FAO forecasts replenishment of world cereal stocks to minimum safe levels
If current forecasts for 1998 crops materialize, for the first time in four years world cereal stocks will return to the minimum safe level set by FAO - 17 to 18 percent of global cereal consumption during the marketing year 1998/99. Forecasts for cereal carryover stocks have risen by almost 20 million tonnes since the previous report in March, to 321 million tonnes.
"The availability of bigger cereal stocks than earlier anticipated and favourable prospects for the new crops allow for some cautious optimism for global cereal supplies in 1998/99", according to the latest Food Outlook. But the report also warns that, "a deterioration in prospects for 1998 crops cannot yet be ruled out, particularly in several southern hemisphere countries affected by the aftermath of El Niño".
Despite this improvement in global outlook, food emergencies persist in 38 countries around the world, as compared to 31 countries six months ago. The increase was mainly caused by effects attributed to El Niño, particularly in several countries in Latin America and Asia. However, Africa continues to be the continent with the most severe food shortages, caused by adverse weather and/or civil strife.
Production up and trade down
FAO's latest forecasts put 1998 cereal production at 1 911 million tonnes, slightly up from last year and a new record. Wheat production is forecast to be on trend at 606 million tonnes, slightly down from 1997, while coarse grains (mostly maize, barley, rye, millet and sorghum) output is forecast at 925 million tonnes, 1.6 percent up from last year and above trend for the third year in a row. Global paddy output is tentatively forecast to decline slightly from last year's record to 567 million tonnes (380 million tonnes in milled terms).
World trade in cereals for 1998/99 is forecast at 201 million tonnes, 4 million tonnes less than the previous year. Global wheat imports are expected to fall some 5 percent, to 90 million tonnes. Most of this decrease is accounted for by countries in Asia and Africa where forecasts for domestic crop production are considerably higher than last year, thus reducing the need for imports. Rice imports are tentatively put at 22 million tonnes, some 10 percent less than last year's peak figure. Coarse grain imports, on the other hand, are expected to rise to about 91 million tonnes, 4 percent up from last year. This mainly reflects increased demand for maize by southern African countries.
Prices for wheat, coarse grains, sugar and milk products have weakened
The improved supply/demand situation has resulted in downward pressure on prices for wheat and coarse grains on the international market. Wheat prices were at their lowest in five years - by late May, some 20 to 25 percent below those of a year ago.
Prices for dairy products and sugar have also fallen. Reduced demand in Asia, following the financial crisis, has hit the sugar market, while sluggish global demand for dairy products, accompanied by a steady rise in production, has led to decreases in dairy export prices since the end of 1997.
Cereal consumption may rise slightly in developing countries
Utilization of cereals around the world is forecast to grow by 1 percent this year, to 1 904 million tonnes. This is slightly above trend and, according to the report, "most of the increase is expected to occur in the developing countries, where domestic production is expected to increase most. The growth in total food consumption in the developing countries would exceed that for population by a small margin and, thus, lead to a slight increase in the per caput food consumption." Use of cereals for animal feed in developing countries is also forecast to rise, but more slowly despite ample supplies.
23 June 1998
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