Prospects for world cereal output in 2003 have deteriorated since the previous report in June, following a widespread drought and heat-wave in Europe. As a result, the FAO forecast for world cereal production in 2003 has been reduced sharply, indicating that the amount of global cereal carryover stocks that could be drawn down in 2003/04 will be much larger than expected earlier, and the overall global supply-and-demand situation will be much tighter.
FAO’s forecast for global cereal output in 2003 has been revised downward to 1 865 million tonnes, some 48 million tonnes below the previous forecast but still 33 million tonnes above last year’s reduced level. Wheat output is now expected to fall to its lowest level since 1995, while the recovery anticipated for coarse grains after last year’s below-average crop is not likely to be as large as expected earlier. The outlook for the 2003 paddy crop remains favourable and a recovery from last year’s poor output is still in prospect.
World cereal utilization in 2003/04 is forecast to increase moderately by about 0.4 percent to 1 964 million tonnes, but would remain below the medium-term trend. While cereal food consumption is likely to keep pace with population growth, feed-use of cereals, most notably wheat, is now expected to decline.
FAO’s forecast for world cereal carryover stocks in 2004 has been lowered significantly since the June report to 372 million tonnes, down almost 95 million tonnes, or 20 percent, from the previous season. Wheat is expected to account for the largest share of the overall decline during the current season, but inventories of both coarse grains and rice will also decline significantly.
World cereal trade in 2003/04 is forecast to fall to a five-year low of just 227.5 million tonnes, which would be 11 million tonnes, or 5 percent, below the previous season. Reduced wheat shipments are expected to account for the bulk of the year-on-year decline in world cereal trade, following good crops in several importing countries.
International wheat prices increased over the past two months, mostly in response to a deterioration of prospects for the European crop. In the maize market, prices have remained under downward pressure due to good crop prospects in several major producing countries. International rice prices have risen steadily since May in response to tightening supplies in some major exporting countries.