bales to account for the additional loose cotton.

The new component in the CAB's cotton production estimate, consists of cotton that is not pressed into bales. The CAB and other agencies involved in the cotton production estimate formerly considered only pressed and baled cotton. Loose cotton consumption is mostly confined to small scale open-end spindle units, handloom units and for non-spinning purposes, including the production of mattresses, quilts and pillows.

The East India Cotton Association (EICA) had initiated a study to estimate the use of loose cotton by various segments of the industry. The study was prompted by concerns in the industry that production was being under estimated. The final report of the survey is not yet available, but preliminary results indicate loose cotton production of 500,000-700,000 Indian bales, or approximately 400,000-550,000 U.S. bales. Until EICA releases further results, USDA will use the lower estimate of 400,000 bales in its production estimates.

TURKMENISTAN: COTTON HARVEST PROSPECTS IMPROVE

Turkmenistan cotton production is estimated at 1.0 million bales, up 0.3 million from last month and up 0.4 million from last year. According to a recent U.S. agricultural attache report, yield prospects are up substantially from last year's extremely low level but still 35 percent below the average of the past five years. Following last year's disappointing harvest, officials introduced measures to boost production incentives, including land- privatization policies and advance payments which enabled farmers to purchase and apply increased amounts of fertilizer. The cotton crop also has benefitted from generally favorable weather throughout the growing season.

INDIA: SOYBEAN RECORD CROP LIKELY

India's 1997/98 soybean crop is forecast at 5.0 million metric tons, 12 percent higher than the record 4.48 million tons produced in 1995/96. This is an increase of 0.5 million tons from last month's forecast. Area is forecast at a record 5.5 million hectares, up 0.4 million from last month and 0.5 million hectare increase over the record area of 1996/97. Higher soybean prices last year resulted in a further expansion of soybean area in Madhya Pradesh, Maharashtra, and Rajasthan. Planting operations were completed on time under mostly good conditions. The 1997 monsoon performed well in nearly all the major soybean-growing regions. An increase in soybean yield is expected as the result of excellent growing conditions. The rainfall was well distributed, except for Maharastra, and the crop received timely rains during critical growth stages and pod development. In Maharashtra, below-normal rainfall in soybean-growing areas is likely to reduce yield, which will be more than offset by increased area. There are no reports of widespread disease or pest problems. The soybean harvest has begun in some areas, the peak harvest season will occur at the end of October.

INDIA: RICE CROP AT RECORD LEVEL, SORGHUM OUTPUT LOWER

Indian rice production for 1997/98 is forecast at a record 81.5 million tons, up 0.5 million from last month and 1.0 million larger than last year's crop. Total kharif season (fall and early winter harvest) rice production is estimated to exceed last year's production, while the rabi (winter) rice output is forecast at a near-normal level of 8.5 million tons. Area is estimated at 42.2 million hectares, a decrease of 0.6 million from last month. The area reduction is due in part to heavy rains and flooding. Production is increased as a result of good rainfall distribution in several key states, with the exception of Andhra Pradesh where production is expected to decrease due to weak monsoonal activity in southern growing areas. September rainfall was well distributed in the larger rice growing states of Bihar, Orissa, West Bengal, Punjab, and Haryana.

India's 1997/98 sorghum forecast is revised to 9.0 million tons, down 1.5 million from last month and 14 percent lower than last year. Area is estimated at 11.2 million hectares, down 0.5 million from last year. The production decrease is a result of a lower planted area and reduced yields due to dry conditions. Growing conditions declined in September due to an erratic distribution of rainfall in the major sorghum-growing regions of Maharashtra, Andhra Pradesh, and Karnataka.

