The Common Market's self-sufficiency policy is expected to restrict and reduce imports of lard, variety meats, and fatback from the United States. Plans for fiscal year 1964 To continue to cooperate with industry and foreign governments in increasing dollar trade and in reducing barriers, real and artificial. To keep the U.S. industry informed on competitive problems, sales opportunities, and trade barriers in foreign markets. World situation LAMB AND MUTTON World sheep numbers continue to rise. The world total reached 990 million in January 1962, 1 percent higher than in 1961. U.S. sheep numbers totaled 31 million, a 2-percent drop from 1961. U.S. sheep numbers have dropped for the third consecutive year and apparently are the lowest for any year since at least 1867. U.S. lamb prices have recovered from their low levels of 1961. The average price received by farmers for lambs in 1962 was $17.70 per 100 pounds compared with $15.80 a year earlier. The 1962 average, however, was the lowest for any other year since 1946. Prices in December 1962 averaged $17.90 compared with $15.50 a year earlier. The December 1962 price averaged only 73 percent of parity. U.S. imports of lamb and mutton from Australia and New Zealand have increased sharply since 1957. Lamb imports from all countries in 1962 totaled about 13 million pounds compared with 10.9 million a year earlier and were equal to 1.8 percent of domestic lamb and yearling production. U.S. imports of mutton from all countries in 1962 totaled about 56 million pounds compared with 44.9 million in 1961. Most of the foreign mutton is used in production of frankfurters and other manufactured items and does not compete directly with lamb. Short-term outlook The annual U.S. decline in sheep numbers probably will be stopped in 1963. Slaughter will decline because of fewer lambs on feed and a smaller lamb crop. The outlook for lamb prices in the United States continues fairly good with relatively small supplies of lamb being produced domestically. The imports have not increased to such an extent as to be material price depressing influences. Long-term outlook U.S. sheep numbers on farms will remain relatively stable. High costs of production and relatively low returns to large Western producers offer little incentive, whereas smaller flocks in the East are increasing. In the larger producing countries, Australia and New Zealand, sheep production is more profitable than cattle and sheep numbers and production continues to increase. They will continue to be the largest exporters of lamb with most of their surplus moving to the United Kingdom as usual. Plans for fiscal year 1964 To keep U.S. sheep producers posted on foreign competition, imports, prices, and supplies. To continue trying to reduce and eliminate trade barriers against U.S. lamb and mutton products and to promote export sales of sheep and lambs for breeding. World situation LARD World lard production in 1962 is estimated to have reached 8,360 million pounds, 31⁄2 percent above the 8,080 million pounds produced in 1961. U.S. production dropped about 2 percent in 1962, but the drop was more than offset by gains in Europe and in the Soviet Union. U.S. output will probably rise in 1963 along with production in Europe and the U.S.S.R. World lard trade in 1962 rose from the 730 million pounds exported in 1961 largely because of increased exports from the United States and several Western European producers. The amount of lard entering world trade during 1962 remained considerably below the 1960 total when Cuba was still importing a large amount. Short-term outlook The United States will continue to be a surplus producer even though the domestic disappearance increases and the yield of lard per hog decreases. No sharp fluctuations in price are expected either in the United States or abroad. The United Kingdom will probably take an even larger share of the total U.S. lard exported as European production rises and consumption generally declines. Long-term outlook Prospects for U.S. lard exports are influenced to a great extent by United Kingdom efforts to enter the EEC and by the terms under which that country enters. The protectionist features of the EEC policy for pork and pork products may tend to reduce the United Kingdom market as the import levies and fees are applied, assuming that the United Kingdom does eventually enter the Community subject to the existing rules of the EEC. Plans for fiscal year 1964 To increase promotional activity in Western Europe, United Kingdom, and South American countries; to continue efforts to reduce or eliminate trade barriers; to search for new markets and to keep U.S. industry informed as to competitive problems and opportunities in various foreign markets. Small quantities of lard will be included in title I and title IV, Public Law 480 programs in a few countries. World situation INEDIBLE TALLOW AND GREASES World production