WEATHER BRIEFS

AUSTRALIA: EAST CONTINUES TO BE TOO WET

During September 1998, rainfall was near to above normal across Australia, although a few dry pockets persisted in South Australia and Victoria. For sections of the east, rainfall occurred for the second consecutive month, ranging from 200 to 400 percent of normal. As a result, localized flooding occurred proving unfavorable for maturing winter grains. However, pre-season cotton expectations are high, due to record irrigation reserves and adequate subsoil moisture. In the west, reports indicated that a late frost caused unspecified damage to flowering wheat on September 19, 25, and 26, the extent of damage which has yet to be fully determined.

During October 1 - 3, much-needed, drier weather dominated the east. The break in the chronically wet pattern, accompanied by above-normal temperatures, favored mature winter grains and allowed cotton and sorghum fields an opportunity to dry prior to planting. Lingering showers kept topsoil moist across the southeast. In Western Australia, scattered, mostly light showers covered southern sections of the winter grain belt as the north remained dry. Temperatures were mild, although unseasonable coolness lingered early in the week over sections of the west. During October 4 - 10, light to moderate showers swept across the southeast reaching as far north as the Darling Downs. The moisture was favorable for winter grains in South Australia and Victoria, but in New South Wales, the rain kept maturing wheat and barley unusually wet. Quality downgrades and diseases were a concern. In Queensland, somewhat drier weather and seasonable temperatures favored winter grain harvests and allowed cotton and sorghum planting to progress. Cool, dry weather dominated Western Australia, but no new freezes were recorded.

From October 11 - 17, favorable dryness continued over crop areas of central and northern New South Wales, improving quality prospects of maturing wheat and barley. In addition, the pace of cotton and sorghum planting likely increased. Scattered, mostly light showers in southern Queensland's agricultural districts likely had little, if any, effects on winter grain harvests. Farther south, light showers kept topsoil moist for reproductive to filling winter grains from South Australia to southern New South Wales. Mild, mostly dry weather in Western Australia favored wheat and barley in reproductive to filling stages.

During October 18 - 31, moderate rainfall persisted in the agricultural areas of northern and central New South Wales. These rains interfered with seasonal fieldwork which included winter grain harvesting and summer crop planting. Farther north, in southern and eastern Queensland, heavy rainfall during this two-week period, worsened prospects for unharvested winter grains and sugarcane. The rain also brought spring fieldwork to a halt in important sorghum and cotton growing areas.

CENTRAL AMERICA: HURRICANE MITCH CAUSES MASSIVE CROP DAMAGE

After peaking in strength with 180 miles per hour sustained winds on October 26 - 27, 1998, Hurricane Mitch drifted slowly across Central America. At peak strength, Mitch tied August 1969's Hurricane Camille as the fourth-strongest storm in Atlantic Basin history and the strongest October Atlantic hurricane on record. Agricultural operations in Honduras and Nicaragua, as well as portions of El Salvador and Guatemala, were adversely affected by severe flooding, gusty winds, mud-slides and flood-damaged infrastructure. Nearly 10,000 people have died and one million of the six million people in Honduras have been left homeless. A preliminary report by the U.S. agricultural attache in Guatemala indicates that more than 70 percent of total agricultural production has been lost in Honduras at the point of the hurricane's landfall. Other reports indicate that about 30 percent of Honduras's coffee has been directly affected. Sugarcane is less likely to have suffered as much damage due to its resilience to excessive rain and wind.

PHILIPPINES: RAINFALL INCREASES; TWO TYPHOONS HIT LUZON

During September 1998, near-normal rainfall eased long-term dryness in the Philippines, but slowed rice harvesting. During October 1 - 10, 1998, moderate to heavy showers continued to increase seasonal moisture reserves while slowing transitional seasonal fieldwork. During the week of October 11 - 17, Super Typhoon Zeb struck the northeastern coast of Luzon Island, with sustained winds of 175 miles per hour. The storm caused considerable damage as it crossed the Cagayan Valley, which historically accounts for about 10 percent of the nation's rice. Main-season rice harvests and second-season planting was underway prior to the storm's passage. Inundating rain fell along Luzon's mountainous western coast, but more moderate showers fell in the central and southern islands. During the following week, October 18 - 24, another powerful typhoon, Babs, struck Luzon. This storm hit the island's southeastern tip with sustained winds of more than 100 miles per hour, causing an indeterminable amount of damage to that region's copra, sugarcane, and rice industry. High winds and very heavy rain prevailed over much of southern Luzon and the nearby Visayan Islands, which typically account for about 30 percent of the nation's coconut production. From October 25 - 31, drier weather prevailed across the Philippines, easing wetness and allowing typhoon cleanup efforts and recovery to commence.

