Economic and Social Department

 global information and early warning system on food and agriculture

 food outlook
No. 2 Rome, June 2004

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Cereal Supply/Demand Roundup

Box on China Global Cereal Markets


Box on EU Enlargement and FAO Cereal Trade Estimates

Coarse Grains


Ocean Freight Rates


Meat and Meat Products

Milk and Milk Products

Oilseeds, Oils and Oilmeals




Coarse Grains

Coarse Grains Production

2004 cf
 (million tonnes)%
ASIA 213.6 219.2 2.6
AFRICA 91.8 87.2 -5.0
North Africa12.712.4-2.6
Sub-Saharan Africa79.074.7-5.4
CENTRAL AMERICA 31.6 31.1 -1.6
SOUTH AMERICA 79.8 70.6 -11.4
NORTH AMERICA 302.6 310.7 2.7
EUROPE 198.8 219.5 10.4
CIS in Europe52.254.64.5
OCEANIA 13.3 12.9 -3.7
WORLD 931.6 951.2 2.1
Developing countries401.9395.2-1.7
Developed countries529.7556.05.0
Source: FAO. Note: Totals computed from unrounded data.

Contrary to earlier predictions, the global coarse grains crop in 2004 is now forecast at 951 million tonnes, 2.1 percent up from last year and the largest output on record. The increase since the April report is mostly on account of very favourable planting conditions in the United States, the world’s largest producer, where a record crop is now expected. The larger United States crop accounts for the bulk of the increase over last year. In Europe, a significant surge is also expected after increased plantings and better weather conditions.

In Far East Asia, planting of the main 2004 summer coarse grains is virtually complete. The maize area in China is expected to increase marginally from the previous year, mainly in the Northeast region following the Government’s measures to reverse the declining production trend of recent years. Preliminary forecasts point to an increase in maize production by 3.6 percent to 118 million tonnes. India is forecast to have another good crop and in Indonesia, a bumper maize crop of 11.5 million tonnes has already been harvested, the combined result of increased plantings and above-average precipitation. A good maize crop has also been gathered in the Philippines, where attractive prices have led to increased maize area and the adoption of techniques boosting yields.

In the Asian CIS countries the aggregate area planted with coarse grains, mainly barley and maize, is estimated to be similar to last year’s. However, the previous exceptionally good yields are not likely to be repeated and aggregate output in the subregion should decrease slightly.

In western Africa, seasonably normal conditions so far prevail in the Sahelian zone where the growing season starts in most countries in May. However, desert locusts remain an extremely serious threat in Morocco, Algeria and Mauritania where control operations continue to be hampered by lack of resources. This could allow swarms to move to other Sahelian countries later in the season. In the coastal countries along the Gulf of Guinea, from Nigeria to Guinea, the rainy season has started, and planting is underway. In Central Africa, the rainy season started in time in Cameroon, allowing land preparation and sowing of the first 2004 maize crop, due for harvest from July.

In the eastern African subregion, planting of the 2004 main season coarse grains is underway or about to start in several countries. Early prospects are uncertain due to a combination of dry spells and excessive rains and flooding in several areas.

In southern Africa, harvesting of the 2004 coarse grain crops is underway. Early production estimates point to an aggregate subregional output of some 15 million tonnes, almost 10 percent below the average of the past five years, reflecting the delayed, erratic and inadequate rainfall pattern during the first half of the season in several countries. In South Africa, the subregion’s largest producer, maize output is estimated at 7.9 million tonnes, about 18 percent down from the previous year’s crop. In Zimbabwe, production is expected to fall slightly from last year’s already low levels. By contrast, in Zambia, where weather conditions have been generally favourable, the 2004 main maize crop is forecast to reach a record 1.4 million tonnes. In Mozambique maize output increased substantially reflecting a recovery of production in southern provinces. In Malawi, however, production is estimated at 1.7 million tonnes, 15 percent below last year’s about normal harvest.

In Central America and the Caribbean, planting of 2004 first season coarse grain crops is about to start, while harvesting of the 2003/04 winter maize crop is still under way in Mexico. The subregion’s maize output in 2004 is tentatively forecast at 23.3 million tonnes, close to the good results of the previous year and above average.