UNITED STATES: CROP CONDITION AND PROGRESS

Above-normal temperatures in the central and western United States provided favorable weather for crop, maturation in September. Warm, sunny weather in the western Corn Belt pushed corn and soybeans to maturity, especially later in the month. Although below-normal temperatures kept progress behind normal in the eastern Corn Belt, dry weather allowed crops to mature. Late-month frost caused little or no damage in the upper Midwest, Great Lakes, and Northeastern States. Mid-month showers in the Corn belt and late-month rains in the Southeast may have benefitted late-planted soybeans. Harvest was underway later in the month, but progressed behind the normal pace. End-of- month precipitation slowed harvest in the southern Plains and Southeast

Cotton progress was ahead of normal in the western cotton-producing States, but behind normal farther east. In the Southeast, dry soils continued to stress fields until late-month storms brought relief. At the end of the month, Tropical Storm Nora caused some damage to fields in western Arizona, but overall damage was less than expected. The storm slowed defoliation activity in southern California, but harvest activities continued farther north. Hot, dry weather stressed the peanut acreage for most of September until rains at the end of the month improved soil moisture supplies. Rice harvest progressed well ahead of average in California, but behind the normal pace elsewhere. Sorghum harvest gained momentum under clear, sunny skies until late-month rains fell and slowed activity in most of the major sorghum producing States. Very warm, and dry weather allowed spring small grain harvest to finish ahead of the average pace, especially in Minnesota, Montana, and North Dakota.

Planting of the 1998 winter wheat crop started slowly, then gained momentum toward the end of the month. Early on, Washington growers were delayed by showers and a later-than-normal harvest, but seeding progressed rapidly under clear skies the second half of the month. Grasshoppers delayed planting in Montana and Nebraska as farmers took preventive measures to control the insects. Mid-month hot, dry weather in the central and southern Plains allowed farmers to make good planting progress. Late-month rainfall slowed planting in the central and southern Plains, but replenished dry soils.

FORMER SOVIET UNION: WEATHER AND CROP DEVELOPMENTS

In crop areas west of the Ural mountains, summer crops (corn, sunflowers, sugar beets) were being harvested in September, while winter grain planting advanced southward. September is the optimum month for planting winter grains in Ukraine and southern Russia (southern Black Soils Region, lower Volga Valley, and North Caucasus). In September, above-normal precipitation fell over most of Russia and the eastern half of Ukraine. Most of the rain fell after September 24, delaying summer crop harvesting but providing favorable topsoil moisture for winter grain emergence and establishment. Below-normal temperatures prevailed over most of Ukraine and Russia during September, slowing summer crop maturation. Cool, showery weather continued to prevail over Ukraine and Russia from October 1-6, hampering summer crop harvesting but maintaining favorable moisture conditions for winter wheat emergence and establishment. From October 1-2, the first occurrence of frost so far this season extended as far south as central Ukraine. Minimum temperatures ranging from 0 to -2 Celsius were scattered throughout northern and central Ukraine. The freeze occurred around typical dates and had minimal impact on mature crops. Recently, dry weather accompanied a warming trend in Ukraine and southern Russia, improving conditions for fieldwork.

In spring grain areas east of the Volga Valley, the bulk of spring grains is harvested in September. In Russia and Kazakstan, below-normal precipitation was accompanied by unseasonably warm weather, favoring spring grain maturation and rapid harvesting. Since early October, scattered showers in the Urals region in Russia slowed late season harvest efforts while dry weather in Siberia allowed spring harvesting to progress rapidly toward completion. In Kazakstan, continually warm, dry weather from October 1-7, helped final harvest efforts.

Tom Puterbaugh (202) 720-2012 (October 1997)

FEATURE COMMODITY ARTICLES

BRAZIL, ARGENTINA AND PARAGUAY COTTON AREA

For marketing year 1997/98, the cotton area for the three major South American producing countries is forecast at 2.2 million hectares. In contrast, 3.3 million hectares were sown to cotton in these countries during market year 1988/89. Over the pasted 10 years, nearly one million hectares have shifted to other field crops, primarily soybeans. Not only has area movement occurred among commodities within each country but cotton area has shifted among countries. The following charts illustrate these changes, demonstrating that total area among countries has declined while percent of cotton area has been redistributed among the three producers. Brazil and Argentina are the loser and gainer, respectively in absolute and relative terms; however, area shifted in Brazil and Argentina because of different reasons. The Brazilian textile industry, because of the high cost of cotton production and a tariff structure favoring cotton imports, found that cotton could be imported much cheaper than produced. On the other hand, Argentine growers, because of the favorable tariff situation with Brazil, found a ready market for an expanding cotton industry. This situation may be on the threshold of change as Brazil begins to mechanize and governmental policies shift in favor of the cotton producers by lowering production costs.