at 7.5 billion pounds in 1962 rose about 1 percent from 1961 as increases in Europe and the Soviet Union offset a drop in the United States. In 1963 U.S. production is expected to recover to a level above 1962. At the same time there will probably be additional increases in Europe and Russia. World exports totaled 2.5 billion pounds in 1962, more than 70 percent of which came from the United States. Most of the remainder came from Australia, New Zealand, and Canada, with a small amount shipped from several nations of Western Europe. Short-term outlook U.S. supplies are expected to continue large with prices remaining steady at relatively low levels during the coming year. Exports in 1963 should remain at or slightly above 1962, largely because of shipments under various Food for Peace programs in underdeveloped or developing nations. Shipments to Japan and Europe will continue to account for the majority of tallow exports for dollars. Long-term outlook The trend toward the use of synthetic detergents will undoubtedly continue in the world's most industrialized nations. Partially offsetting will be increased demand for soap in developing nations of Africa, Asia, and South America. Additional amounts will be needed as the use of tallow in feed increases in Europe. No problems are anticipated as a result of common agricultural policy of the EEC. Plans for fiscal year 1964 Increased promotional activity in Western Europe, United Kingdom, and South American countries. To continue efforts to reduce or eliminate trade barriers; to promote U.S. tallow in the European market; to search for new markets and to keep U.S. industry informed as to competitive problems and opportunities in various foreign markets. Specific market development projects are underway in Japan, Colombia, and Western Europe. These projects promote tallow and grease for soap, industrial uses and for fat-in-livestock feeds. Tallow continues to be an important commodity in six countries under title I, Public Law 480. Lesser amounts will enter several countries under title IV, Public Law 480. World situation WOOL World wool production in 1962-63 is estimated at 5.710 million pounds, down fractionally from 1961-62 but 25 percent above the 1951-55 average. There will be less wool in Australia due to reduced yields per sheep following widespread drought. There will also be reduced output in Argentina and south Africa, while increases are in prospect in both Uruguay and New Zealand. Mill activity in most of the world's major consuming countries was above the previous year for the first 6 months of 1962, but fell slightly below for the third quarter. Prices for raw wool at the beginning of the season generally were below the previous year, but in the fall of 1962 began to strengthen. International tension, reduced carryover stocks, and improved consumer demand in Europe have all contributed to the stronger conditions of the wool industry. Short-term outlook Prices should remain favorable in the primary markets for the remainder of the 1962-63 season. There will be less wool available in the five major producing countries taken as a whole. Demand for wool in major consuming countries has held up well because of the generally more severe winter being experienced in Japan, North America, and Europe. A sharp price rise is not likely because of the availability of substitute manmade fibers. Long-term outlook Competition from synthetic fibers will continue to influence wool demand and prices. The ready availability of wool substitutes may preclude future price booms following political disturbances as in the past. This should help wool to maintain its competitive position and lend stability to the market. The United States will continue to import a large part of its wool requirements. Future markets for wool may be considerably different from the present. Consumption per person in the industrialized nations may be on the decline but markets will probably be developing in underdeveloped parts of the world as living standards gradually rise. Plans for fiscal year 1964 Plans are to continue to collect and disseminate information on production, trade, stocks, and prices of wool on a worldwide basis. World situation HIDES AND SKINS World bovine hide production continued to rise in 1962. In the United States, the world's leading producer, hide production was more than 27 million pieces. Output in Argentina rose moderately because of increased slaughter following widespread drought. Hide production in the Soviet Union also continued to expand in proportion to the growth of its cattle industry. The United States and Argentina account for about 60 percent of world bovine hide trade annually. In 1962 Argentine exports may have exceeded 13 million pieces, while U.S. exports were about 7 million. Short-term outlook World production will continue to rise in 1963. A rise of about 1 million pieces is likely in the United