FAS Weekly Attache Report Digest
February 15, 2003

INDIA, February 11, 2003 -- Strong cotton prices during the 2002/03 marketing season will support higher cotton planting in 2003/04, forecast at 8.8 million hectares. Assuming normal weather conditions, cotton production is projected at 15.8 million bales (170 kg) for 2003/2004.

TURKEY, February 11, 2003 -- Industry sources indicate that planted area in Turkey for cotton will increase marginally in MY 2003. As a result, production is expected to remain relatively stable. Low cotton prices at the start of the season encouraged farmers to plant wheat. However, this should be offset by increased area in the southeast.

UZBEKISTAN, REPUBLIC OF, February 11, 2003 -- Given forecasts of continuing water shortages in the north-western regions of Karakalpakstan and Khorezm, Uzbekistan's MY 2003/04 cotton lint production is forecast at 1 million metric tons and exports are forecast at 775,000 metric tons.

BRAZIL, February 11, 2003 -- This report updates Brazilian cotton supply and demand for MY 2001/02 and 2002/03 and projects cotton area and production for MY 2003/04.

JAPAN, February 6, 2003 -- Recovery of Japan's beef market from BSE is expected to continue in 2003. However, the possible implementation of Japan's beef safeguard could disrupt the beef market and stall the recovery in consumption . Compared to 2002, the outlook for Japan's pork market is less than stellar, characterized by weak demand and low prices. Pork imports are expected to drop by 10%. Unlike previous years, Japan's pork safeguard is not expected to trigger during the first quarter of the 2003 fiscal year due to the weak market situation.

JAPAN, February 6, 2003 -- Weak consumption and slack import demand will likely prevail in Japan's broiler market in 2003. Total broiler imports are forecast to fall by 2% in 2003. However, U.S. broiler imports are expected to improve following a sharp drop in 2002 due to Japanese import bans. Demand for prepared poultry products will continue to strengthen in 2003.

NEW ZEALAND, February 6, 2003 -- The local beef sector is being challenged to reach target export sales volumes and price margins due to growth in both New Zealand's production and global supplies along with a strengthened New Zealand dollar. Beef exports in 2003 are forecast to increase to 535,000 tons, but will nevertheless fall significantly below export availabilities.

PAKISTAN, February 11, 2003 -- Pakistan's MY 2003/04 cotton acreage should increase driven by higher returns and aversion to problems encountered within the sugarcane sector this year. Assuming a significant increase in area and static yields, MY 2003/04 production is forecast at 1.85 Million Metric Tons.

AUSTRALIA, February 7, 2003 -- Australia's 2003/04 macadamia crop is forecast at 33,000 MT, unchanged from year-earlier levels. A 15 percent rise is expected for the 2004/05 crop, as more normal weather should boost harvest prospects. Exports in 2003/04 are expected to total 24,750 MT, 10 percent below year-earlier figures, and reflecting reduced domestic availability.

BRAZIL, February 7, 2003 -- Brazilian broiler production increased by 12 percent in 2002, and exports by 26 percent. Current estimates for 2003 indicate continued expansion in broiler production and exports, but at more moderate rates.

LATVIA, February 7, 2003 -- Successful economic development continued in 2001, as GDP surged 7.6 percent, the greatest growth among the Baltic countries. With consumer purchasing power on the rise and growing tourism, prospects for increased demand for high-value food imports are viewed as favorable. The rapid expansion of large Nordic/European retail chains into Latvia offer new opportunities for exporters who can successfully connect with them. Latvia hopes to finalize EU accession negotiations by the end of this year and join the European Union in 2004. Major current constraints to exports of U.S. products include the unfamiliarity of consumers with U.S. grocery products and tariff disadvantages vis-a-vis European suppliers and Latvia's partners of Free Trade Agreements.

UKRAINE, February 7, 2003 -- Despite the impressive export pace to date, a lower wheat production estimate coupled with a tight domestic supply situation suggests that wheat exports in MY 2002/2003 will likely be lower than earlier expected.