PRODUCTION BRIEFS

AUSTRALIA: WHEAT AND BARLEY REDUCED DUE TO UNFAVORABLE WEATHER

Australia's 1998/99 wheat output is forecast at 22.0 million tons, down 1.5 million or 6 percent from last month, but up 13 percent from 1997/98. Wheat planted area is reduced to 11.5 million hectares, down 0.3 million from last month, as indicated by a recent report by Australia's Bureau of Agriculture and Resource Economics (ABARE). Barley production is lowered this month to an estimated 5.5 million tons, down 0.5 million or 8 percent from last month and down 14 percent from 1997/98. Area remains unchanged at an estimated 3.0 million hectares.

Combinations of persistent rains across the already saturated cropping areas in northern New South Wales and Queensland, frost damage in parts of Western Australia, and below normal rainfall in Victoria adversely affected the wheat quality and quantity this past month. However, South Australia and central New South Wales have experienced a generally favorable growing season.

According to ABARE, around 0.2 million hectares have been lost in New South Wales due to flooding. In addition, fungus outbreaks are reported in the areas of excessive rainfall, and much of the northern crop may be downgraded for quality. The frost damage from late-September in Western Australia will become more evident as the crop moves into harvest. ABARE reports that some frost-affected areas have been cut for hay, while "significant quantities of wheat are expected to be downgraded to feed quality in frost-affected areas."

RUSSIA: GRAINS OUTPUT LOWERED BASED ON HARVEST PROGRESS

Wheat production for 1998/99 is estimated at 28.0 million tons, down 0.5 million from last month and down 16.2 million from last year. Barley output is estimated at 9.5 million tons, down 0.5 million from last month and down 11.3 million from last year. Harvest reports indicate that total grain production for 1998/99 is estimated to reach 49.3 million tons (not including roughly 1.5 million tons of pulses and miscellaneous grains) against nearly 85.3 million for 1997/98. Total-grain area is estimated at 47.9 million hectares--a drop of 3.6 million hectares from last year, including a 2.6-million-hectare reduction in barley area. Estimated total-grain yield is down approximately 40 percent from last year because of severe drought. According to Russian agricultural officials, 11.0 - 12.0 million hectares of grain perished as a result of persistent dryness and extreme heat in the Volga Valley and adjacent regions.

KAZAKSTAN: WHEAT PRODUCTION REDUCED AS YIELD IS CUT

Wheat production for 1998/99 is estimated at 5.0 million tons, down 0.5 million from last month and down 4.0 million from last year. Estimated wheat area dropped 1.5 million hectares to10.0 million, due chiefly to continuing shortage of capital, seed, and operational machinery. Persistent drought and excessive heat slashed grain yield in the key production zone. The combination of low area and poor yield drove total grain production to the lowest level in over forty years.

MEXICO: COARSE GRAIN OUTPUT INCREASES DUE TO EXTENDED RAINS

Mexico's 1998/99 sorghum production estimate is increased this month from 6.0 million tons to 6.5 million, a month-to-month change of 8 percent. Area is unchanged at 2.0 million hectares. The change reflects the latest Secretariat of Agriculture, Livestock, and Rural Development (SAGAR) data indicating that the negative impact of the delayed arrival of the summer monsoon has been less than anticipated. The absence of an early frost extended the growing season, resulting in near-normal plant development.

Mexico's 1998/99 corn production forecast is increased this month from 17.5 million tons to 18.0 million tons, a month-to-month change of 3 percent. Area is unchanged at 7.7 million hectares. In addition to the absence of an early frost, a very long summer growing season allowed corn to develop in a near-normal fashion despite the delayed arrival of the annual rainy season. The summer crop, which is normally harvested by December, accounts for about 80 percent of annual production.