Argentina: Argentina is the largest cotton-producing country in South America and one of the top ten producers in the world. The 1997/98 crop is estimated at 2.1 million bales, up 0.6 million or 41 percent from last year. Cotton area is estimated at a record 1.0 million hectares, above the previous record of 960,000 hectares in 1995/96. The increase in area is mainly a result of high prices as the demand pull from Brazil forces Argentine prices upward.

Production consists entirely of upland varieties and is concentrated in the northeastern region of the country, with 65 to 70 percent of planted area located in the Province of Chaco. The Provinces of Formosa and Santa Fe each account for approximately 13 percent of planted area, with the remaining cotton area located primarily in Santiago de Estero, Corrientes, Cordoba, Entre Rios, Misiones, La Rioja, Salta, and Tucuman.

The climate in the Chaco region is humid and subtropical with precipitation varying between 32 and 40 inches per year. The majority of the rainfall occurs between September and March with a dry season from April to August. Planting commences in September and harvest begins in April. There can be great variability in annual rainfall which affects potential production. Approximately 90 percent of the crop is rain fed, but small areas of irrigated cotton are found in the Provinces of Santiago de Estero, Salta, Tucuman, and Cordoba.

Yields are projected at above-average levels for 1997/98 due to the increased use of inputs such as fertilizers, herbicides, and insecticides. The main factor which has historically affected Argentine cotton yields has been weather. Delayed planting due to dry conditions is a common occurrence and yields suffer as a result. The irregular nature of the summer rains during crop development also has an effect on yield potential. Moreover, untimely rains during harvest can drastically reduce yields and quality. Final cotton production will be largely dependent on continued rainfall during crop development and dry weather at harvest. Harvesting normally begins in late February and progresses through July. Current soil moisture conditions should allow planting to start on time.

Brazil: Brazil is the second-largest cotton producer in South America and is forecast to produce 1.8 million bales for the 1997/98 season, up 0.5 million or 35 percent from last year. Area is forecast at 0.9 million hectares, up 0.2 million for 1997/98. Yields are forecast above average due to the anticipated increased use of inputs and mechanization. The primary reasons for the area rise are increases in the official minimum price of cotton, up nearly 8 percent from last season, and increased financing at lower interest rates.

Cotton production takes place in three separate regions --Northeast, Center- South, and Center-West. These areas have different planting schedules with the Center-South and Center-West occurring first. On average, the Center- South and Center-West regions account for 80 percent of production and by early October, sowing operations are in full swing. Sowing is usually completed during November and harvesting begins in February. In the Northeast region, the perennial cotton is low yielding and tolerant of dry conditions. Harvesting occurs from August to January.

Cotton area is projected to increase due to an 8-percent increase in the minimum price of cotton from last season and greater financing. Approximately US$280,000 will be available per producer at 9.5 percent interest (down from 12 percent last season). Most of the area increases are expected in the Center-West states of Goias, Mato Grosso, and Mato Grosso do Sul. The Center- West has larger farms, allowing for greater mechanization and input use. Additionally, tax incentives that the state government of Mato Grosso is providing have encouraged investment in equipment. Machine sales have increased over the last two months as have seed sales. Cotton areas in the Center-South states of Parana and Sao Paulo are expected to increase marginally. The higher cost of production in the Center-South and greater competition from alternative crops, such as soybeans, have encouraged growers to keep land that had shifted out of cotton in the alternative crop. Cotton area in the Northeast is projected at last year's level of 0.4 million hectares.

Paraguay: Paraguay is the third-largest cotton producing country in South America and is forecast to produce 0.5 million bales for the 1997/98 season, up 0.3 million or 154 percent from last year. Increased area planted is forecast due to a higher minimum price for cotton and improved financing at lower interest rates. The adequate availability of quality seeds should allow farmers to plant their intended area. The yield is forecast above the five- year-average of 410 kilograms per hectare due to higher projected input use. The farms are mechanized but at a lower level than both Brazil and Argentina because of the smaller land holdings. Cotton is grown throughout the country with the largest areas in San Pedro and Caaguazu departments, north and east of Asuncion. Planting begins in October and harvesting normally begins in late February and progresses through July. Current soil moisture conditions should allow planting to start on time.