THAILAND, February 7, 2003 -- The year of 2003 is likely to be an unpleasant struggling year for the Thai chicken industry which will likely experience an oversupply and low price situation.

KOREA, REPUBLIC OF, February 10, 2003 -- The retail food sector in Korea is undergoing a rapid change, as large retail formats and convenience stores edge out traditional wet markets and "mom-and-pop" grocers. The change will progress from the retail outlets to the distribution system, eventually leading to lower prices and greater variety to consumers. The growth of modern retail formats, coupled with the consumers' ever stronger demand for international tastes and products, will be translated into growing opportunity for a wider variety of consumer ready U.S. food products.

THAILAND, February 10, 2003 -- Official estimate of 2002/03 rice production is at 17.1 million tons, 2.1 percent lower than last year's good crop of 26.5 million tons, due mainly to unfavorable weather conditions. However, rice exports are forecast to reach 7.4 million tons in CY 2003, up 2.8 percent from the previous year.

THAILAND, February 10, 2003 -- Export prices remained flat as market was inactive.

ROMANIA, February 10, 2003 -- Local prices for milling wheat continue to go up due to short supplies. The GOR recently adopted measures aimed at stabilizing domestic prices in an attempt to maintain "reasonable" prices for urban bread consumption. Current wheat supplies are not sufficient for milling needs over the next 6 months due to poor quality.

AUSTRALIA, February 10, 2003 -- Cattle, sheep and pig inventories for CY 2002 are estimated to have fallen due to widespread drought conditions across the Australian continent. Production and slaughter in CY 2003 is forecast to increase for sheep and pigs due to lower opening inventories and an expected return to more normal weather conditions. Cattle slaughter is forecast to increase, with beef production and exports maintained at record levels.

INDIA, February 10, 2003 -- The Ministry of Food Processing Industries is formulating a new food law to harmonize and rationalize existing food laws.

INDIA, February 10, 2003 -- MY2002 edible oil imports are estimated to touch 5.0 million tons due to a 14 percent decrease in oilseeds production compared with MY2001. Additionally, the edible oil safeguards petition was declined, and the Solvent Extractors' Association of India appealed for a liberal oilseeds import policy.

MOROCCO, February 10, 2003 -- High duties on meal and oilseeds imported by the feed industry limits the development and expansion of the market of soybeans and soybean meal in Morocco. The Free Trade Agreement that Morocco is negotiating with the U.S. could be a good opportunity to lower feed costs, improve quality, and eventually increase the use of soybeans and soybean meal in Morocco

COLOMBIA, February 10, 2003 -- Palm production in Colombia is expected to grow six percent in 2002/2003 and seven percent during 2003/2004. Soybean imports rose sharply to 531,000 metric tons in 2001/2002 up from 380,000 metric tons the previous year. The sharp growth in imports of soybeans is due to a shift from soybean meals imports to soybean. Recent changes in the value-added tax are expected to slow significantly the increase in soybean imports for this year and next year.

EUROPEAN UNION, February 10, 2003 -- EU chicken exports rose sharply in 2002 from 2001 and from previous forecasts, as the EU took advantage of the Russian embargo on U.S. poultry. Dutch, French, and German exports to Russia soared, and were further fueled by high export refunds. On the world market, EU poultry is expected to face increased competition, however, on-going export contracts may allow significant volumes of EU chicken to be exported during the first part of 2003. EU exports to the Middle East are foreseen to continue to decline due to competition from Brazil.

EUROPEAN UNION, February 10, 2003 -- Beef consumption in almost all EU countries has returned to pre-BSE levels with German consumption rebounding faster than originally expected. For pigmeat, the EU has seen some reopening of traditional markets after the FMD crisis. In particular, Danish pork exports to Japan rose by 10 percent, despite the safeguard clause, while EU exports to Russia also showed some recovery.

ROMANIA, February 11, 2003 -- A recent law will impact the meat-processing companies located in "less-favored areas". According to the new law on investment, imported raw materials destined to be used in economically dis-advantaged areas will be no longer exempted from customs duty.

