Food Outlook
Global Information and Early Warning System on food and agriculture

-------------------------------------------------- No. 3, 1998 - Rome, June 1998


The outlook for cereal supplies in 1998/99 has improved, reflecting an increase in the estimate of ending stocks to be carried over to the new season and the expectation of a record crop in 1998. If current forecasts materialize, cereal supplies would be sufficient to meet expected consumption requirements in 1998/99 and to allow for the replenishment of global cereal reserves to minimum safe levels.

Food emergencies persist in 38 countries worldwide, compared to 31 towards the end of last year. The increase is mainly due to the effects attributed to El Niño, particularly in several countries in Latin America and Asia. However, Africa remains the continent with the most acute food shortages as a result of adverse weather and/or civil strife (see Food Emergency Box inside).

FAO's latest forecast puts 1998 cereal production at 1 911 million tonnes, marginally above last year's crop and a new record. Wheat output is forecast to be on trend at 606 million tonnes but slightly down from 1997, while coarse grains output is forecast at 925 million tonnes, 1.6 percent up from 1997 and above trend for the third consecutive year. Global paddy output is tentatively forecast to decline marginally from last year's record to 567 million tonnes (380 million tonnes in milled terms).

FAO's first forecast of world trade in cereals in 1998/99 is 201 million tonnes, 4 million tonnes down from the previous year. Global imports of wheat are expected to decrease by some 5 percent to 90 million tonnes, and that for rice, by almost 10 percent, to 20 million tonnes, after peaking in 1998. By contrast, global coarse grains imports are forecast to increase by almost 4 percent to 91 million tonnes.

International prices for wheat and coarse grains weakened further, reflecting the improved global supply/demand situation. By late May, wheat prices were 20-25 percent below a year earlier, and the lowest in 5 years, while coarse grains prices were 10 percent lower. By contrast, rice export prices from most origins continued on an upward trend through May.

International prices for most dairy products have fallen during the year so far. Sluggish demand and a probable rise in export availabilities make an increase in international prices unlikely during the remainder of the year.

FAO estimates world sugar production in 1997/98 at 123.6 million tonnes, slightly more than in the previous year. Consumption is forecast to continue to grow in 1998, but at a slower pace, mainly due to reduced demand in Asia. The latter has resulted in a sharp fall of international sugar prices in the past months.

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