WEATHER BRIEFS

CHINA: WET WEATHER CONTINUES DURING AUGUST

During July 1998, excessive showers concentrated along the Yangtze Valley causing flooding and possible damage to early rice and delaying late-rice planting. Across the North China Plain and Manchuria, near- to slightly below-normal July rainfall favored reproductive summer crops. Widespread early-August rainfall brought relief to those areas that received below-normal July rainfall. During the first week of August 1998, heavy showers exacerbated flooding along the Yangtze River and tributaries in Hubei Province. Further south in Hunan, warm, dry weather aided flood recovery efforts. Drier weather is needed along the stretch of the Yangtze Valley to allow late-rice planting to resume. Across the North China Plain and Manchuria, widespread moderate to heavy showers benefitted filling summer crops, but caused some local flooding. During August 9 - 15, beneficially drier, warmer weather aided flood recovery efforts and late- rice planting across the eastern Yangtze Valley. Temperatures across the region averaged 2 to 4 degrees C above normal. To the west, in Sichuan and northwestern Hubei, heavy showers again exacerbated flooding along the Yangtze River and its northern tributaries. Heavy showers benefitted filling summer crops in the North China Plain and Manchuria, but caused some local flooding. During August 16 - 22, scattered showers slowed recovery efforts and caused some additional flooding across the Yangtze Valley. Drier, sunnier weather prevailed across southern China, aiding rice. Temperatures averaged 2 to 4 degrees C above normal across the region. In the North China Plain, moderate to heavy showers favored filling corn and soybeans but slowed early-maturing cotton. In Manchuria, moderate rains hindered flood recovery efforts, but maintained favorable moisture for filling corn and soybeans. Finally during the last week of August, moderate to heavy showers aggravated flooding across the Yangtze Valley. The showers maintained high river levels along the Yangtze River, slowing recovery efforts. Across southern China, variable showers increased moisture supplies for late double-crop rice. Drier weather maintained moisture levels and aided maturing cotton across the North China Plain. Drier weather also eased flooding in northern Manchuria. Heavier rain fell across the south in Liaoning. Temperatures averaged 1 to 3 degrees C above normal across central and southern China and slightly below normal in Manchuria.

ARGENTINA: DRYNESS CAUSES CONCERNS FOR WHEAT ESTABLISHMENT

During July 1998, near- to above-normal rainfall increased soil moisture for germinating winter wheat across central Argentina. However, topsoils were becoming dry in southern Buenos Aires. During the first week of August 1998, mostly dry weather continued to favor winter wheat planting across central Argentina. Only widely scattered showers prevailed across the region. During August 9 - 15, light rain increased topsoil moisture for winter wheat establishment, especially in southern Buenos Aires. Dry weather prevailed across central Argentina and Buenos Aires Provinces allowing for winter wheat planting. By the end of August, planting was mostly complete, except in the province of Buenos Aires. Also, topsoil had become too dry for winter wheat establishment.

EASTERN EUROPE: LATE-SEASON RAINS FAVOR IMMATURE CROPS

In Eastern Europe during July 1998, above-normal precipitation in the Czech Republic, Slovakia, and Hungary slowed winter grain harvesting but boosted soil moisture for summer crops. Farther south, a drying trend began about July 16 in major summer crop areas of Romania, Bulgaria, and Serbia, persisting through most of August. Prolonged heat accompanied the dryness in these areas, placing moderate to severe stress on summer crops. Heat and dryness continued during the first week of August in Romania, Bulgaria, and Serbia, reducing prospects for summer crops. Maximum temperatures in these areas ranged from 35 to 40 degrees C. During August 9 - 15, the unusually warm, dry weather continued in Romania, Bulgaria, and Serbia, worsening conditions for summer crop development. From August 16 - 22, light, scattered showers fell from Poland, southward through the Czech Republic, causing only brief delays in harvesting. Unfavorably hot, dry weather continued in southern Romania and Bulgaria, causing further reductions in prospects for corn and sunflowers in the filling stage. Weekly temperatures averaged 2 to 4 degrees C above normal in southern Europe and near normal in the north. Finally during the last week of August, widespread rain fell in Hungary, Slovenia, Croatia, Bosnia, Serbia, and western Romania. This rain favored immature summer crops and increased topsoil moisture for upcoming winter wheat planting.

