January 24, 2005

Peru 2005 wheat production estimated at 162,000 MT

Peru's wheat production in MY 2005 (July/June) is forecast at 162,000 metric tons. Wheat imports in CY 2004 reached 1.4 million MT, the U.S. was the largest wheat supplier with 885,325 MT, according to an agricultural attache report posted Friday on the USDA's Foreign Agricultural Service Web site.

Executive Summary

Wheat production in MY2005 (July/June) is forecast at 162,000 MT and will probably remain around that level in the near future. At about 39 kilograms per year, bread consumption remains at very low levels compared with consumption in other countries in the area. Flour production in CY 2004 is estimated at 980,000 MT, of which 65 percent was used for bread flour and the rest for pasta and crackers. Pasta production in CY 2004 was around 290,000 MT. Peru's wheat imports in CY 2004, reached 1.4 MMT, a slight increase compared to the previous year. With 885,325 MT, the U.S. was, for the second year in a row, the largest wheat exporter to Peru.

Corn production in Peru is estimated at 1.6 MMT for MY (October/September) 2004/2005, an increase of ten percent compared to the previous year. Harvested area in CY 2004 is estimated at 255,000 hectares and 180,000 hectares for yellow and starchy corn respectively. Corn consumption is estimated at 2.45 MMT in CY 2005. Peru imported 1.018 MMT of yellow corn in CY 2004, of which 820,830 MT came from Argentina. U.S. corn imports recovered almost four fold to 188,900 MT.

Rice production for MY (January/December) 2005 is forecast at 1.45 MMT (milled basis), an increase of 3.6 percent compared to the previous year. The severe drought that affected Peru in CY 2004 caused a significant reduction in rice production (14 percent). Nevertheless, this reduction was not as sharp as estimated at the beginning of the year due to planting in new areas. Peru imported 52,217 MT of rice in CY 2004, a significant increase from the 15,000 MT imported the previous year.

MERCOSUR officially accepted Peru's request to become an associated member (country with which MERCOSUR is interested in signing an FTA) in December 2003. Though the annexes specifying the tariff reduction schedule is still under negotiations, grains will probably be one of the most important agricultural trade issues, especially for Argentina. Under the MERCOSUR agreement Peru could grant tariff preferences to Argentine wheat and corn, and Uruguayan rice making U.S. grains less competitive in this market.

Source: USDA