States; however, some drop is likely in Argentina following a year of heavy slaughter. Assuming continued prosperity in Europe and Japan, and no Government-imposed restrictions in the latter country, U.S. export should remain at current levels or even rise slightly. Long-term outlook Continued pressure from manmade substitute is certain. The competition will continue to be felt most strongly in the best markets for leather products. Developing nations offer the most hope for continued growth of the worldwide markets for bovine leather. As people in these areas become more affluent, their ability and desire to purchase leather shoes increases. Plans for fiscal year 1964 It is planned to continue the leather promotion project in Japan; to keep U.S. interests advised of imports and export trends and trading opportunities; and to continue to encourage the export of hides and skins so as to aid the U.S. livestock industry. Plans are underway to promote semiprocessed leather and leather goods in Europe. World situation TOBACCO World tobacco production set a new record in 1962-9.1 billion pounds, compared with 8.7 billion in 1961. Production of Flue-cured-the most important kind entering world trade, also, was at record levels-3.4 billion pounds, compared with 3.3 billion in the previous year. Record crops of Flue-cured were grown in India, New Zealand, and Pakistan. Record plantings occurred in Brazil and the Rhodesias-Nyasaland, but unfavorable weather reduced the final outturn. The U.S. Flue-cured crop in 1962, at 1.4 billion pounds, was up 11 percent from 1961, and the largest since 1956. World consumption of tobacco continued to gain in 1962. Increasing output of tobacco products, particularly cigarettes, is the principal factor resulting in record world tobacco export trade in recent years. In 1962, world cigarette output totaled about 2,400 billion pieces-about 50 percent larger than in 1951-55. Free world tobacco exports in 1962 were close to the record 1.68 billion pounds entering world trade in 1961. But it is likely that exports in 1963 will be below those of the past 2 years-a period when some buildup of stocks occurred, and blue mold damage to crops in several countries in Western Europe necessitated stepped-up tobacco imports. U.S. tobacco exports in 1962 were below those of 1961. Short-term outlook U.S. tobacco exports in fiscal 1963 are likely to be below those of fiscal 1962, when 520 million pounds (export weight) moved abroad. The 1962 crop of Flue-cured tobacco contained a larger than normal quantity of low-quality leaf, and this already has reduced the level of exports of Flue-cured for the first half of the marketing season. On the other hand, the steady growth in manufacture of American-type blended cigarettes is encouraging burley exports. Exports of the latter type may be at a near record in fiscal 1963. Quality of U.S. leaf offered by exporters will be a most important factor in the level of exports for the next year or so. Trade barriers of various sorts, however, will hamper efforts of U.S. tobacco exporters to improve their position in world trade. Long-term outlook As world tobacco consumption increases further in the longer term period, some gains in U.S. exports should occur. But it is unlikely that U.S. trade will increase as a percentage of total world trade. Any absolute gains in U.S. exports that may occur will require (1) an improvement in the quality of leaf produced; (2) favorable developments with respect to the presently scheduled Common Market external tariff, and (3) elimination of other trade barriers that currently restrict imports of U.S. leaf. Plans for fiscal year 1964 Continued efforts to obtain more favorable tariff treatment in the Common Market will be made. Elimination of other trade barriers will be vigorously pushed. Marketing and competition specialists will make on-the-spot surveys in areas where competition is important, and where possibilities for increased trade appear promising. New promotional projects will be undertaken wherever possible. Spot news items and special circulars will be published to assist the various segments of the industry in keeping abreast of world developments affecting the outlook for exports. World situation SUGAR World sugar supplies tightened and prices increased in 1962. The 1962-63 world sugar crop, 56 million short tons, is about 3 million tons below consumption. This results in reducing stocks, which had been built up to rather high levels and in increasing prices. Stocks had also been slightly reduced following the 1961-62 crop. The tightening world supply situation is primarily the result of a sharp drop in Cuban production and two successive rather poor European beet crops. Cuba continues to market a considerable amount of its sugar under agreements with communistic bloc countries. The Yearend stocks of sugar reached a peak of 24 million short tons in 1961. Stocks declined