PRODUCTION BRIEFS

ARGENTINA: CORN AREA LOWER

Projected corn production for 1998/99 has been decreased from 18.0 to 16.5 million tons, a decrease of 8 percent from last month, and a decrease of 3.1 million or 16 percent from last year's record crop. Area is decreased from 3.6 to 3.3 million hectares, a decrease of 8 percent from last month, and little changed from last year. The corn area decrease corresponds to an increase in soybean area and reflects the most recent information on planting intentions. Prices for both commodities are presently very low and planting intentions are not yet finalized. The reduction in production from last year's record level is based on a yield estimate indicative of an upward multi-year trend, but lower than last year's record yield, which was achieved under near-ideal conditions. Corn planting begins in October and runs through December with harvest beginning in March and ending in June.

MEXICO: COARSE GRAIN ESTIMATES REDUCED

Mexico's 1997/98 sorghum production estimate is reduced this month from 6.0 million tons to 5.8 million, a month-to-month change of 3 percent. Area is unchanged at 1.8 million hectares. The change reflects the latest Secretariat of Agriculture, Livestock, and Rural Development (SAGAR) data which indicates less-than-anticipated production from the second season crop grown mostly in the northeast. Low precipitation totals and the resulting low accumulation levels at reservoirs across Mexico have negatively impacted sorghum, a commodity that farmers frequently turn to when moisture is at a premium.

Mexico's 1997/98 corn production estimate is reduced this month from 18.0 million tons to 17.5 million tons, a month-to-month change of 3 percent. Area is unchanged at 7.4 million hectares, and yield is estimated at 2.36 tons per hectare, a month-to-month change of 3 percent. The reason for the decline is a reduction of the second season crop caused by low irrigation water supplies. The second season crop accounts for less than 20 percent of annual production. This largely irrigated crop, grown primarily in Sinaloa, Tamaulipas, San Luis Potosi, and Veracruz, was harvested by the end of July 1998.

Mexico's 1998/99 sorghum production forecast is reduced this month from 6.3 million tons to 6.0 million, a month-to-month change of 5 percent. Area is unchanged at 2.0 million hectares. Monsoonal rains, associated with the recent El Nino event, were delayed from the normal late-May start until July, resulting in added pressure on already low reservoir holdings. In some cases, above-normal summer temperatures forced replanting of early sown fields. Yield is down 5 percent at 3.00 tons per hectare.

Mexico's 1998/99 corn production forecast is reduced this month from 18.5 million tons to 17.5 million, a month-to-month change of 5 percent. Area is reduced from 8.0 million hectares to 7.7 million hectares, a month-to-month change of 4 percent. Yield is forecast at 2.27 tons per hectare, a month-to-month decline of 5 percent. The delayed arrival of the annual monsoon to the major producing areas has negatively impacted the summer crop, which accounts for better than 80 percent of annual production, and is normally harvested by December. There remains the potential that the second season crop, planted in October/November, will be limited by continuing low reservoir levels.

ARGENTINA: OILSEEDS ESTIMATED HIGHER

Soybean production for 1998/99 has been increased from 15.0 to 15.5 million tons, an increase of 3 percent from last month, but still a decrease of 3.0 million or 16 percent from last year. Area is increased from 6.5 to 6.8 million hectares, in increase of 5 percent over last month, and equaling last year's area. The soybean area increase corresponds to a decrease in corn area based on the most recent information on planting intentions. Planting decisions are not finalized at this time as planting of soybeans does not begin until November and will continue through January. The reduction in production from last year's record level is based on an expected return to a near-normal yield following last year's record yield.

Sunflowerseed production was increased from 6.3 to a record 6.7 million tons, up 0.45 million or 7 percent from last month, and up 28 percent from last year's crop which suffered late-season losses due to excess rainfall. Area is increased from 3.5 to 3.8 million hectares, an increase of 0.25 million hectares or 7 percent from last month, and up 21 percent from last year. The increase is due to expectations of higher returns for sunflowerseed relative to other summer crop alternatives and to a reduction in the area of winter wheat which often rotates with sunflowerseed. Sunflowers are planted September through December and harvested February through June.

