May 11, 2004

Portugal's 2004 Corn Production Estimated To Be 795,000 MT

Portugal's 2004 corn production is forecast at 795,000 metric tons, with wheat production seen at 313,000 tons, according to information from the U.S. Department of Agriculture's Foreign Agricultural Service web site, dated May 3.
 
Executive Summary
 
Portugal's grain area is reported to have remained basically unchanged relative to 2003/04 levels. But the crop will be significantly higher due to much improved winter grain yields.
 
The Portuguese national statistics office (INE) reports that average 2004 yields of durum wheat, soft wheat and oats will be up 60%, 35% and 50%, respectively, over 2003 levels.
 
Portuguese 2004 grain outputs are forecast at the following levels (in thousand tons, with 2003 levels in brackets): wheat, 313 (203); barley, 20 (9); rye, the only winter grain to have suffered a mild area reduction, 26 (28); and oats, 67 (43). According to producer sources, areas seeded this spring to corn and rice will remain basically unchanged from previous year levels, which suggests milled rice and corn outputs of 102,000 tons and 795,000 tons respectively.
 
Grain production during the next few years will be heavily influenced by the effects of the 2003 CAP Reform, which will be implemented in Portugal on Jan. 1, 2005. Local authorities have opted for the full subsidy de-coupling of grains, but activity abandonment is to be mitigated by a re-adjustment of the Agro-Environmental Measures (AEM), instituted at EU-level, but country-regulated. Under the revised local AEM regime, total winter grains production may suffer only a mild reduction in the post-CAP Reform period, while corn will likely suffer a much larger decline, as it is eligible to comparatively less attractive AEMs.
 
According to producer sources, only corn farmers with yields above 13 tons/hectare will be competitive when subsidy de-coupling comes into place. However, the total decline in production may be smaller, depending on other factors, such as farmers' psychological attitudes and specific economic problems in closing down businesses.
 
Wheat imports are expected to go up in 2004/05 to 1.19 million tons (1.06 million in 2003/04), recovering from last year's plunge caused by exceptionally tight supply conditions in the wheat market. A larger supply of local winter feed grains will lead to a higher incorporation of wheat, barley and oats into feed, displacing corn. Portuguese imports of other grains in 2004/05 are as follows, in thousand tons, with 2003/04 levels in brackets: corn, 1,209 (1,300); barley, 245 (250); Rye, 24 (23); Oats, 10 (20); Sorghum, 1 (60); Corn, 1,209 (1,300). Milled rice imports in 2004/05 are forecast at 96,000 tons, unchanged from 2003/04.
 
Total grain imports from the U.S. will tend to be down in 2004/05, due to the effects of higher U.S. export prices, the report said. Wheat imports from the U.S. are forecast at 60,000 tons during 2004/05 (140,000 tons in 2003/04). The trade does not expect a repetition of the exceptional last quarter 2003 market conditions, when it was cheaper to bring in zero-duty Spring Wheat from the U.S. than to buy EU feed wheat. U.S. high-quality wheat remains attractive, and the local trade is looking forward to the 2004 U.S. Soft Red, and Hard Red winter wheat crops. The local high-quality wheat market is estimated at some 120,000 tons to 150,000 tons a year, with German improving wheat being the main U.S. competitor. The U.S. share of this market will ultimately depend upon the quality and prices of the 2004 German crop.
 
Canada is also competitive in the high quality wheat market. Trade sources report that 24,000 tons of Canadian wheat was recently unloaded in the northern port of Leixoes. This wheat was sourced from Canada due to attractive prices for specific standards with high P/L ratios and high protein levels. Trade sources quote French wheat at E179-180/Tons, ex-silo, Lisbon, slightly under-priced by the newly imported Canadian wheat. Sorghum imports of U.S. origin are also expected to come down in 2004/05 from the previous year's 60,000 tons, due to the limited commercial success of the venture. Trade sources report that some of the sorghum that was purchased during the last quarter of 2003 remains unsold, due to the reluctance of feed manufacturers to change their feed mix to incorporate that nontraditional feed grain. However, total 2004/05 imports of sorghum will ultimately depend on the price ratios of sorghum against competing feed grains, especially corn. Trade sources say that sorghum is presently being sold in Lisbon, ex-silo, loaded on truck for E162/ton, while corn is being sold for E178-180/ton.
 
1 USD = 0.84E
 

Source: USDA