WHEAT AND WHEAT FLOUR RUSSIAN PURCHASES WILL BUILD RECORD WORLD TRADE

Press, Volume CXII, Issue 33033, 28 September 1972, Page 16

WHEAT AND WHEAT FLOUR RUSSIAN PURCHASES WILL BUILD RECORD WORLD TRADE

(By

ROBIN REEVES.

commodity editor of the ''Financial Times." London)

As a result of the massive wheat purchases by the Soviet Union, world trade in wheat and wheat flour is likely to increase by over 20 per cent to a record 62 million to 64 million tons in the current 1972-7 S season. This was predicted by the International Wheat Council in its latest market report published on September 20.

The report describes the Russian purchases (assessed at about 18 million tons) as perhaps the most dramatic event in the world wheat market since the Second World War. They seem certain to boost world trade in wheat by at least 11 million tons above last season’s level, which would be sufficient to surpass the previous trade record of 61.7 million tons reached in 1965-66. The Council’s forecasts indicate that the United States is likely to benefit most. It is expected to boost its wheat exports to a record 30.6 million tons, compared with 17 million tons in 197172 and a previous peak of 23.4 million tons in 1965-66. The Soviet Union is expected to account for 11 million tons of total United States shipments.

Canadian exports are predicted to rise from 13.7 million tons last season to

14.5 million tons. E.E.C. exports from 4.2 million tons to between 6 million and 7 million tons and Argentina’s from 1.3 million to 2.1 million tons. Shipments from Australia, on the other hand, are expected to fall from 8.7 million to 6.5 million tons in 1972-73 because of the expected decline in its forthcoming harvest. The Soviet Union, too, not surprisingly, is expected to reduce its exports. U.S. to China The report describes the recently reported sale of j million tons by the United States to China as a significant development, not so much for its volume, but because it will be the first time for over 20 years that the United States wheat has been shipped to this destina< tion.

Together with about 3 million tons to be shipped

I from Canada, this sale should increase total purchases by China in 1972-73 to 3.5 million tons so far, compared with about 3 million tons in ' 1971-72.

■ It is emphasised that the 'massive shipments of wheat and other grains to the Soviet Union may create ! logistical problems, both at i the shipping and discharging ends. The United States will probably move more grain

1 this year than ever before in its history. It will be a tremendous [challenge to all concerned to I avoid congestion on the railI roads and at the country and ;port elevators, and to ensure 'the smooth turn-around of (vessels, the report comments. ( Equally, the Soviet Union, for its part, faces the formid;able task of absorbing gram I imports very much larger than ever before in any one year. “This is bound to tax its port and transport facilities severely.” Lower stocks The net result of all this activity is, of course, going to be a sharp reduction in world stocks. The Council tentatively estimates that by the end of the current season stocks in seven exporting countries will be down to a total of 34 million tons, the lowest level for 20 years, and a decline of 15.4 million tons over the season. The previous low was 35.7 million tons at the end of 1965-66

On production, the Council says it is too early for a precise estimate to be made for world wheat production in 1972-73. Nevertheless, it makes a very tentative forecast of 296 million tone (excluding China), compared with an estimated 320 million tons last season. The Soviet harvest is P’J at 80 million tons compare i with 99.7 million tons la t year.