BRAZIL: SOYBEANS ESTIMATED HIGHER

Soybean production for 1998/99 has been decreased from 29.5 to 29.0 million tons, a decrease of 0.5 million or 2 percent from last month, and a decrease of 2.0 million or 7 percent from last year's record crop. Area was decreased from 13.0 million hectares to 12.8, a decrease of 0.2 million or 2 percent from last month and from last year. The area decrease is due to lower expected returns for soybeans because of low international prices. Yields are forecast to be near normal following last year's record. Soybean planting begins in September and runs through February with harvest beginning in March and lasting through May.

TURKEY: COTTON PRODUCTION/IMPORT REGIME AND PRICE

On September 10, 1998, the Turkish Minister of Industry, announced that the Government of Turkey has decided to impose a 25-percent tariff on cotton imports and a surcharge of 40 cents per kilogram on cotton exports, effective through March 31, 1999. The Minister indicated that the measure was designed to encourage the local textile industry to increase its use of domestically produced cotton. According to information received from USDA's agricultural counselor in Turkey, the announcement included a 60-percent increase in the base prices for 1999 seed cotton purchases by cooperatives to TL 195,000/kg for Aegean and Antalya cotton, TL 170,000 for Southeastern cotton and TL 160,000 for Cukurova cotton, as of September 11 (US$ = TL 275,545). The Government of Turkey will also pay a 10 cent per kilogram premium to eligible farmers, although the premiums will not be available until January 1999. The Minister said that a new system of supporting agricultural production via premium payments will replace the old base price model, starting with cotton this marketing season, and will become effective for all commodities next year. Farmers are reported to be disappointed by the Minister's announcement because they were expecting higher base prices. Traders are unhappy because the new tariffs could restrict trading activities; and the textile mills are unhappy because local prices tend to rise above world market prices when imports are restricted.

UNITED STATES: CROP CONDITION AND PROGRESS

Mild temperatures and ample rainfall early in the month promoted rapid corn and soybean development in many parts of the Corn Belt. Varying temperature and precipitation patterns limited insect populations and disease outbreaks. However, uneven growth and yellowing due to nitrogen deficiency, while limited to areas with excessive rainfall, became more evident as the month progressed. Flooding plagued low-lying fields along the lower Ohio River Valley and Missouri Bootheel during the first half of the month. Heat and excessive dryness stressed corn and soybeans in parts of the Great Lakes region for most of the month.

Virtually all cotton fields in the southern Great Plains and Southeast had progressed into the boll setting stage by mid-month, with bolls opening more than 1 week ahead of the average pace. Many areas, from the Mississippi Delta through the Southeast, battled rising insect populations, worm infestations, and boll rot. Scattered rains throughout the month relieved drought conditions in many areas of the southern Plains, Mississippi Delta, and Southeast, but the relief came too late for early maturing crops. Later planted cotton, peanut, and sorghum fields benefitted from the rains, but were still under stress from excessive dryness as the month ended. Along the western Gulf Coast, cotton and rice harvest activities were periodically hindered by rain, but, by the end of the month, harvest was nearly complete for both crops.

The winter wheat harvest was nearly complete, with only fields in the northern Great Plains and Pacific Northwest remaining unharvested as the month began. Spring wheat and barley harvest accelerated, as scattered early-month rains had little impact on the harvest pace. By mid-month, the spring wheat and barley crops were well over 50 percent harvested, nearly triple the normal pace in Minnesota and North Dakota. The rapid harvest pace continued through the end of the month, with many areas finishing 2 or 3 weeks early. The oat harvest was more than half complete as the month began, continued ahead of normal as the month progressed, and finished well before the end of the month in most areas of the Corn Belt.

Above-normal temperatures in California promoted crop development and improved conditions, but cotton and rice development continued to lag well behind normal. As the month ended, cotton bolls were just beginning to open compared to the normal pace of 36 percent.

