FAO/GIEWS - Food Outlook March/April 1997

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Early prospects for the 1997 cereal crops point to an output close to the previous year's record. Based on the condition of crops already in the ground and planting intentions for those to be sown later this year, and assuming normal weather for the remainder of the 1997 cropping seasons, FAO's first forecast puts world cereal output this year at 1 880 million tons (including rice in milled terms) compared to the revised estimate of 1 873 million tons in 1996, and above trend for the second year in succession. If current forecasts materialize, cereal output would be sufficient to meet expected consumption requirements in 1997/98 based on trend and may allow for a further replenishment of cereal reserves. However, with many of the 1997 crops still to be sown and others just in the early stages of development, these forecasts are very tentative and a deterioration of the 1997 crop, which could reverse this year's improvement in the global food supply situation, cannot yet be ruled out.


1995/9 1996/97

(. . . . . . million tons . . . . . .)
Production 1/ 1 726 1 873 1 880
Wheat 547 589 590
Coarse grains 810 906 910
Rice (milled) 369 378 380 2/
Supply 3/ 2 045 2 134 . . .
Utilization 1 792 1 833 . . .
Trade 4/ 207 189 . . .
Ending Stocks 5/ 261 294 . . .

1/ Data refer to calendar year of the first year shown. Rice in milled equivalent.
2/ Tentative forecast; assumes no substantial change from 1996 record.
3/ Production, plus opening stocks.
4/ July/June basis for wheat and coarse grains and calendar year for rice.
5/ Does not equal the difference between supply and utilization due to differences in individual country trade years.

In contrast to the favourable outlook at the global level, there are 29 countries facing food emergencies of varying intensities. In Africa, food supply difficulties persist in several parts. In the Great Lakes Region, ongoing civil strife in Zaire has led to an exodus of Rwandan refugees from camps into inaccessible areas. Their food and nutritional situation has become critical and deaths from starvation related causes are already reported. In Rwanda, the food situation remains tight following a large repatriation of refugees last November/ December. In Burundi, a succession of reduced crops and economic sanctions by neighbouring countries have severely affected the food supply. In Eastern Africa, despite satisfactory main season cereal output in 1996/97, large numbers of people are suffering severe food shortages due to failure of the secondary season crop. Emergency food assistance is needed in eastern and north-eastern parts of Kenya, in pastoralist southern regions of Ethiopia, where a food emergency has been declared, in northern parts of Tanzania and Uganda and in Somalia. In Western Africa, the food supply position remains precarious in Liberia while the situation is gradually improving in Sierra Leone following a peace agreement. In Southern Africa, overall food supply outlook remains favourable so far.

In Asia, the food situation in Korea D.P.R., continues to deteriorate and the outlook for 1997 appears grim. In Laos, following heavy crop losses due to floods last year, emergency assistance is required by 420 000 people. In Mongolia, food production continues to be heavily constrained by problems associated with economic transition, which have resulted in shortages of inputs. Following a serious drought in 1994/95, low and erratic rainfall in Sri Lanka has again affected rice production. Food assistance is needed for populations in the north who have been affected by drought and civil strife. Notwithstanding serious floods last year the overall food supply situation is satisfactory in Cambodia. In the CIS, the food supply situation in Tajikistan remains precarious and additional food aid pledges are urgently needed.

The first preliminary FAO forecast of world cereal production in 1997 is 1 880 million tons (including rice in milled terms), compared with 1 873 million tons in 1996. Wheat output is provisionally forecast at 590 million tons, virtually unchanged from the output in 1996 and above trend for the second year in succession. Output is forecast to rise in most of Asia, Europe and the CIS, but this would be mostly offset by lower crops anticipated in North Africa, South America and Oceania. For coarse grains the FAO's first forecast of global output in 1997 is 910 million tons, which as for wheat, would be virtually unchanged from the crop in 1996 and well above trend for the second consecutive year. Output is forecast to increase in South America and the CIS but this would be mostly offset by smaller crops expected in Africa and Europe. However, since most coarse grains crops in the northern hemisphere are yet to be sown, this early forecast is very tentative. As regards rice, the 1997 main paddy season in the southern hemisphere and around the equatorial belt is well advanced but, in most of Asia, where the bulk of the rice is grown, the season has yet to begin pending the arrival of the monsoon rains. While it is still too early to make a firm forecast of 1997 paddy production, assuming growing conditions remain as good as in 1996, paddy output in 1997 could be around 565 million tons (380 million tons, milled basis), almost unchanged from the previous year.