Mexico's 1997/98 corn production estimate is reduced this month from 17.5 million tons to 17.0 million tons, a month-to-month change of 3 percent. Area is unchanged at 7.4 million hectares. The change reflected the most recent SAGAR data update for the 1997 spring-summer season harvested corn crop.

EUROPEAN UNION: COARSE GRAIN OUTPUT REVISED LOWER

The European Union (EU) is estimated to produce 104.1 million tons of coarse grains during 1998/99 down 0.9 million from last month and down 5 percent from last season's record crop. Harvested area is estimated at 19.9 million hectares up marginally from last month, but down 3 percent from 1997/98. Corn production for the EU is estimated at 33.2 million tons, down 0.6 million from last month and down 14 percent from last season's record level. For France, corn output is lowered 0.2 million from last month to 14.3 million tons as preliminary harvest results indicate a reduced yield. Wet weather has been hampering harvest progress. For Italy, corn is reduced 0.4 million this month to 8.6 million tons due to lower yield. Hot, dry weather during the end of July and beginning of August, along with reports of corn borer attacks lowered production this season. Barley production for the EU is estimated at 52.7 million tons, down 0.7 million from last month, but up slightly from last year. For the United Kingdom, the barley crop is reduced to an estimated 6.6 million tons down 0.7 million from last month and down 16 percent from last year as preliminary harvest reports indicate lower yield.

PHILIPPINES: RICE OUTPUT LOWERED DUE TO TYPHOONS

A series of typhoons have adversely affected rice production in the Philippines. Milled rice production for 1998/99 is estimated at 6.9 million tons, down 0.3 million from last month, but up 7 percent from last year's drought affected crop. Area is estimated at 3.8 million tons, down 50,000 hectares from last month, but up 7 percent from last season. Typhoons Babs and Zeb slammed into the Philippines with high winds and heavy rains during the month of October causing area and yield reductions to rice. The damaged occurred as the wet season crop was in the middle of harvest (September to December). The second season rice is harvested in February and April. As communication and infrastructures are restored, and the U.S. agricultural counselor in Manila has more time to assess the impact of the storms, a more complete assessment of the damages will be forthcoming.

UNITED STATES: CROP CONDITION AND PROGRESS

Crops rapidly matured, as temperatures remained seasonable or above-normal east of the Rocky Mountains throughout the month. Harvest momentum accelerated in the Corn Belt, Great Plains, and Southeast, as early-month dry weather aided progress. As the month progressed, most of the

Corn Belt and Great Plains received substantial rainfall but the harvest pace remained ahead of the 5-year average. Harvest operations lagged in the Southwest, as crops matured well behind normal especially in California. Dry weather hindered fall seeding operations in the High Plains. Heavy rainfall caused local flooding in the Northeast early in the month and some parts of Texas, Oklahoma, and Kansas experienced flooding and erosion late in the month.

As the month began, nearly all of the Nation's corn had reached maturity and most of the soybeans were dropping leaves, more than 1 week ahead of normal for both crops. Dry weather provided excellent harvest conditions for the first week of the month. Periodic rains interfered with harvest activities during the month, first in the western Corn Belt then later in the southern, central, and eastern Corn Belt. Harvest activities were able to resume in all areas after the brief rain delays and remained well ahead of normal throughout the month. By the end of the month, the harvest season was winding down, more than 1 week early for corn and nearly 1 week early for soybeans.

Cotton development began the month 1 week ahead of normal, with virtually all fields in the Mississippi Delta States in the boll opening stage, much of which was harvested. Most of the crop was mature in the southern Plains and Southeast, but continued to rapidly advance in California. Georges' heavy rains and subsequent flooding damaged cotton fields along the eastern Gulf coast and halted harvest activity. Harvest efforts were interrupted by rain in the northern and extreme southern areas of the Mississippi Delta, as well as parts of the Atlantic Coastal Plains during the first half of the month. Meanwhile, dry conditions in the central Mississippi Delta region and western Oklahoma aided progress. Harvest accelerated during the last half of the month, as rain delays were mostly limited to the southern Plains. As the month ended, two-thirds of the crop was harvested, ahead of the normal pace, but California producers lagged well behind the 5-year average.