about 1 million tons during 1962 and are expected to decline further to about 19 million short tons by December 31, 1963, well below desirable levels at current world consumption. A substantial part of December 31 stocks in Europe consist of production in the last 3 months of the year. International Sugar Agreement became largely inoperative on January 1, 1962, because of inability to agree on a quota for Cuba. Considerations will be given in 1963 to the possible renegotiation of the International Sugar Agreement, as the present one expires at the end of 1963. The United States has introduced a procedure of phasing out the quota premium-difference between world and U.S. prices-for sugar imported under quota. The 1.5 million tons to be imported under the global quota in 1963 will, however, be at world prices. Short-term outlook About two-thirds of the world sugar trade moves under special arrangements. The remaining one-third moving from free world supplies will continue to be tight over the short run. Assuming that world sugar prices during 1963 continue at about the level of January, it is probable that 1963-64 world production will be only slightly below estimated consumption. Thereafter, production may again exceed consumption. In view of the tight supply situation, the United States faces problems in competing for its foreign needs. Long-term outlook As indicated above, production may begin to exceed consumption after 1963-64. There are a number of uncertainties, however, in the world sugar picture, which have been aggravated by Cuban developments. There are a number of factors which could stimulate production over the long run. Some countries may elect to remove or relax production restrictions because of higher prices and make more effective utilization of cane and beets. In many countries acreages will increase. Also it is quite likely that European beet crops, which have been only fair in the last two seasons, will be larger in future years. On the other hand, economic or political crises and other developments in key producing countries could jeopardize world sugar supplies. Plans for fiscal year 1964 The established series of reports on world production, stocks, and trade, in sugar and related products, including molasses and honey, will be expanded. Emphasis will be given to improving the reporting and analysis of supply and consumption on a country-by-country and area-by-area basis. Activity in mill construction and expansion will be summarized for publication as need indicates. Special attention will be given to analysis of the structure and economic position of the sugar industry in foreign countries. Particular emphasis will be devoted to more currently evaluating the actual and potential supply position in exporting countries, including projections of future production and trends in trade. This is urgently needed in the operations and administration of the U.S. sugar program because of the critical position of world sugar, particularly as it related to U.S. import needs. World situation COFFEE The 1962-63 world crop amounts to about 65.5 million bags (132.3 pounds). Consumption will be about 5 million bags less. Supply and demand for the year, however, will be more nearly in balance than for any crop year since 1956-57. The carryover at the end of 1962-63, September 30, 1963, will approximate $5 million bags. Three-fourths of the world stocks will be held by Brazil, but stocks are building up in some other countries. Prices showed little change during 1962, except for some decline in milds. The series of Producer International Coffee Agreements of recent years have been fairly successful in attaining the objectives of price stability and orderly marketing. A long-term producer-consumer agreement was negotiated at the United Nations in the summer of 1962. It will become effective sometime during the 1962-63 (October-September) crop year and is expected to contribute more effectively to stabilizing coffee prices and marketings. The United States imported a record 24 million bags in 1962 valued at about $1 billion. World trade also set a record in 1962. Short-term outlook There will be a world surplus of coffee for the next few years, even though production and consumption are approaching a balanced position. Despite burdensome stocks, however, the International Coffee Agreement should have a stabilizing effect on prices. Long-term outlook The long-term outlook for coffee is somewhat brighter. Some of the producing countries are beginning to curtail production and to diversify their agricultural economies. A rather large percentage of the current stocks are deteriorating in quality and will have to be disposed of in the next few years. Additionally, world consumption will likely increase at a rate of about 3 percent a year. The long-term agreeemnt, if effectively operated, could contribute significantly to solving the world coffee problem. |