Bob Tetrault, South American Regional Analyst
Phone: 202-690-0140 E-mail: Tetrault@fas.usda.gov
Ron Roberson, Cotton Chairperson
Phone: 720-0879
E-mail: roberson@fas.usda.gov

MEXICAN COTTON PRODUCTION CONTINUES DECLINE

Mexico is forecast to produce 800,000 bales of cotton for the 1997/98 season, down 277,000 or 26 percent from last year. The general quality of the 1996/97 Mexican cotton crop was average due to favorable weather conditions. In 1996/97, rainfall accumulations throughout drought-stricken northern Mexico surpassed the level of rainfall of a year earlier, improving water availability for irrigation and helping growers establish initial cropping patterns for the 1997/98 crop.

Cotton yields around the country are traditionally variable. The overall average yield for the 1996/97 cotton crop was 953 kilograms per hectare, with yields varying between 300 and 1,100 kilograms. The whitefly infestation which plagued earlier crops was gradually reduced through prevention and eradication measures. In the Mexicali area, for example, measures such as the destruction of watermelon, pumpkin, and melon residues were implemented to reduce whitefly populations and interrupt their migration to the cotton crops. Also, a "plant by" date was established as March 31 in order to avoid whitefly damage during early growing stages of June through August.

Just after the start of the summer-cotton planting season, the estimated cotton production and area for the 1997/98 (August-July) season were revised downward. The latest revision indicates cotton production declining to a level around 800,000 bales. Low prices, high production costs, and little financial support for cotton farmers were the causes for the reduced sown area. Mexican farmers are finding alternative crops such as corn and wheat more profitable than cotton. Cotton harvested area is estimated at 200,000 hectares, a decrease of nearly 20 percent from last year's level of 246,000. The latest estimate by the Mexican Government for production and area, by region and state, are shown below. Region and State Area planted Yield Production (Hectares) (Kilograms/hectare) (480-pound bales) Sonora (South) 29,000 916 122,000 Sonora (North) 12,000 1,034 57,000 Sinaloa 16,000 748 55,000 Mexicali, Baja Calif. 42,000 985 190,000 Cd. Juarez, Chihuahua 35,000 827 133,000 Delicias, Chihuahua 18,000 1,028 85,000 La Laguna, Coahuila 19,000 997 87,000 Tamaulipas (North) 7,200 544 18,000 Tamaulipas (South) 10,500 477 23,000 Campeche Chiapas & Others 4,000 544 10,000 Total 192,700 881 780,000

Virtually all the commercially significant cotton grown in northwestern Mexico is irrigated. The higher costs of production associated with irrigation have caused cotton output to decline drastically. Cotton producers in northern Sonora, where electric pump irrigation systems are used, saw their costs of production rise due to hikes in electricity rates. Areas such as Campeche, Delicias, and Tamaulipas (North and South) were initially expected to have higher sown areas, but final figures were lowered as farmers were disappointed with the Government's lack of support for cotton producers.

Earlier in the season, growers expected the Government to implement a new subsidy program. However, due to scarce budgetary resources, the Government did not provide any new or additional subsidies besides the Program of Direct Aid to the Countryside (PROCAMPO). This support program has been in existence for a number of years. It was designed to ease the transition from a guaranteed price regime to an open market with a direct subsidy to farmers on a cash per hectare basis for nine basic crops, including cotton. Under this program cotton producers received US$71 per hectare for the spring/summer 1997 crop cycle (US$=7.806 pesos). However, production costs vary widely from area to area and are substantially higher than the support level. In northern Sonora, costs are estimated at US$1,153 per hectare while in the La Laguna/Torreon area, costs are reportedly US$897 per hectare. Production costs in coastal areas are lower, estimated at US$767 per hectare. According to industry sources, the national average costs are estimated at US$1,025 per hectare. With October/ November Mexican cotton quoted at US85.5 cents per pound, growers are making a profit given the national average yield of 881 kilograms pre hectare. However, farmers can do better with other crops because of the higher cost of production of cotton relative to the costs for other crops.