FORMER SOVIET UNION: WEATHER AND CROP DEVELOPMENTS

In crop areas west of the Ural mountains, spring grain harvesting was well underway in August and planting of the 1999 winter grain crop began in northern areas. The combination of frequent showers and unseasonably cool weather in the Baltics, Belarus, and most of northern Russia (Northwest Region, Central Region, Volga Vyatsk, and northern Central Black Soils Region) slowed crop development and harvesting. In southern Russia (North Caucasus, lower Volga Valley, and the southern portion of the Central Black Soils Region), well-below-normal precipitation in August further reduced prospects for corn, sunflowers, and sugar beets in the filling stage of development. In Ukraine, unseasonably warm, dry weather from August 1-22 favored rapid small grain harvest activities but worsened conditions for corn and sunflower development. Light to moderate rain began over Ukraine on August 23 and lasted until months' end, preventing further deterioration in conditions for corn and sunflowers. Since early September, light to moderate showers continued to hamper small grain harvesting and winter grain planting in northern Russia. Although the first freeze of the season (0 to -2 degrees C) was observed in extreme northern areas of Russia, it had little, if any, impact on maturing crops. Reports as of September 7 indicated the harvest of spring grains and pulses, excluding corn, was about 52 percent complete compared to about 64 percent last year. Farther south, light showers (3-19 mm, with local amounts in excess of 20 mm) and cool weather prevailed from Ukraine eastward into southern Russia, slowing summer crop maturation but boosting topsoil moisture for winter wheat planting. Additional rain will be needed in these areas in upcoming weeks for proper seed germination and plant establishment.

In crop areas east of the Volga Valley, unfavorably hot, dry weather prevailed in Kazakstan and adjacent areas in Western Siberia, hastening maturity in spring grains and further reducing yield prospects. Since early September, several days of unseasonably warm, dry weather favored spring grain maturation and harvesting in Kazakstan and southern areas in Russia (southern Urals and the Altay Kray region). Farther north in Russia, cool showery weather slowed spring grain maturation and harvesting.

Tom Puterbaugh (202) 720-2012

FEATURE COMMODITY ARTICLES

1998/99 WORLD COARSE GRAIN PRODUCTION

World coarse grain (corn, barley, oats, sorghum, rye, millet, and mixed grains) production for 1998/99 is forecast at 894.4 million tons, up 2.5 million from last year. This would be the second largest crop on record. Although area declined from last season to 312.5 million hectares, total coarse grain yields are estimated at a record 2.86 tons per hectare. World corn production is forecast at a record 597.3 tons based on record yield and an increase in area versus last season. Barley, oats, and sorghum production are all forecast lower than 1997/98 due mainly to smaller area. Rye output is also projected smaller than last season as lower yield more than offsets an increase in area. Below is an analysis of the major coarse grains (corn, barley, and oats).

Corn: World corn production for 1998/99 is estimated at a record 597.3 million tons, up 19.1 million from last year and up 5.9 million from the previous high in 1996/97. Output has been trending higher in recent years due to increases in both area and yield. World corn area is estimated at the second highest on record at 140.3 million hectares, up 3.4 million hectares from last year, but slightly below the 1996/97 record of 141.0 million. World corn yield is a record 4.26 tons per hectare, up slightly from last season. In the United States, corn output is estimated at 247.4 million tons, up 9.5 million from 1997/98 due to an increase in yield. Yield is up 4 percent from last season at 8.28 tons per hectare. Both production and yield are estimated to be the second highest on record. Favorable weather across the Midwest more than offset a severe drought in the South. In the EU-15, corn production is estimated at 35.0 million tons, down 3.7 million from last season's record level. Since 1994/95, yields have risen steadily to a record 9.04 tons per hectare last year; however, drier weather in France this season has curbed yield growth. Harvested area is down nearly 4 percent to 4.1 million hectares as farmers shifted into other crops. In France, unseasonably warm, dry weather limited moisture for the corn crop -- production is estimated at 15.0 million tons. In Italy, favorable weather has kept yield at last year's record of 9.79 tons per hectare with production pegged at 9.5 million tons. In China, corn production is estimated at 122.0 million tons, up 17.7 million tons from last season's drought, but down from the record of 127.5 million of 1996/97. Area is estimated at 24.3 million hectares, up almost 0.5 million from last season due to better prices causing producers to shift from soybeans to corn. Although excessive rainfall has caused some damage to the corn crop in the northern growing areas, favorable weather across the North China Plains has offset any major reductions. Yield continues to be strong at 5.03 tons per hectare as it has benefitted from the adoption of new technologies. In South Africa, corn production typically reflects the extreme variability in rainfall and temperature. Corn sowing begins in late-October and can extend into mid-January. For the 1998/99 season, production is forecast at an average level of 8.5 million tons. Area is stable at 3.0 million hectares due to low corn prices. In Argentina, production in 1998/99 is estimated at 16.5 million tons, down 3.1 million from last year. Harvested area is estimated at 3.3 million hectares, up marginally from 1997/98. Although the projected yield of 5.00 tons per hectare is down from the record 6.03 tons of 1997/98, greater use of fertilizers and high quality seed support a strong yield. The crop will be planted starting in October. In Eastern Europe, corn production is estimated at 24.7 million tons, down 7.0 million from last year's above average crop. Hot, dry weather across Romania, Bulgaria, and Yugoslavia decreased corn production prospects. Romania's corn output is estimated at 8.7 million tons, down 4.0 million tons from last year and Yugoslavia's crop is estimated at 7.5 million tons, down 2.0 million tons from 1997/98. In Thailand, corn production is estimated at 4.3 million tons, up 0.6 million from last year. Last season's high corn prices, a shortage of cassava seedling stocks, and a reduction in the amount of funds advanced by sugar mills to sugar cane farmers caused farmers to shift land from idled land, sugar cane, cassava roots, and soybeans into corn. In addition, favorable weather and continued use of high-yielding hybrid seeds has boosted yield projections to a record 3.58 tons per hectare. In Mexico, corn production is estimated at 17.5 million tons, unchanged from last season reduced crop. Harvested area is estimated at 7.7 million hectares, up 0.3 million from 1997/98. A late start of the rainy season and reports of continued low reservoir levels, needed for irrigating the second corn crop, has limited production potential.

