No. 10, 1996 Rome, November 1996

HIGHLIGHTS

Latest information confirms an improved outlook for global food security as a result of a significant recovery in world cereal production this year. Aggregate cereal carryovers are forecast to rise for the first time in four years, but to remain below minimum safe levels and thus insufficient to meet a major production shortfall in 1997.

Food shortages continue to grip several Low-Income Food-Deficit countries despite the general improvement in global supplies, mostly due to the effect of civil strife, devastating floods and localized crop failures.

FAO's latest forecast puts 1996 world cereal production at 1 849 million tons (including milled rice), 6.9 percent up from 1995's reduced level. Assuming normal conditions until completion of the 1996 harvests, global output of wheat is forecast to increase by 6.4 percent to 581 million tons, that for coarse grains by 9.4 percent to 875 million tons, and that for rice by nearly 2 percent to 380 million tons (milled).

World trade in cereals in 1996/97 is now forecast to contract to 184 million tons, 18 million tons less than shipments in the previous year and the smallest volume since 1985/86. The bulk of the decline is expected in wheat and the major coarse grains while rice trade is tentatively forecast to remain similar to the previous year's level.

Global cereal utilization in 1996/97 is forecast to recover by 2 percent, to 1 827 million tons, from the reduced level in 1995/96. Only a modest increase in cereal food consumption is anticipated while feed use is expected to recover significantly.

FAO's first forecast puts food aid shipments in 1996/97 at 7.5 million tons. This would be only marginally above the reduced 1995/96 volume, now estimated at 7.2 million tons, some 2 million tons below shipments in the previous year and 6 million tons below the annual average food aid shipments during the past five years.

International wheat prices have stabilized over the past few weeks after dropping sharply in August. However, maize and rice prices are continuing to weaken under pressure from the ongoing harvests in the major producing countries.

World cassava production is forecast to rise in 1996 and global trade in cassava products is anticipated to increase after reduced shipments over the past few years.

Total supplies of oilseeds and derived products will remain tight in 1996/97, as carryover stocks from the previous season are sharply reduced and only modest increases in oilseeds production is expected in the coming year, while demand remains sustained. As a result, prices are expected to remain firm.