Cotton producers and textile industry officials are concerned that Mexican production could fall even further in 1998/99 season. They forecast cotton area to drop below the current level of 200,000 hectares as growers shift to alternative crops in response to cotton's relatively low price, high production costs, and the lack of Government production incentives.

Ron Roberson, Cotton Chairperson
Phone: (202) 720-0879
E-mail: roberson@fas.usda.gov

TWO DECADES OF GROWTH IN THE PRODUCTION OF WORLD GRAINS AND OILSEEDS

The following charts (see charts 1 through 18) illustrate the changes in harvested area and production for total grains and oilseeds over the past two decades by important producing regions. World demand for high protein animal feeds and vegetable oil has pushed oilseed area up to record levels, climbing from 115.7 million hectares in 1977/78 to 165.1 million this season, a 42 percent increase. World average total oilseed yield increased 39 percent during this same period, boosting total oilseed production to a projected 265.5 million tons. Although the United States remains the world leader in oilseed production, foreign producers have eagerly responded to both domestic and international demand by planting more oilseeds, especially South America, China, and India.

World total grain production also has increased since 1977/78, climbing from 1,319.5 million tons to an estimated 1,860.4 million this year, a 41 percent increase in output. However, unlike the area expansion demonstrated by oilseed crops, total grain area is down 3 percent, or 21 million hectares. The significant upward trend in total grain yield reflects improved plant genetics, improved cultural practices, and changes in the planted crop mix. Minor, lower-yielding grain crops such as barley, oats, and sorghum have declined in favor of higher yielding, food and feed grains such as wheat, rice, and corn. The current year's production increase in oilseeds and decrease in grains is in part a response to shifting price ratios in favor of oilseeds.

Image 1: United States Grain Area Unchanged, Oilseed Up
Image 2: United States Grain and Oilseed Production Higher
Image 3: EU Oilseed Area Stable, Grain Area Increases
Image 4: EU Oilseed and Grain Output at Record Level
Image 5: Argentine Oilseed Area Outpaces Grain
Image 6: Argentine Oilseed Output Higher, Grain Reduced
Image 7: Brazilian Grain Area Declines; Oilseed Expands
Image 8: Brazilian Grain Output Declines, Oilseed Rises
Image 9: Chinese Oilseed Area Higher, Grain Decreases
Image 10: Chinese Grain and Oilseed Output Decreases
Image 11: FSU Grain and Oilseed Area Decline
Image 12: FSU Grain and Oilseed Output Increases
Image 13: Indian Grain and Oilseed Area Stable
Image 14: Indian Grain Production Higher, Oilseed Stable
Image 15: Canadian Grain Area Lower; Oilseed Higher
Image 16: Canadian Grain Output Lower, Oilseed Higher
Image 17: World Harvested Area
Image 18: World Production

Timothy Rocke, Grains Chairperson
Phone: (202)720-1572 Email: Rocke@fas.usda.gov
Paul Provance, Oilseeds Chairperson
Phone: (202)720-0882
Email: Provance@fas.usda.gov

CHINA: FIELD TRIP ASSESSES CROP PRODUCTION

A USDA team traveled to the provinces of Jiangsu, Anhui, Shandong, and Beijing during the first half of September 1997 to assess crop conditions. Most of the trip consisted of field travel and discussions with producers. However, the team also met with government and industry officials to better understand the current agricultural situation. Corn and peanuts are the main crops produced in these provinces, along with cotton and soybeans.

China's 1997/98 corn production is estimated at 105.0 million tons, down 20.5 million or 18 percent from last season's record level. Drought in the northern and northeastern provinces, along with typhoon damage are responsible for the decline. Yield is estimated at 4.47 tons per hectare, down 14 percent from the 1996/97 record level and the lowest since 3.88 tons per hectare were harvested in 1989/90. Corn area is down 1.0 million hectares due to dryness at planting and lower prices that caused producers to switch to other crops. Rice production is estimated at 136.0 million tons, down slightly from 1996/97. Harvested area is estimated to be similar to last year's level. Also, peanut production is down 21 percent this season, to 8.0 million tons, with area similar to last year's level of 3.6 million hectares. Yield is estimated to fall 21 percent to 2.22 tons per hectare, the lowest since 1.99 tons per hectare were harvested in 1992/93. Soybean production is estimated at 13.5 million tons, slightly higher than last year, while cotton output is estimated at 17.5 million bales, down 1.8 million or 9 percent from 1996/97. These estimates are based in part on three different crop tours organized by the U.S. agriculture counselor's office in Beijing.

