Food Outlook
Global Information and Early Warning System on food and agriculture
-------------------------------------------------- No. 1, 1998 - Rome, February 1998


Commodities prices

The outlook for world food supplies has improved somewhat as latest reports indicate a larger increase in global cereal output in 1997. A modest replenishment of carryover stocks is now expected mainly reflecting larger supplies of coarse grains in Latin America and reduced import demand for animal feed in Asia. But stocks of cereals would, however, remain below minimum safe levels for world food security.

The early outlook for 1998 cereal crops is mixed. In the northern hemisphere good wheat crops are expected in western Europe, North Africa and India but conditions are not favourable in China, Pakistan and parts of eastern Europe. In the United States conditions for the winter wheat crop are good but plantings were lower than expected. El Niño has so far had less negative effect on coarse grains output in southern Africa and Latin America than earlier anticipated but resulted in reduced rice plantings and yields in south-east Asia.

A near record number of countries are facing food supply problems this year. The number of countries has increased to 37 compared with 31 late last year mainly due to the effects of El Niño in Asia and Central America. But Africa remains the continent with the most acute food shortages as a result of a combination of adverse weather and civil strife (see Box on Emergencies).

World trade in cereals in 1997/98 is now forecast at 201 million tonnes, 3 million tonnes more than the previous year’s reduced volume. The forecast has been cut by some 700 000 tonnes mainly reflecting reduced import demand for coarse grains in Asia as a result of the financial crisis (see Box on the Possible Consequences of the Asian Financial Turmoil on Global Markets of Basic Foodstuffs).

International wheat and coarse grains prices have weakened reflecting the improved supply situation for wheat and reduced import demand for coarse grains. By contrast, rice prices rose as the market reacted to the increased import needs of several Asian countries.

A record production of oilseeds is estimated for 1997/98 which is expected to meet the anticipated increase in demand for oils and meals. A further expansion in trade in oilseed products is forecast for 1997/98 while prices for both oils and meals are expected to stabilize at relatively high levels.

Production and trade in meat rose vigorously in 1997 and prices remained generally subdued, reflecting abundant export supplies relative to import demand. Further growth in output and trade are forecast in 1998, with world poultry and pig meat prices likely to decline. The financial crisis in Asia may also depress international bovine meat prices, as imports into the region could fall heavily (see Box on page 18).

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