Less than half of the winter wheat was seeded when the month began and only one-fourth had emerged. Early-month rains in the southern Plains were welcomed in spite of the resulting planting delays, as the moisture was needed to germinate seeds. In the northern Rocky Mountains and Pacific Northwest, favorable weather allowed planting to move ahead of the 5-year average. Growers in the eastern Corn Belt also made rapid seeding progress, especially in Ohio, where planting progressed well ahead of normal. In the southern Corn Belt and northern Delta region, rain curtailed planting until mid-month, when progress began to gain momentum. Emergence lagged in the central and southern Plains due to the slow planting pace, but rain during the first half of the month boosted emergence in the northern Plains.

The rice harvest progressed ahead of normal, except in California, where progress continued to lag behind normal throughout the month. Warm weather early in the month aided sorghum development, allowing the harvest pace to accelerate in the Great Plains and southern Corn Belt. By mid-month, harvest was virtually complete in most areas of the Mississippi Delta States and by the end of the month, growers in the southern Corn Belt and Great Plains were nearly finished also. Peanut harvesting fell behind the normal pace due to heavy rains and flooding from Hurricane Georges and continued to lag throughout the month in Georgia and Alabama. In the southern Plains and along the Atlantic Coastal Plains, harvest progressed ahead of normal.

FORMER SOVIET UNION: WEATHER AND CROP DEVELOPMENTS

In Russian spring grain areas east of the Ural mountains, wet weather, including some wet snow delayed final harvest efforts. In crop areas west of the Ural mountains, drought persisted through the middle of October in eastern Ukraine and southern Russia (southern Black Soils Region, North Caucasus, and the lower Volga Valley), delaying winter wheat planting well beyond optimum dates and adversely affecting crop development. In contrast, above-normal precipitation and mild weather in western Ukraine and northern Russia (Northwest Region, Central Region, northern Black Soils Region, Volga Vyatsk, and the upper Volga Valley) favored winter grain establishment. Since October 20, light to moderate showers brought much-needed moisture to drought-stricken winter wheat areas in eastern Ukraine and southern Russia. However, time is running out for further crop establishment in these areas since winter wheat typically enters dormancy by mid-November. Recently, colder weather spread southward over Russia and Ukraine. The cold weather in northern Russia ended a period of unseasonable warmth, prompting winter grains to begin entering dormancy about 3 weeks later than usual. Farther south, the cold weather in eastern Ukraine and southern Russia slowed or halted winter wheat growth. If early growth is stunted or crops are minimally established as they are now, the crop's ability to withstand low temperatures is reduced, and vulnerability to potential winterkill conditions increases. Thus, the weather during the remainder of the fall and over the winter will play a major role in determining prospects for next year's crop.

Tom Puterbaugh (202) 720-2012

FEATURE COMMODITY ARTICLES

WORLD GRAINS AND OILSEEDS AREA AND PRODUCTION

The following charts (see charts 1 - 9) illustrate the changes in harvested area and production for total-grains and the major oilseeds over the past two decades by important producers or producing regions.

World total-grain area (wheat, coarse grains, and rice) for 1998/99 is forecast at 683.7 million hectares, down 7.0 million from last season due, in part, to low international grain prices. Global wheat area is down following two seasons of higher area. Barley area is at its lowest level in over 30 years, while oats is at a record low. However, corn and rice areas are up from last year and both are the second highest after the 1996/97 season. Total-grain output for 1998/99 is forecast at 1,849 million tons, down 32.7 million from last season, but the third highest on record. Global wheat output is down from last season's record, but is still the second highest. World corn production is at a record level, while rice output has fallen for the first time in four years. Global oats production is at a record low, while barley is at a 23 year low.

