January 20, 2006

World grain trade to see surge

World trade in grain is ready for a surge, according to US commodity sector specialists.

Holding steady at about 8 percent of world dry bulk trade in the last few years, grain trade is looking at a few factors that could give it a lift.

Firstly, there is increasing trade liberalisation and worldwide agricultural protectionism may be reduced. The World Trade Organisation is directing talks on the reduction of import tariffs in Geneva until Apr 30.

Secondly, long-term prices for soft commodities are expected to increase and grain trade is expected to be affected. The Dow Jones Agricultural Index was 59.5 in early December, much lower than its peak of 143.3 in May 1997.

Trade in grains has frequently exceeded the 220 million tonne-a-year mark in recent years, with the largest exporters being the US, Canada, Australia, Argentina and the EU.

The largest buyers, on the other hand, are China, the Middle East and North Africa--with Russia and other former Soviet states looking to sell more grain to the Middle East.

The worldwide output of coarse grains for 2004/05 is estimated at about 958 million tonnes, of which 103 million tonnes are expected to be traded.

However, the bird flu pandemic can affect worldwide demand for grain as poultry feedstuff. As it is, the global fight against bird flu has caused some 150 million birds, mostly poultry, to be culled worldwide.