Economic and Social Department

 global information and early warning system on food and agriculture

 food outlook
No. 1 Rome, February 2003

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Current Production and Crop Prospects


Carryover Stocks

Export Prices

Fish and Fisheries Products


Appendix Tables


Export Prices

Grain prices remain under pressure but rice prices strengthen


Cereal Export Prices *

  2003 2002
Jan. Nov. Jan.
  (. . . . . . US$/tonne . . . . . .)
United States      
  Wheat 153 180 128
  Maize 106 109 92
  Sorghum 113 122 97
  Wheat 138 136 115
  Maize 102 108 89
  Rice, white 204 190 197
  Rice, broken 152 157 145
* Prices refer to the monthly average. For sources see Appendix Tables A.6 and A.7.

International grain prices continued to weaken considerably with non-traditional exporters shifting more of their domestic surpluses onto the world market. The slide in international wheat prices has continued since October 2002 in spite of much smaller exportable supplies in Australia and Canada, as well as a tight situation in the United States. The abundance of cheaper supplies from alternative sources has greatly reduced the competitiveness of the US-origin wheat, even among traditional US export markets such as Egypt, for example. In January, the U.S. wheat No.2 (HRW, fob) averaged US$153 per tonne, down US$27 per tonne from November, although still up by US$25 per tonne, or 20 percent, from the corresponding month last year.

food outlook

Wheat futures also fell significantly in recent weeks with prices converging towards last year's much lower levels. By the third week in January, the May futures for the soft red winter wheat contracts at the Chicago Board of Trade (CBOT) were quoted at around US$116 per tonne, sharply lower than the peak in September 2002, though still slightly above the corresponding period last year. Weak international demand for US wheat has been the main reason for the slide in the futures. However, with relatively small stocks in the United States, weather developments have also increased volatility in the US futures. In late January, unseasonably dry conditions in the US Great Plains hard red winter wheat growing areas helped prices to recover slightly from a 6-month low.

food outlook

International maize prices also weakened considerably over the past few weeks. While a decline in the US maize production in 2002 was the main driving force for the earlier surge in prices, ample supplies of competitively-priced feed wheat, large maize sales by China and continued exports from Brazil have contributed to the recent decline in international maize prices. In January, the U.S. maize No.2 (Yellow, f.o.b.) averaged US$106 per tonne, down US$3 per tonne since November, but US$14 per tonne above the corresponding period in 2002. May futures at the CBOT also continued to slide in recent weeks in reaction to the slow pace of exports from the United States.

food outlook
food outlook

International rice prices have remained under downward pressure since the last Food Outlook, with the FAO Total Price Index (1998-2000=100) averaging 72 in January, 1 point below November. The lack of movement exhibited since May 2002 by the index has tended to mask divergent trends in prices of different origins and qualities. For instance, since November, quotations have strengthened in Thailand, sustained by domestic intervention via the Government's procurement scheme and, lately, by a strict application of weight restrictions on internal haulage. Similarly, the Food Corporation of India recently raised its selling prices for export. By contrast, quotations from other origins, notably Viet Nam, the United States and Pakistan, have fallen in the wake of new crop arrivals onto their markets.

food outlook

International prices for high quality Indica have fluctuated sharply since the December report. For example, the Thai 100% B averaged US$204 per tonne in January, up US$14 per tonne from November. By contrast, prices of the US long grain No.2/4% fell over the same period by an average US$10 per tonne to US$205 per tonne, reflecting an easing of demand for Government aid programmes. Viet Nam 5% quotations also registered a steep fall, with the January average prices at US$15 per tonne below that of November. The net effect of these price movements has left FAO High Quality Indica Price Index virtually unchanged since the December Food Outlook.

The FAO Low Quality Indica Price Index has declined by 2 points since November, reflecting mainly falling quotations from Thailand, for 100% broken rice, as well as from Viet Nam and Pakistan, which more than offset some strengthening in India's prices. Such divergent patterns resulted in a narrowing of the price differential among rice from different origins, as competition intensified. Similarly, the FAO Japonica Price Index fell by 2 points over the same period, mostly on account of a US$23 per tonne dip in prices of the US medium grain No.2/4% in January. Finally, in the face of strong international demand and of a reported large shortfall in Basmati production in India, Basmati and Fragrant rice prices have staged a sharp recovery, as exhibited by the FAO Aromatic Price Index, which rose from 75 points in December to 82 points in January.

The near-term prospects for international rice prices remain downcast, with the arrival, in February-March, of new rice crops in South America and from secondary crops in the northern hemisphere. The weakness might linger well into 2003, under current prospects of sluggish imports by those countries that have given a boost to the market in recent years, such as Indonesia, the Philippines or the Islamic Republic of Iran.

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