World total area for the major oilseeds during 1998/99 is forecast at a record 170.8 million hectares, up 3.7 million from last season due to favorable prices relative to other crops. World soybean area is at another record, having increased three years in succession. Also, rapeseed, sunflowerseed, and peanut area are at records this year, while cottonseed area is at its lowest in 4 years. Total-oilseed production for 1998/99 is forecast at a record 277.2 million tons, up 0.3 million from a record crop last season. Global soybean production is down from last year due to lower prospective yields in Argentina, Brazil, and China. Rapeseed and sunflowerseed production are at record highs. Peanut production is up from last year, while cottonseed output is down.

Timothy Rocke, Grains Chairman
Telephone: (202) 720-1572
E-mail: rocke@fas.usda.gov

Paul Provance, Oilseeds Chairman
Telephone: (202) 720-0881
E-mail: provance@fas.usda.gov

CENTRAL AND EAST AFRICA GRAIN PRODUCTION

Total-grain production in Central and East Africa for 1998/99 is forecast at 25.3 million tons, up from 22.8 million in 1997/98. Area harvested in 1998/99 is forecast at 25.0 million hectares, slightly down from 25.1 million in 1997/98. Central and East Africa, for the purpose of this article, include the following countries: Burundi; Cameroon; Central African Republic; Ethiopia; Kenya; Rwanda; Somalia; Sudan; Tanzania; Uganda; and, Zaire. (Chart)

In 1998/99, Central Africa had abundant and widespread rain; however, in Zaire renewed civil disturbances, impeded normal agriculture and marketing activities. In East Africa, the 1998/99 had a mixed growing season. Abundant rains in August, improved grain prospects for most countries. Increased output is forecast for Kenya and Ethiopia. In Sudan, heavy rains at the beginning of September resulted in floods causing some crop damage, but generally benefitted grains stressed by earlier dryness. In Burundi, Rwanda, Tanzania, and Uganda, production is expected to recover substantially from the previous year. In Somalia, the grain crop was sharply reduced, due to dry weather and reduced planting.

Burundi: Total-grain production in Burundi for 1998/99 is forecast at 0.2 million tons, down from 0.3 million in 1997/98. Area harvested in 1998/99 is forecast at 0.2 million hectares, virtually unchanged from the previous year. The main grain crops produced are corn and sorghum forecast at 0.2 million tons and 60,000 tons, respectively. Rainfall was adequate and well distributed except in localized areas of the northern and eastern sections of the country. Crop growth and development was considered normal, but yields were constrained by poor seed quality and lack of fertilizers.

Cameroon: In Cameroon, total-grain production for 1998/99 is forecast at 1.0 million tons, down from 1.1 million in 1997/98. Area harvested in 1998/99 is forecast at 0.9 million hectares, nearly the same as last year. The main grain crops produced are corn and millet forecast at 0.6 million and 0.4 million tons, respectively. The rains were abundant and widespread in April and May, decreased somewhat in June, but remained widespread through August. The crops are forecast at a near average yield.

Central African Republic: Total-grain production in the Central African Republic for 1998/99 is forecast at 0.1 million tons, nearly the same as last year. Area harvested in 1998/99 is forecast at 0.1 million hectares, virtually the same as 1997/98. The main grain crops produced are corn and millet forecast at 60,000 tons and 35,000 tons, respectively. Crop conditions were satisfactory due to abundant and widespread rains.

Ethiopia: In Ethiopia, total-grain production for 1998/99 is forecast at 8.3 million tons, up from 7.0 million in 1997/98. Area harvested in 1998/99 is forecast at 6.8 million hectares, up from 6.6 million in 1997/98. The main grain crops produced are barley, corn, sorghum, and wheat and are forecast at 1.5 million, 3.0 million, 1.7 million, and 1.8 million tons, respectively. There are two growing seasons in Ethiopia: the main (Mehr) season and the minor (Belg) season. Abundant rains benefitted the crops in the Mehr season, especially in parts of Ahmara, Tigray, and eastern Oromiya where precipitation had been insufficient. Overall prospects from late-October are favorable. The Mehr season accounts for over 90 percent of annual production. The Belg harvest is forecast to be reduced due to a prolonged dry spell and pest infestation early in the season.

