Record cereals output expected in 2008-09 – but markets expected to stay volatile
ROME, 18 July 2008: According to FAOs Crop Prospects and Food Situation report published Friday, record cereal production of 2.180 million tons in 2008 – a 2,8 percent increase over 2007 – should contribute to some improvement in the global supply and demand situation.
Most of the increase is in wheat following significant expansion in plantings in all regions. Coarse grains output is expected around the bumper level of last year but lower than earlier anticipated due to severe floods in the United States, the worlds largest producer and exporter.
Rice is tentatively forecast to increase slightly from last years good level.
Despite the anticipated increase in world output, cereal markets will remain tight in 2008-09. Total cereal supply (carry-in stocks plus production) will barely exceed the anticipated utilization and the world cereal reserves will recover only marginally from the current estimated 30-year low.
International cereal prices remain at high levels with tight maize supply in the United States underpinning prices of major cereals.
MAIZE export prices climbed to new record levels in recent weeks, double their levels a year earlier.
Prices of WHEAT weakened only modestly despite seasonal harvest pressure and remained about 40 percent higher than a year earlier.
After reaching a peak in May, RICE export prices fell in June and early July reflecting greater export availability in main exporter countries; however, they were almost three times above the level of a year ago.
Cereal production of the LIFDCs (særligt udsatte lande), as a group, in 2008 is forecast to increase at a slow rate growth of just 1,2 percent. Excluding the largest countries, China and India, the increase of the remaining countries is even lower and follows a decline in output in the previous year.
In SOUTHERN AFRICA, the outcome of the recent main season cereal harvest was overall favourable with a recovery in production in South Africa and good crops in several other countries but output fell well below last year and the average in Zimbabwe.
In EASTERN AFRICA, the outlook is unfavourable for the cereal harvests in several countries, including Ethiopia, Somalia and parts of Kenya and Uganda.
In NORTH AFRICA, Moroccos cereal production is expected to recover strongly from last years drought-reduced level, but Tunisia is facing a smaller harvest.
In ASIA, the regional cereal output is set to remain close to last years good level with bumper crops in China and India more than offsetting reductions expected in Pakistan and the Islamic Republic of Iran. Food insecurity is expected to increase in Afghanistan and Tajikistan.
In SOUTH AMERICA, harvesting of the main season coarse grain crops is underway and a record output is expected following larger plantings, in response to high international prices.
Prospects for the wheat crop are mixed; plantings increased in Brazil but policy and weather factors led to smaller plantings in Argentina.
Read the full report on http://www.fao.org/docrep/010/ai470e/ai470e00.htm