Wheat Coarse grains Rice (paddy) Total 1/

1996 1997 1996 1997 1996 1997 1996 1997

( . . . . . . . . . . . . . . million tons . . . . . . . . . . . . . )
Asia 228.5 234 213.4 214 514.2
Africa 22.4 18 88.7 83 16.2
Central America 3.6 4 26.6 27 1.8
South America 21.1 19 53.9 61 18.4
North America 92.6 92 296.5 299 7.8
Europe 128.2 131 159.6 156 2.9
CIS 69.4 73 56.2 61 1.3
Oceania 23.8 18 10.8 9 1.0
WORLD 589.5 590 905.6 910 563.5 565 2/ 2 058.6 2 065
Developing countries 272.3 272 371.2 376 537.7 539 1 181.2 1 187
Developed countries 317.2 318 534.4 534 25.8 26 877.4 878

1/ Total cereal, including rice in paddy terms.
2/ Tentative forecast; assumes no substantial change from 1996 record.

FAO's forecast for world trade in cereals in the current 1996/97 marketing year has been raised by 3 million tons since the last report to 189 million tons, which is nevertheless still 9 percent below the volume traded in the previous year, and the lowest volume since 1990/91. The forecast for world imports of wheat and wheat flour (in wheat equivalent) has been raised to 87.4 million tons, although at this level it would still be about 8 million tons less than in the previous year, reflecting mostly a recovery in production in several importing countries in 1996. FAO's forecast for world trade in coarse grains in 1996/97 now stands at 83 million tons, marginally lower than earlier forecast, and 9.5 million tons down from the previous year. As for wheat the fall in coarse grain trade reflects mostly improved output in several importing countries. With regard to rice, FAO’s forecast for 1997 imports remains unchanged at 18.4 million tons, 0.7 million tons less than the previous year's shipments and 2.5 million tons below the 1995 record level.

The latest forecast for global cereal utilization in 1996/97 points to an increase of 41 million tons or 2.3 percent above the previous year, to 1 833 million tons. Global food consumption of cereals is forecast at 941 million tons in 1996/97, an increase of 13 million tons. Most of this expansion is expected in the developing countries where the annual average per caput food consumption of cereals is forecast to rise to 172 kilograms. Global feed use of cereals is forecast to be up by 14.5 million tons from the previous year to 634 million tons in 1996/97, with most of this increase accounted for by the developed countries. Other uses of cereals such as for seed and industrial purposes and post-harvest losses, are forecast at 257 million tons in 1996/97, up slightly from 1995/96.

FAO's latest forecast for food aid shipments of cereals in 1996/97 (July/June) remains unchanged from earlier expectations at 7.5 million tons. This volume would be the same as the revised estimate for 1995/96, but about half the level prevailing in the early 1990’s. Of the total, the low-income food-deficit countries (LIFDCs) are expected to receive about 5.9 million tons, a similar volume to the previous year's, which would represent about 10 percent of their total cereal import, in 1996/97 compared with over 15 percent in 1992/93.

International wheat prices strengthened in February and remained generally firm in March, although substantially below last season’s peak. By late March, the price for U.S. wheat No.2 was quoted at about U.S.$ 180 per ton, slightly above February levels but over U.S.$ 40 per ton less than in the same period last year. Markets have been supported by the lower exportable supplies available in the United States during the second half of the season. In the EC the rise in domestic prices has resulted in a lowering of restitutions in recent weeks. Argentine and United States maize prices rose slightly in March and by the fourth week they were quoted at U.S.$ 121 per ton and U.S.$ 128 per ton, respectively, still about U.S.$ 50 per ton below the corresponding period last year. International rice prices fell in March with the FAO Export Price Index for Rice (1982-84=100) averaging 132 points, only marginally lower than in February but 9 points below the corresponding level in 1996. The price for Thai 100B continued its downward trend falling by U.S.$ 22 to U.S.$ 335 per ton in late March.

FAO's forecast of global cereal stocks at the end of the 1996/97 seasons remains unchanged from the previous report at 294 million tons, which would be a recovery of 33 million tons or 13 percent from their depleted opening level. All of this increase is expected to occur in the major exporting countries, more than offsetting a reduction in the aggregate stocks of other countries. Global wheat stocks are forecast to increase by 11 percent to 117 million tons, while stocks of coarse grains are expected to increase more substantially, by about 23 percent, to 127 million tons. By contrast, global rice stocks are forecast to fall again, for the fourth year in succession, to 50 million tons by the end of the marketing seasons in 1997.

The recovery in global cereal production in 1996 and the anticipated replenishment of carryovers in the current 1996/97 season has eased the exceptionally tight supply/demand situation of the previous year, and as a result, international cereal markets have stabilized in recent months. However, the ratio of end-of-season stocks to trend utilization in 1997/98, now estimated close to 16 percent, would still be below the 17-18 percent range the FAO Secretariat considers the minimum necessary to safeguard world food security. Yet, as indicated earlier, assuming normal weather continues until completion of harvests, early production prospects for 1997 point to a global cereal output large enough to meet trend consumption requirements in 1997/98, and which would allow for some further replenishment of cereal reserves. But, the situation needs to be closely monitored in the coming months as any significant deterioration in the 1997 cereal harvests, which is still possible, could reverse the recent improvement in the global food supply situation.

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