Barley: World barley production for 1998/99 is estimated at 144.8 million tons, down 10.2 million from last season, and down 19 percent from the record 178.1 million produced in 1990/91. Harvested area fell to 61.4 million hectares, down 4.1 million hectares from last season and the lowest since 61.3 million in 1967/68. Yield is estimated at 2.36 tons per hectare, slightly below last year and below the record 2.46 tons in 1990/91. In the United States, barley output is down slightly than1997/98 at 8.1 million tons. Harvested area declined to 2.5 million hectares, the smallest harvested since records were kept. Reduced demand for feed barley has caused farmers to switch to other crops or idle their land. Yield is estimated at 3.30 tons per hectare, up 5 percent from last season, but down from the record 3.36 tons in 1992/93. In the FSU-12, barley output has fallen from 50.0 million tons in 1990/91 to an estimated 22.6 million in 1998/99. Poor weather and continued economic troubles have plagued the crop this season. Area is estimated at 17.5 million hectares, down 3.5 million from last year due to decreases in Russia and Kazakhstan. Yield is estimated at 1.29 tons per hectare, down 21 percent from last season due to hot, dry weather. In Russia, production declined 9.3 million tons this year to 11.5 million tons due to reduced area and yield. Unfavorable hot, dry weather in the Volga Valley and Urals caused spring barley production to fall. Normally, about half the barley crop is grown in the spring. In Ukraine production is estimated at 6.3 million tons, down 1.1 million tons from last season. Nearly all barley grown in Ukraine is spring barley. Below-normal precipitation and hot weather in the eastern and southern areas stressed barley and reduced yield to 1.58 tons per hectare. In Kazakhstan, production estimates dropped from 8.5 million to 1.6 million during the 1990/91 to 1998/99 period. Production is down this season due to unfavorable hot, dry weather in July and August. In Canada, production is estimated 13.0 million tons, down 0.7 million from 1997/98. Weaker feed barley prices relative to other crops caused area to decline 0.4 million hectares from last season to 4.3 million in 1998/99. A hot, dry July with intermittent showers limited yield to 3.06 tons per hectare. In the EU-15, production is estimated at 53.9 million tons, up 1.3 million from 1997/98, while area declined slightly from last season to 11.5 million hectares. Excellent weather in France and Spain and normal weather in Germany boosted yield to a record 4.70 tons per hectare. In Australia, production is estimated at 6.0 million tons, down 0.4 million from last year. A relatively poor outlook for barley prices caused producers to reduce area to 3.0 million hectares, down 0.5 million from 1997/98. However, favorable early season weather has lifted yield potential to a near-record 2.00 tons per hectare.

