No. 5, 1998 - Rome, November 1998
The outlook for cereal supplies in 1998/99 has deteriorated slightly, due to lower than expected output in the CIS and Asia. World cereal output in 1998 is now expected to decline by 2 percent to 1 872 million tonnes, falling just below the anticipated consumption requirements in 1998/99. Thus global stocks would have to be drawn, but would remain within the minimum safe range.
The food supply outlook remains unfavourable for many developing countries, due to weather adversities and/or civil strife in sub-Saharan Africa, adverse weather and economic difficulties in Asia, and devastations by hurricanes in Central America.
World trade in cereals in 1998/99 is forecast at 201 million tonnes, 3 percent below the previous years volume despite a recent upward revision. Reductions in wheat and rice imports would more than offset increased trade in coarse grains.
Global cereal utilization in 1998/99 is forecast at 1 878 million tonnes, up slightly from the previous year, but marginally below the long-term trend. The anticipated slow-down in growth of utilization mostly reflects weak feed demand, while food consumption is expected to continue to rise, in pace with population growth.
FAO forecasts cereal food aid shipments in 1998/99 at 9 million tonnes, up from the reduced 1997/98 level, now estimated at 5.3 million tonnes. After four years of decline, this significant turn-around is largely the result of greater availabilities of grain supplies with the major donors, combined with higher food aid needs.
International wheat and coarse grains prices have rallied since late August in response to a spate of contracts, although they remain well below those a year ago. By contrast, rice export prices came under downward pressure from reduced import demand for the high grades, and the arrival of new crop supplies on the market.
World cassava production is forecast to decline in 1998. Demand for cassava pellets in the EC remains depressed due to ample supplies of domestic feed grains. The EC import price has fallen further, continuing the slide that began in late 1996.
International prices for milk products have decreased in 1998 due to reduced demand, particularly from parts of Asia and the Russian Federation whose economies are in crisis, and larger supplies in several exporting countries.
World sugar surpluses to continue in 1998/99 for the fourth consecutive year, as growth in production is expected to again outpace consumption. As a result, sugar prices are expected to remain under downward pressure.