The USDA team started field travel in Shanghai and proceeded west into southern Jiangsu Province to Nanjing. Field observations and talks with government and industry officials confirmed that the crops are set to produce at a bumper level again this season. With drought in the northern part of China and floods to the south, the crops in Jiangsu benefitted from a favorable growing season with timely rains and moderate temperatures. Rice is the most important grain crop in Jiangsu, producing nearly two-thirds of the provincial total, while winter rapeseed and peanuts are produced in minor amounts. Jiangsu produces single-crop rice -- accounting for about 9 percent of all rice in China and about 20 percent of all single-crop rice produced. The crop is planted in May and harvested in September/October. Fields were observed to be in excellent condition with no irrigation problems. All producers expected a bumper harvest. Food consumption accounts for the largest share of China's rice use. Both urban and rural consumers prefer japonica rice, which comes from Jiangsu Province, over early-indica rice varieties. Wheat is planted in the fall and harvested in the spring. Both an area increase and favorable weather produced a record wheat crop this year. Corn is planted in the wheat stubble. Corn harvesting was beginning at the time of the Team's field travel.

Jiangsu is an edible-oil-deficit province, as consumption is greater than supply, with population and consumption rising. The current market price is low due to the impact of imported vegetable oil and an increase (albeit relatively small) in production. Soybean oil is the consumer preference in the north, while peanut oil is preferred in the south. The majority of the soybeans kept on-farm are consumed as tofu. Soybean area expansion is dependent upon producer's risk assessment since soybeans do not have a government fixed price (except in Heilongjiang), while corn, rice, and wheat have fixed prices. An agriculture ministry official noted that potassium and phosphorus fertilizer use is trending higher. The cotton crop benefitted from the favorable weather and use of "advanced technology" or plastic sheeting on the field which reduced weeds and increased water retention. About 13 percent of China's total cotton is produced in Jiangsu. Grain storage capacity in this province is unknown (as in all provinces), but, after 3 years of bumper harvests, officials admit that the capacity is full and will need to expand. However, distribution of grain continues to be a major problem.

From Nanjing, the team traveled west to Hefei in southern Anhui Province then northeast to Xuzhou. Field observations and talks with Government and industry officials indicated that grain, cotton, and oilseed output were slightly less than last season. In Anhui, rice accounts for about 7 percent of the total rice crop -- with slightly more than half of it as single-crop rice. Corn accounts for about 2 percent of the total, while wheat comprises about 7 percent of the total wheat crop. Rapeseed accounts for about 13 percent of the total, while peanuts and soybeans account for 5 and 4 percent of the total, respectively. Rice is mainly produced in the southern areas of the province, while corn, soybeans, and peanuts (spring crops) and wheat and rapeseed (winter crops) are produced in the north. Anhui produces about 6 percent of China's cotton. It is produced in the southwest and in the northern tip of the province.

Corn is procured by the Government and the portion that is left is either kept on farm for animal feed or sold on the market. Compound feeds are not widely used on-farm and is usually only a quarter of the rate used for feedlots. All the corn is harvested by hand, dried on the cob (on roadsides, house tops, etc.), then bagged for storage or the market. There is no bulk handling. Industry officials reported that corn in the Northeast is better quality since the moisture content is generally lower. During the team's visit, the corn crop was at the early stages of harvest. Producers commented that this season was not as good as the bumper crop of 1996, but they still were generally satisfied with their expected corn output. The harvest of wheat and rapeseed was complete and producers all commented that the yields were very good. The team noted large piles of straw stacked 8 feet by 15 feet alongside many homes/villages. Its uses include feed for animals and fuel for cooking. Although most of the rice is produced in the south, the fields observed were in excellent condition. Producers and officials were generally optimistic on the crop as nearly all the fields were irrigated.