Kenya: In Kenya, total-grain production for 1998/99 is forecast at 3.2 million tons, up from 2.9 million in 1997/98. Area harvested in 1998/99 is forecast at 2.1 million hectares, virtually unchanged from 1997/98. The main grain crops produced are corn, sorghum, and wheat and are forecast at 2.6 million, 0.1 million, and 0.3 million tons, respectively. Above average rains have benefitted the grain crops of the 1998/99 main "long rains" season during July and August. The outlook for this harvest appears promising, but production will still not cover consumption needs because of the increased population.

Rwanda: Total-grain production in Rwanda for 1998/99 is forecast at 0.2 million tons, unchanged from last year. Area harvested in 1998/99 is forecast at 0.2 million hectares, nearly unchanged from 1997/98. The main grain crops produced are corn and sorghum and are forecast at 80,000 tons and 0.1 million tons, respectively. Rwanda had an improved harvest for 1998/99 due to substantial rains in May and June that benefitted crops and an increase in planted area. However, production has been reduced in Gikongoro and civil strife is still affecting production in the northwestern prefectures of Gitarama, Ruhengeri, and Giseny.

Somalia: Total-grain production in Somalia for 1998/99 is forecast at 0.3 million tons, nearly unchanged from last year. Area harvested in 1998/99 is forecast at 0.6 million hectares, down from 0.8 million in 1997/98. Corn and sorghum are each forecast at 0.1 million tons. The 1998 "Gu" season crops were severely affected by prolonged dry weather and late rains at the end of June did not improve conditions. The overall outcome of the main "Gu" season is forecast to be sharply reduced. Also, civil unrest contributed to the reduction in planting.

Sudan: In Sudan, total-grain production for 1998/99 is forecast at 4.9 million tons, up from 4.7 million in 1997/98. Area harvested in 1998/99 is forecast at 7.6 million hectares, down from 8.3 million in 1997/98. The main grain crops produced are millet, sorghum, and wheat forecast at 0.6 million, 3.7 million, and 0.6 million tons, respectively. Overall crop prospects are favorable with abundant rains in July, but the situation varies according to area. Rain which normally begins in late-March in the southern most areas were delayed a month resulting in planting reductions in the first season. Erratic rains in most areas in May and June caused prolonged dry periods coupled with heavy rains and floods in some parts. The dry weather led to crop losses of early planted crops and floods destroyed crops in other areas. Crop conditions improved in July and an above-average production is forecast.

Tanzania: In Tanzania, total-grain production for 1998/99 is forecast at 3.8 million tons, up from 3.4 million in 1997/98. Area harvested in 1998/99 is forecast at 3.3 million hectares, up from 3.0 million in 1997/98. The main grain crops produced are corn, rice, and sorghum forecast at 2.6 million, 0.6 million, and 0.4 million tons, respectively. Although, total-grain production is forecast up, only corn has increased above last year's level. Abundant rains this year encouraged farmers to expand the total area planted over last year. Millet and sorghum area declined as producers switched to other crops, namely corn.

Uganda: Total-grain production in Uganda, for 1998/99 is forecast at 1.7 million tons, up from 1.6 million in 1997/98. Area harvested in 1998/99 is forecast at 1.2 million hectares, virtually unchanged from last year. The main grain crops produced are corn, millet, and sorghum forecast at 0.9 million, 0.5 million, and 0.4 million tons, respectively. In the 1998/99 first season, rains late in July and August hampered harvest operations, but provided good soil moisture for land preparation for the second-season planting. Production for the first crop is considered to be good; however, there are regional variations. The second- season sowing was complete by early-October.

Zaire: In Zaire, total-grain production for 1998/99 is forecast at 1.4 million tons, up from 1.3 million in 1997/98. Area harvested in 1998/99 is forecast at 2.0 million hectares, unchanged from 1997/98. The main crops produced are corn and rice forecast at 1.1 million and 0.3 million tons, respectively. Civil conflict, lack of inputs, and flooding during the first-crop season has constrained production potential. The intensified conflict will again hamper farming activities for the coming months.