TAIWAN, February 11, 2003 -- U.S. rice accounted for 99,386 tons or 69% of the 144,720 ton Minimum Market Access (MMA) quota in 2002. Australia and Thailand had market shares of 18% and 13%, respectively. Despite the West Coast Port labor problems, U.S. rice exporters supplied 59% of the private sector quota.

UKRAINE, February 11, 2003 -- Ukraine's oilseed production in 2003 is expected to decrease slightly following last year's second highest sunflower crop ever. U.S. soybean meal exports to Ukraine are expected to increase insignificantly in MY 2003/2004 and will face strong price competition from South American and Western European suppliers.

INDIA, February 12, 2003 -- *Indian AgMinister seeks tariff protection for farmers*, *India to stress TRIPS issue at Japan meeting*, *Seek livelihood-security system at WTO Cancun meeting, says Dr. Swaminathan*, *Wheat exporters defaulting*, *Cargill may trade on Indian commodity exchanges*, *Industry body seeks protection for oilseed farmers*, *Cut in soya oil reference price likely*, *India ratifies protocol on transgenic safety*.

CHINA, PEOPLES REPUBLIC OF, February 12, 2003 -- No significant changes in projections since annual report. Pork exports to Russia remain strong, and steady growth in beef imports stays on track. Concerns over import controls continue, but volumes are not yet affected .

RUSSIAN FEDERATION, February 12, 2003 -- Total 2002/03 oilseed production is estimated at 4.1 million metric tons (mmt), almost a 30 percent increase from the previous year. Consumption is forecast at over 3.8 mmt, also an increase from the previous year due to expanded crush consumption. A recent GOR resolution removing the current five percent import duty on soybean meal might stimulate imports to fuel domestic feed use. However, tariff preferences given to developing countries and unresolved GMO registration requirements may mitigate any gain to the U.S.

CANADA, February 12, 2003 -- FDA Outreach Program Outlines Bioterrorism Regulations for Government and Industry Officials in Agriculture * Canadian Food Inspection Agency Undergoes Organizational Changes * CFIA Revises Starlink Corn Monitoring Policy * Canada Extends Poultry Meat Ban to Include Arizona * CWB Launches Competitive Marketing Campaign in Japan * Softwood Export Tax a Possibility * SaskPool Revamps Restructuring Plan * FAS/Ottawa holds Canada Concepts Marketing Workshop in Montreal.

BRAZIL, February 13, 2003 -- Post revised 2002 production and export estimates to reflect new data obtained from trade sources, including record exports for beef and pork. The outlook for both beef and pork calls for continued expansion in 2003, but at moderate rates.

CHINA, PEOPLES REPUBLIC OF, February 13, 2003 -- High grain stocks will allow China to continue its corn export program and imports will remain minimal over the near term. Long term import prospects are more favorable given recent policy-driven drops in production and continued gains in livestock products consumption.

RUSSIAN FEDERATION, February 10, 2003 -- The Government of the Russian Federation announced that a three year quota will be in effect for all poultry products starting May 1, 2003. The yearly quota will be 1.05 million metric tons (MMT), though the pro rated 2003 quota will be reduced to 744,000 MT. However, overall trade in poultry meat is forecast to decrease only slightly in 2003, to 1.285 MMT, as companies import and store extra poultry prior to the imposition of the quota. Russian broiler production is forecast to reach 600,000 MT in 2003, a 12 percent increase, due to a favorable demand outlook and also the introduction of quantitative restrictions.

MEXICO, February 13, 2003 -- The United States has the largest share of the Mexican import market for forest products. Ninety five percent of lumber imports to Mexico are sourced from the United States. Potential markets for wood products in Mexico are the construction sector, the furniture and interior decoration manufacturing sector, and the handling industry.

CANADA, February 13, 2003 -- For 2003, a decline in beef production and a modest increase in pork output are forecast. The anticipation of a cattle herd buildup last year was cut short by severe drought in the West which led to tight feed grain supplies, higher feed grain prices, declining feedlot placements, and record feeder cattle exports. Higher Canadian pork output in 2003 is expected to reflect rising slaughter capacity and increased efficiencies from large scale hog production units. Canadian exports of live hogs to the United States are forecast to be close to the 6.0 million head level.

