No. 1/2, 1997 - Rome, January/February 1997

HIGHLIGHTS

The outlook for world food supplies has improved further. Latest reports indicate a significant recovery in global cereal output in 1996 and in the expected level of carryover stocks, which would however, remain below minimum safe levels.

The early outlook for 1997 cereal crops is mostly satisfactory so far. In the northern hemisphere good wheat crops are expected in Asia and Europe and in the United States despite lower plantings. In the southern hemisphere the outlook is promising for coarse grains in Africa and Latin America and for rice in south-east Asia.

The food supply outlook remains precarious in several parts of Africa. Food prospects are particularly bleak for a large number of people in the Great Lakes Region due to a combination of civil unrest, population displacement and poor harvests. Large scale international assistance will continue to be required in 1997.

FAO’s latest estimate puts 1996 world cereal production at 1 872 million tons (including milled rice), 8.2 percent up from 1995’s reduced level. Global output of wheat is estimated up 7.5 percent at 588 million tons, that for coarse grains up 11.6 percent to 905 million tons, and that for rice up 2.2 percent to 379 million tons (milled).

World trade in cereals in 1996/97 is now forecast at 186 million tons, 20 million tons less than shipments in the previous year. The bulk of the contraction is accounted for by lower imports of wheat and coarse grains, with the forecast decline in imports of rice expected to be less pronounced.

International wheat prices remained firm over the last two months, but the futures market remains highly sensitive to prospects for the 1997 crops. International coarse grains and rice markets generally remain under downward pressure from large supplies after 1996's good crops.

Growth in meat production and consumption was sustained in 1996, despite high feed costs. For the first time, poultry meat overtook bovine meat as the second most important meat after pork in both production and consumption and became the leading meat category in international trade.

International prices for milk products are expected to strengthen during 1997 as a result of a recovery in international demand. After several years of stagnation, world milk production should start to move upwards in 1997.