The cotton crop was disappointing to the producers this season. Producers spoke of smaller boll size and reduced bolls per plant. Insects and rain with high winds were reportedly the cause of the decline in the bolls per plant. Some farmer were harvesting open bolls, while others were still picking leaves to spur boll development.

As the team traveled north in Anhui closer to the border of Shandong, the corn and peanut crops showed signs of stress and late development. The team traveled from Xuzhou (in northern Anhui) northeast into Shandong Province to Qingdao, then north Yantai, before heading west back into central Shandong to Jinan. In Shandong, corn, wheat, and peanuts are the major grains and oilseed crops produced. Shandong is one of the most important agricultural producing provinces in China as peanuts, wheat, corn, cotton, and soybeans account for a large portion of China's crops -- 30, 19, 13, 9 and 6 percent, respectively. Corn and soybeans are grown throughout the province, peanuts are concentrated in the eastern half, while wheat and cotton are grown in the western half of the province.

According to producers and government officials, the winter wheat crop was harvested under ideal conditions after a favorable growing season. Wheat is reportedly up over 2 million tons from 1996/97. (Government officials stated that wheat area may increase for the 1998/99 season.) However, from late-May into July, the eastern half of Shangdong Province received below-normal precipitation accompanied by above-normal temperatures. The dryness continued 2 weeks longer on the peninsula. In mid-August, Typhoon Winnie brought heavy rain and high wind resulting in further yield reductions in localized areas. The western half of the province had generally favorable weather.

The team traveled in the eastern half of Shandong and observed yield losses of up to 30 to 40 percent for corn, soybeans, and peanuts due to drought and typhoon damage. For corn, producers delayed planting in hope of rainfall. However, the rain came late and crops are now seriously behind in development. Normally, the harvest would be in full swing, but in many fields corn was tasseling. Producers and officials agree that it may be too late to obtain even an average yield, let alone harvest the corn. Since wheat follows corn, producers will have to decide whether to wait for the corn or plant wheat. In areas where irrigation was available, corn output will still be below last season's bumper level. In central Shangdong, near Weifang, Typhoon Winnie caused large areas of corn to be knocked down. Upon further investigation, the cobs were half the size of nearby undamaged fields. However, the corn can still be harvested. Producers and officials reported that the shortfall this season will not have a big effect on producers, for both the government and producers have sufficient stocks due to bumper corn harvests over the last couple years. Reportedly, producers have between 500-1000 kg of wheat and 150-500 kg of corn stored at home. For areas where producers have serious losses, the Government planned to provide financial and food aid. However, producers that the team talked with were not counting on any assistance. The Grain Bureau has plenty of grain reserves and could still export. The price of corn was RMB800/ton in the spring, but has risen to RMB1360-1400/ton currently due to the drought and increased feed demand. The increased corn price will affect feed prices and livestock production. However, corn prices are not expected to climb "too high", as the Government has large reserves which can be used to stabilize prices. (RMB8.28 = US$1)

For oilseeds, peanuts were dramatically affected by the drought. Although many producers used plastic sheeting on the ground to conserve moisture, the drought was too intense and prolonged to allow proper development. Yield was reported by both producers and officials to be down at least 40 percent. Plants were not vigorous and both the number and size of the shells were significantly below last season's level. For those producers that did not use plastic, it was observed that the crop was almost a total loss. Most of the peanut fields were not irrigated, as the water was used for other crops. Harvesting was just commencing. For soybeans, the crops appeared to be much worse on the peninsula and gradually looked better as the team approached central Shandong. Some beans were already harvested and drying alongside the road, while others were still in the fields maturing. The government usually procures about 70 percent of the peanuts and 30 percent of the soybeans produced.

Since cotton is planted outside the area, where drought and typhoon damage occurred, production was minimally affected. In addition, the team was told that there wasminor insect damage but not as serious this year as compared to other years.

Timothy Rocke, Grains Production Chairperson
Phone: (202) 720-1572 E-mail: rocke@fas.usda.gov

Last modified: Thursday, December 11, 2003