Oats: World oat production for 1998/99 is estimated at 27.9 million tons, down 2.9 million from last year and the lowest on record. As world demand for oats declines, area reaches a record low estimate of 16.5 million hectares. Yield is steady this season at 1.70 tons per hectare. In the United States, production is estimated at 2.6 million tons, marginally above last season's record low. Similar to last year, farmers may reap one of their smallest oat areas on record at 1.2 million hectares. Yield is estimated at an above-average 2.16 tons per hectare. In the FSU-12, oat production is estimated 8.5 million tons, down 3.0 million from 1997/98. Area has declined steadily from 10.4 million hectares to 7.3 million in the 8 years from 1990/91 - 1998/99. Russia, the FSU's primary producer of oats, is estimated to produce 6.5 million tons in 1998/99, down 2.9 million from last year and down 5.8 million from 1990/91. Unfavorable weather throughout most of the growing season reduced yield to 1.08 tons per hectare, similar to the previous low of 1995/96. In the EU-15, oat production is estimated at 6.4 million tons, down 0.2 million from 1997/98. Area is estimated at 1.9 million hectares, the lowest level on record. The reduction in area is due to agricultural policy reform and a continued slide in demand. Generally favorable weather across most of the EU-15 has lifted yields above last season's level to 3.41 tons per hectare. In Canada, oat production is estimated at 3.9 million tons, up 0.5 million from last year due to a slight increase in area and yield. Relatively favorable prices caused farmers to expand area about 0.1 million hectares to 1.6 million. Yield is estimated at a near average yield of 2.50 tons per hectare as the weather was variable this season.

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

John Turner, Argentina Analyst
Telephone: (202) 690-0138
E-mail: turnerj@fas.usda.gov

Paulette Sandene, China Analyst
Telephone: (202) 690-0133
E-mail: sandene@fas.usda.gov

Mark Lindeman, FSU Analyst
Telephone: (202) 690-0143
E-mail: lindeman@fas.usda.gov

Ron White, Mexico Analyst
Telephone: (202) 690-0137
E-mail: whiter@fas.usda.gov

Jim Crutchfield, Australia Analyst
Telephone: (202) 690-0135
E-mail: crutchfieldj@fas.usda.gov

1998/99 RUSSIAN GRAIN PRODUCTION

Russia grain production for 1998/99 is estimated at 57.2 million tons (not including roughly 2.0 million tons of pulses and miscellaneous grains), down 34 percent from last year. Severe drought in the Volga Valley and Urals, combined with a 3.6-million-hectare drop in sown area, pushed estimated total grain output to its lowest level in over forty years. Wheat production is estimated at 32.0 million tons, down 28 percent from last year. Barley production is estimated at 11.5 million tons (down 45 percent), oats at 6.5 million (down 31 percent), rye at 5.0 million (down 33 percent), and corn at 1.4 million (down 48 percent). Grain quality, however, benefitted from the dry weather, and the percentage of milling-grade wheat is up sharply from last year.

The 1998 grain harvest has lagged considerably behind last year, in terms of both pace and yield. As of September 7, approximately 26 million hectares of grain area had been cut, compared to 33 million at the same date last year, and only 34 million tons of grain had been threshed against 62 million last year. According to a senior Ministry of Agriculture official, 12 million hectares of grain perished as a result of hot, dry conditions which prevailed over the Volga Valley and adjacent areas during most of the growing season. Although crop stress was most severe in the Volga Valley and Urals, harvest progress reports indicate that preliminary yields are down substantially from last year in nearly every major grain production region. Spring barley in the lower Volga Valley and northern North Caucasus was particularly hard hit: compounding the dryness was a spell of extreme heat which arrived in mid-June, when the crop was advancing through reproductive stage and was especially vulnerable to high temperatures.

The U.S. Agricultural Minister-Counselor in Moscow reports that recent ruble devaluation has made domestic products more competitive than imports. Farmers, enticed by rising domestic prices for grain and the prospect of potential barley exports, are making a determined effort to counter the impact of the drought by minimizing harvest losses. At the same time, however, an effort by farmers to avoid taxes, coupled with local officials' desire to secure increased State aid, could result in exaggerated harvest losses and significant under-reporting of actual grain output.

