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| food outlook | |
| No. 3 | Rome, June 2003 |
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Cereals
Latest information points to a global cereal output of 1 914 million tonnes (including rice in milled equivalent) in 2003, considerably more than forecast in April and some 4 percent up from the previous year’s below-average level. The upward revision is mostly a result of better prospects for coarse grains, as the outlook for wheat deteriorated and early indications for rice remain little changed since the last report. However, with consumption expected to rise relatively strongly, the new 2003/04 marketing season looks set to witness a further significant drawdown in global cereal stocks for the fourth consecutive year. However, lower world import demand coupled with an expected recovery in production in a number of major exporting countries could, to some extent, mitigate the negative impact of smaller global supplies on international prices. 
The forecast for world wheat production in 2003 has been reduced since the previous report in April, by 7 million tonnes, to 584 million tonnes, mostly on account of indications that the winter crops in the eastern part of Europe have been severely affected by harsh winter conditions. However, at the forecast level, this would nevertheless be 2 percent above the previous year’s poor crop, although below the average of the past five years. At the regional level, output is forecast to rebound strongly in North America and Oceania. In Africa, improved rainfall this season in the main wheat producing countries in North Africa, after several dry years, looks likely to result in the largest crops there since 1998. In South America, better weather conditions also are largely behind this year’s improved prospects, although in this case due to a return to normal precipitation after excessive rainfall last year, particularly in Argentina. In the other regions, smaller crops are expected this year. In Asia, a forecast 2 percent decrease in this year’s output is largely accounted for by China and India, where a combination of dry conditions and policy measures have caused area reductions, and Kazakhstan, where adverse weather affected crops during the winter. Also in Europe, a particularly harsh winter in the central and eastern parts of the region is responsible for sharp drops in production expected in several countries, in particular the Russian Federation and Ukraine. In Central America, a smaller wheat crop is forecast in Mexico due to insufficient rainfall during the growing season The forecast for global coarse grains output in 2003 has been revised up significantly since April to nearly 934 million tonnes. As in the case of wheat, the year-on-year increase would be largely due to an expected recovery in production in North America and Oceania following last year’s drought-reduced crops. However, output is also set to rise sharply in South America, where Brazil has gathered a bumper maize crop. Coarse grain production may also rise somewhat in Europe as a result of an increase in the spring grain sowings in some eastern countries, to offset the winter crop losses. Elsewhere, in Asia, Africa and Central America the coarse grains output is forecast to remain relatively unchanged in 2003. In the southern hemisphere and along the equatorial belt, the 2003 main paddy season is nearing completion, while in the northern hemisphere the bulk of the crop is yet to be planted pending the arrival of Monsoon rains in Asia. Based on the harvest results in the southern hemisphere so far, and the early indications of planting intentions in the northern hemisphere, overall global rice output in 2003 is forecast at 396 million tonnes (592 million tonnes in paddy terms), 2 percent higher than the previous year’s reduced level. However, this figure is still highly tentative, since the final outcome will depend largely on the timing, extent and distribution of the Asian monsoon rainfall, which has an important bearing on the global outcome.
Preliminary indications for world cereal utilization in 2003/04 point to a possible increase of around 1.3 percent to 1 981 million tonnes. Cereal food consumption is likely to keep pace with population growth and feed use is expected to show an increase of around 1.6 percent, mainly on expectation of a strong production rebound in several developed countries. Implications for demand surrounding a possible slow-down in the global economy compounded by potentially negative impacts of Severe Acute Respiratory Syndrome (SARS), render forecasting utilization at this early stage more uncertain than usual. World cereal utilization in the current 2002/03 season is forecast at 1 955 million tonnes, nearly unchanged from the 2001/02 level and slightly below trend. The latest forecast is also 8 million tonnes more than reported in April, mainly reflecting upward adjustments to feed use in China and in the United States. An emerging feature in 2002/03 has been the sudden increase in global feed wheat use, driven by large supplies in the CIS and more competitive wheat export prices relative to coarse grains. Nevertheless total feed use of cereals is anticipated to contract by 1.1 percent in 2002/03 as sharp declines in North America are likely to more than offset expected expansions in Asia and Latin America and the Caribbean. Direct human consumption of cereals is expected to grow sufficiently to maintain per caput food consumption levels close to the previous year’s. In the Low Income Food Deficit Countries (LIFDCs), cereal food consumption is forecast to stay stable within a 167-168 kilogram range.
Early indications for global cereal stocks in 2003/04 point to a significant draw down for the fourth consecutive season. World cereal stocks at the end of countries’ marketing seasons in 2004 are tentatively put at 399 million tonnes, some 69 million tonnes, or 15 percent, below their opening levels. Although a bigger global production is expected in 2003, the projected total cereal utilization in 2003/04 would still exceed the anticipated production, thus necessitating another significant release of stocks. As in the previous seasons, China would account for the bulk of the reduction in world stocks. World Cereal Production, Supplies,Trade and Stocks
Source: FAO
1/ Data refer to calendar year of the first year shown. Rice in milled equivalent.
2/ Production plus opening stocks.
3/ July/June basis for wheat and coarse grains and calendar year (second year shown) for rice.
4/ May not equal the difference between supply and utilization due to differences in individual country marketing years.
FAO’s first forecast of the global trade in cereals in 2003/04 stands at 231 million tonnes, which would represent a 3.5 percent contraction compared to 2002/03. It is expected that trade in nearly all major cereals will decrease in the new season with the most significant decline projected for wheat. Some of the expected contraction in world trade will be caused by smaller imports by developing countries, but the bulk of the decrease would come from the developed countries, with their purchases falling back to more normal levels after two years of above‑average imports. Total cereal imports by the Low Income Food Deficit Countries (LIFDC) are forecast to remain close to the estimated imports in 2002/03 of around 80 million tonnes.
International prices of most cereals remained generally firm since the last report in April but the outlook for the coming months is mixed. For wheat, exportable availabilities among non-traditional exporters are forecast to drop. However, favourable crop prospects among major exporters, coupled with the forecast contraction in world import demand in 2003/04, could put prices under downward pressure in the coming months. For maize, with an anticipated sharp decline in maize exports and stocks in China and much smaller feed wheat supplies in world markets, the 2003/04 global supply and demand for coarse grains, maize in particular, seems fairly balanced, and international prices are expected to remain close to this year’s levels. Tentatively, prospects for international rice prices over the coming months point to some increases, since supplies available for export have come under pressure in the face of a resurgence in international demand, particularly by Brazil and some countries in Africa. However, beyond this period, the price outlook will be influenced by the status of paddy crops in northern hemisphere countries. However, given the limited supply available in stocks world-wide, the impact of any adverse paddy growing conditions could have a particularly strong effect on international rice quotations. |
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