Theresa Wright, Regional Analyst
Telephone: (202) 720-8887
E-mail: wrightt@fas.usda.gov

WORLD PALM OIL PRODUCTION

World production of palm oil has been increasing dramatically. Projected at 17.7 million tons in 1998/99, production is up 28 percent over the last 5 years and up 86 percent in the last 10. World production is dominated by two countries in the Southeast Asia region: Malaysia, which produced an estimated 50 percent of world output in 1997/98, and Indonesia, which produced 30 percent. Global output is estimated to have declined 4 percent in 1997/98, to 16.9 million tons, due to dry weather, haze from forest fires, and a downturn in yield due to the normal biological cycle of palm oil trees in key countries. Expansion of output is forecast to resume in 1998/99, but yield will still be low due to the latent effects of dry conditions which existed throughout much of calendar year 1997. The major impact of moisture stress on palm oil production is often observed 18 to 24 months after dry conditions occur.

Output of palm oil in Malaysia in 1996/97 reached a record 9.0 million tons; however, the situation was not as favorable in 1997/98. Despite continued expansion of fruit-bearing area, overall yield equivalent (MHE) dropped due to the dry weather and to an "off-year" in the trees' production cycle. A modest recovery from 8.5 million tons in 1997/98 to 8.8 million is forecast in 1998/99 with most of the rise likely in the second half of the year. There remains a strong incentive for producing palm oil in Malaysia. Since palm oil is traded in U.S. currency, local plantation houses saw profits climb, and plantation stocks moved higher on the Malaysian stock market.

Indonesian palm oil production for 1997/98 is estimated to have declined by 7 percent to approximately 5.0 million tons due to lower yields. The yield reduction is attributed chiefly to the dry conditions which occurred in 1997 and also to the haze problem, caused by the forest fires in areas of Kalimantan and Sumatra, which affected the photosynthesis process. Output is forecast to rebound to a record 5.5 million tons in 1998/99, based largely on the continued expansion in area.

The world's fifth largest producer, Thailand, also had dry conditions in calendar year 1997, causing a delayed downturn in yield and lower production. Output is forecast at 360,000 tons in 1998/99, down 23 percent from 1997/98. In the longer term, the palm oil industry continues its expansion as a greater number of palm trees reach full maturity.

Palm oil production is expected to increase steadily in Papua New Guinea. Output is estimated at 270,000 tons in 1997/98, up 37 percent from five years earlier. Output is forecast at 290,000 tons for 1998/99 based on the increasing trend and reports of further development efforts.

Palm oil production in western Africa has not increased as it has in other regions. Nigeria is the world's third largest producer but has continued to produce about 600,000 tons per year for the last decade. Despite Nigeria's enormous production potential, inconsistent government policy has continued to limit production.

Palm oil production in Cote d'Ivoire declined in 1996/97 due to drought conditions and initial problems of privatization. Production is forecast to resume its upward trend and reach 320,000 tons in 1998/99 as efficiency improves in the operations of the privatized companies.

Another western African country which has been increasing palm oil production is Cameroon. Output is estimated at 165,000 tons in 1998/99, up 83 percent from 5 years ago. The Cameroon Development Corporation and a leading company in palm oil production have advertised internationally, promoting the Cameroon palm oil industry.

The Western Hemisphere's largest producer of palm oil is Colombia. It is the world's fourth largest producer and has shown a 95-percent increase in output in the last decade to 450,000 tons. Palm oil is the only oil-bearing crop in the country that has grown in production in the last decade, but crop expansion is slowing. Production grew at an annual average rate of more than 9 percent in the early 1990's, but is now growing at about 6 percent. The slower growth is due mainly to reduced planting activity and the maturation of trees. Investment in the sector has been hurt by the elimination of loan subsidies to producers as well as increasing insecurity in the countyside resulting from insurgent group activity.

There has been an upward trend in vegetable oil production over the past several years in Ecuador, mainly due to a rise in the production of palm oil. Palm oil now accounts for about 75 percent of the country's total edible oil production. Production of palm oil increased from 194,000 tons in 1994/95 to a forecast 250,000 tons in 1998/99.

The United States' neighbor to the south, Mexico, is a small producer of palm oil. A government program to expand production has been underfunded; nevertheless, output has increased from 2,000 tons to an estimated 20,000 tons for 1998/99 within the last decade.

Paul Provance, Oilseeds Chairman
Phone:(202)720-0881
E-mail: provance@fas.usda.gov