Grain quality is up sharply from last year's unusually low level. According to the Ministry of Agriculture, over 40 percent of the 9 million tons of wheat inspected as of early September was high-quality milling wheat. By comparison, only 25 percent of last year's Volga Valley grain crop was milling-grade because of persistent wetness throughout much of the growing season. The rebound in quality of the 1998/99 crop, however, is typical of an abnormally dry growing season and does not necessarily signal a return to the consistently high share of milling-grade wheat achieved during the so-called intensive-technology years from 1985 to 1990, when as much as 70 percent of the wheat crop was milling-quality. The same factors that are preventing an increase in yield- reduced application of fertilizers and plant-protection chemicals, poor quality seed, harvest delays resulting from a shortage of operational machinery, and inadequate storage facilities- continue to negatively affect grain quality.

The outlook for 1998/99 production of other major crops in Russia is mixed. Sunflowerseed output for 1998/99 is estimated at 3.3 million tons, up 0.5 million from last year. The higher production forecast reflects a 14 percent increase in sown area to a record-matching 4.1 million hectares. For the third consecutive year, however, sunflowerseed yield has been relatively low because of unfavorable weather. Sugar beet production for 1998/99 is estimated at a below average15.0 million tons, up 1.2 million from last season's poor crop. Sugar beets are grown in the same region as sunflowers- the Volga Valley, Central Black Earth region, and North Caucasus- and potential yields for both crops were affected by drought. Agriculture officials have indicated that potato

production could drop significantly this year from the 10-year average of roughly 36.0 million tons because of dry spring weather followed by heavy rainfall in northern Russia, but stressed that there is no threat of famine. Over 90 percent of potatoes and nearly 80 percent of vegetables in Russia are grown under intensive management on private household plots, and harvest results of the past ten years show that potato and vegetable output tends to be somewhat more stable than grain output in terms of year-to-year fluctuation.

Mark Lindeman, Regional Analyst
Phone: (202) 690-0143
E-mail: lindeman@fas.usda.gov

CHINA: AGRICULTURAL SITUATION IN 1998 AFFECTED BY FLOODS

Excessive rainfall in central and southern China led to serious flooding in the Yangtze River Valley this summer. Water levels in many lakes and rivers are still at flood stage, but dry weather has returned to the lower Yangtze River Valley, allowing some repairs and replanting to occur. In the Northeast, unseasonably heavy rainfall in August caused heavy flooding and some crop losses in Heilongjiang and adjacent provinces.

National and local officials are still evaluating the agricultural and economic damage from the 1998 flood season. Meteorologists have hypothesized that the weather phenomenon of "La Nina" has contributed to the unusually wet weather pattern this summer in China, though there is widespread recognition by Chinese officials and environmentalists that man-made factors have been partly responsible for the severity of the damage. These factors include deforestation, excessive cultivation on steep slopes, reclamation of bottomland around lakes and rivers, and disruption of land cover from mining and other economic activities.

The crops most affected this year by the flooding are rice and cotton in the Yangtze River Valley and soybeans in the Northeast. Flooding has reportedly damaged stocks of cotton and the infrastructure to transport cotton stocks. China's decision in April 1998 to reenter the world cotton market as a major exporter may be impacted by the floods. If it reverses its decision to export, such a decision would decrease available supplies and competition on the world market. Since China may hold 40 percent of the world's stocks, its policy with regard to exports and imports is a key to the assessment of flood impact. For rice, USDA has lowered China's 1999 export forecast to 1.0 million tons, down 0.75 million from last month. The heavy rains have been blamed for shipment delays during the past several months, but contracts have continued to be executed with no reports of defaults. The amount of stored grain destroyed by flooding is believed to be small.

Current Flood Situation: Rainfall has diminished in most of southern and central China since the first week of August, allowing vital rescue and repair work to begin. Officials are relieved that dikes protecting major cities along the Yangtze River were able to hold back the flood crests, but protection of the urban centers came at a high cost to rural residents and agricultural production. Preliminary reports say several thousand lives were lost, millions of people were evacuated from their homes, and economic losses have been estimated at more than US $24 billion. Officials in China emphasize that a complete accounting of the flood's impact will not be possible for several months. The final anticipated flood crest traveled down the Yangtze in early September without causing additional damage, and the situation has begun to stabilize. However, flood waters in the Yangtze are not expected to completely recede until the end of October.