NIGERIA, February 11, 2003 -- Several container loads of imported frozen poultry were recently seized and publicly destroyed by officials of the Nigerian Government. In August 2002, the GON implemented an import ban on frozen poultry despite a supply deficit of approximately 25,000 MT annually.

KOREA, REPUBLIC OF, February 11, 2003 -- This a correction to KS3004. Revisions have been made to the 6th paragraph of page 2, correcting the termination year for the Korean program providing support toward castration of Hanwoo bulls. 2002 marked a turning point in the Korean beef cattle sector. Beef farmers enjoyed the high prices and, in response, took steps to increase inventory in 2003. In the meantime, imported chilled beef has enjoyed a bumper year to make up for the shortage in hanwoo beef. However, for pork producers, 2002 was a roller coaster year. Hopes to resume pork exports to Japan in the second quarter of 2002 were battered by outbreaks of FMD in May and hog cholera in October. Since Korean authorities chose to vaccinate against hog cholera, resumption of exports to Japan will not be possible until the end of 2003 at the earliest. This has resulted in high stock levels of unpopular export cuts.

THAILAND, February 14, 2003 -- Export prices increased slightly due to the limited available supplies.

EUROPEAN UNION, February 14, 2003 -- On February 6, 2003, the European Commission invited the public to take part in an Internet consultation about the future of organic farming. Based on a working document entitled "Analysis of the possibility of a European Action plan for organic food and farming", the public and stakeholder organizations can submit reactions on all elements relating to the development of organic farming.

SOUTH AFRICA, REPUBLIC OF, February 14, 2003 -- Historical corn production figures have been revised significantly to account for discrepancies between output and deliveries. The crop harvested in 2002 is now estimated at about 10 million tons while the crop to be harvested in 2003 could reach 9.75 million tons. It is, however, currently suffering severe heat stress which could impact yields. Due to a shift in area planted, white corn is expected to constitute about two thirds of the upcoming crop compared to less than sixty percent of the 2002 harvest. This could lead to a white corn surplus and a shortage of yellow. An expected carry over of more than 1.5 million tons at the end of April 2003 is adding to the downward pressure on prices.

SWEDEN, February 14, 2003 -- The European Commission disapproves of the planned unilateral Swedish stop for cod fishing. The Commission bases its decision on the fact that a stop would have little positive effects on the cod stock and that it would discriminate against Swedish fishermen.

SWEDEN, February 14, 2003 -- A verdict from the Swedish Market Court on February 5, 2003, opens up for alcohol advertising in Swedish newspapers and magazines. The challenge by the Swedish food magazine "Gourmet", to Sweden's prohibition on alcohol advertising made its way through the European Court of Justice and back to the Stockholm District Court and finally the Swedish Market Court with a favorable result.

EUROPEAN UNION, February 14, 2003 -- This weekly report contains data on rice prices in the U.S., Thailand and the EU. It also lists current import duties and export subsidies in the EU. All information will be published as such in the weekly USDA publication "Rice Market News".

NEW ZEALAND, February 14, 2003 -- Counter-Terrorism Bill calls for food security and livestock safeguards. Biotechnology: GM dairy cattle research demonstrates consumer and producer benefits. The Government's recent approval of GM cattle research is subjected to legal challenge by anti-biotech group. Dairy: Fonterra increases its "fair value share price" U.S. 5.5 cents. Forestry: Fletcher Forests sells off cutting rights to 9,000 hectares of pine forests.

CROATIA, February 12, 2003 -- On February 7, 2003, in the Croatian village of Gale, (near Split in the southern part of the country), veterinarians discovered several sheep with Q-fever. Some people from the village where hospitalized because they also showed signs of infection. The Ministry of Agriculture will test all the sheep, goats and cattle in the region. All the diseased animals will be destroyed. All tested animals will be marked, diseased herds will be fenced, and all animal owners will be forced to tighten controls on breeding stock.

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