Flooding has also been a problem this year in Northeast China, particularly Heilongjiang Province, China's most important soybean province and a major producer of corn and single-crop rice. A short, intense rain event resulted in 3 to 6 inches of rain falling over a wide area of western Heilongjiang, Jilin, Liaoning, and eastern Inner Mongolia during the first week of August. The runoff sent the Nen and Songhua Rivers over their banks, inundating a reported 3.12 million hectares of farmland in the province. Although Harbin, the capital, was untouched by flooding, more than a million homes in Heilongjiang Province were reported destroyed, millions of people were displaced, and China's largest oilfield in Daqing was threatened with closure.

Corn and Soybeans: The impact of flooding on China's 1998/99 corn crop is not expected to be large. Production is estimated at 122.0 million tons, up 17.7 million or 17 percent from last year's drought-impacted crop. This is the second-largest crop in history after 1996/97. Area is estimated up 0.8 million hectares from last year to 24.3. The area increase is partly due to farmers shifting from soybeans to corn, a more profitable crop. Warm spring temperatures and abundant rainfall created favorable conditions for planting and germination in the North China Plain and the Northeast. Early-summer flooding impacted the crop in southern and central areas of China, but these losses were offset by projected high yields in Sichuan, the North China Plain, and the Northwest, where the summer weather was nearly ideal. Widespread flooding during August hurt yields in western Heilongjiang and eastern Inner Mongolia, but the abundant rainfall benefitted the crop in other parts of the Northeast.

China's 1998/99 soybean crop is estimated at 13.8 million tons, down 0.2 million or 1 percent from last month and down 6 percent from last year. Soybean area is estimated at 8.0 million hectares, down 0.3 million from a year ago. Estimated yield, at 1.73 tons per hectare, is slightly higher than the 5-year average yield. Over 39 percent of China's soybean crop is produced in Heilongjiang Province, but Jilin, Inner Mongolia, Shandong, Hebei, and Henan Provinces are also large producers. Production is expected to decline in 1998/99 due to drought in the eastern part of Heilongjiang and flooding in the west. Soybeans in the adjacent provinces of Inner Mongolia and Jilin were also impacted by flooding. Good yields are expected in the North China Plain due to favorably warm and wet summer weather. Because soybeans are not commonly planted alongside theYangtze River, this year's flooding in the Yangtze River Valley had limited impact on production.

Rice: Rice production in 1998/99 is estimated at 132.0 million tons (milled basis), down 6.0 million or 4 percent from last month and down 6 percent from last year. Rice area is estimated at 31.1 million hectares, down 0.2 million from last month due to lower estimated late rice area. China's rice yield is estimated at 6.06 tons per hectare, lower than last year's record yield but close to the 5-year average. Heavy summer rainfall and severe flooding created unfavorable conditions for the early rice harvest in parts of central and southern China, particularly in the Yangtze River Valley.

Output of early rice (24 percent of total output) is reported to be lower this year in Hubei, Hunan, Guangxi, and Jiangxi Provinces due primarily to wet weather during the June/July harvest period. Transplanting of late rice (28 percent of total output) may have been delayed by wet weather, reducing yield potentials by shortening the maturation period. Late-rice area is expected to drop in 1998/99 due to persistent flooding along sections of the Yangtze River. Single-crop rice (48 percent of total output) is grown in Northeast China, the North China Plain, Sichuan, and parts of Jiangsu and Hubei. The weather for single-crop rice has been wetter than normal in most areas, but temperatures have been moderate and normal yields are expected.

Cotton: Cotton production is estimated at 18.8 million bales (4.1 million tons), down 4 percent from last month and 11 percent from last year's bumper crop. Estimated area is 4.5 million hectares, similar to last year, while yield is forecast down from last year's record due to unfavorable weather. Excessive rainfall and flooding in the Yangtze River Valley reportedly reduced yields in the provinces of Hunan, Hubei, Jiangxi, and Anhui. These provinces account for approximately 25 percent of total cotton production. Hot, wet weather in July and early August created suitable conditions for diseases and pests, though officials have not seen any evidence of widespread bollworm or disease damage. Normal yields are expected in Xinjiang Province and the North China Plain, where the weather has been generally good this summer. Warm and relatively dry weather across most of China in early September has been favorable for cotton, now in the open-boll stage. Harvest has begun in the South and will continue through November.

Paulette Sandene, Regional Analyst
Phone: (202) 690-0133
E-Mail: sandene@fas.usda.gov