In South America, harvesting of the 2004 coarse grains is underway in the main producing countries. Aggregate output for the subregion is forecast at about 71 million tonnes, lower than last year’s record of 80 million tonnes, but still above average. In Brazil, aggregate maize production is forecast at 42.6 million tonnes, about 12 percent less than the 2003 record crop. This decline is mainly due to diversion of land to soybeans and rice, which offer more attractive prices and trade opportunities, and to the negative impact of dry weather conditions from the beginning of 2004. In Argentina, the latest official forecast points to a decrease in maize output from 15 million tonnes in 2003 to about 12.4 million tonnes in 2004, due to reduced plantings following insufficient rains at sowing. In Peru and Ecuador, dry weather conditions in the first months of 2004 severely affected maize crops.

In North America, April and May weather conditions were very favourable for the main planting season across the United States’ Corn Belt, allowing crops to be planted early, with prospects of good yields. Reflecting the good start to the season, maize output is now forecast at almost 265 million tonnes, 3 percent up from last year and almost 9 percent above the average of the past five years. Coarse grain planting in Canada proceeded well in late April and early May and some good precipitation improved conditions in previously dry parts of Alberta. This year’s output is expected to remain close to the previous year’s above-average level, with improved yields expected to largely offset a shift of land into non-cereal crops.

In Europe, prospects for the coarse grain crop in the EU-25 are favourable. The planted area has increased and generally favourable weather conditions are pointing to above-average yields. The aggregate output of the 25 countries is forecast to rise by 12 percent from the previous year to 140 million tonnes. In the Balkan countries, prospects for the coarse grains are also better than a year ago reflecting an improvement in moisture availability. However, some recent dry weather in eastern and southern Romania could begin to affect yield potential, if it persists. In the European CIS, the area planted with winter coarse grains is estimated to be up from last year and similar to the 2002 bumper harvest. The bulk of the coarse grains are planted in the spring (April/May); assuming normal weather, the harvest should recover from last year’s sharply reduced level.

In Australia, planting of the main 2004 coarse grain crops is still underway. The outcome is still very uncertain as seasonal planting rains eased off in late April and early May, especially in eastern parts, and many farmers are awaiting the arrival of more precipitation to finalize planting decisions. Planting could continue into June if more rainfall arrives in time.

FAO anticipates smaller world trade in 2004/05


At 105 million tonnes, FAO’s first forecast for global trade in coarse grains in 2004/05 (July/June) points to a significant decline from 2003/04, mostly reflecting a drop in imports by developed countries. However, this early assessment depends heavily on currently tentative production forecasts for 2004: in several countries this year’s crops have only recently been planted or have not yet been sown.

Coarse grains imports by developed countries in 2004/05 are forecast at 33 million tonnes, down 5 million tonnes from 2003/04, mostly in Europe. Given the impact of EU enlargement, which is estimated to account for at least 1.5 million tonnes of the overall decline, a strong recovery in coarse grains production in Europe, including the EU, could result in a further 4 million tonnes reduction in imports by the region as a whole. A different picture emerges for developing countries, where total imports could increase slightly, to around 72 million tonnes. Coarse grains purchases by most countries in Asia are forecast to remain close to the estimated levels in 2003/04 or even increase, driven by expected recovery in demand among countries affected by animal diseases in 2003/04. In Indonesia, however, the anticipated rise in maize production may lead to a sharp fall in imports, while exports could increase. In Africa, larger barley imports by Algeria would account for most of the anticipated small increase in imports. Elsewhere, 2004/05 imports are likely to remain mostly unchanged from the previous season.

food outlook

On the export side, supplies in the United States, the world’s largest exporter, are likely to be larger than in 2003/04, given more favourable production prospects. With a strong recovery also expected in the EU-15 as well as the 10 new accession countries, exportable supplies from EU-25 to third parties are likely to increase significantly compared to 2003/04. A repeat of another good year in Canada and Australia will keep export supplies from these two countries at 2003/04 levels, but in Argentina, dry weather and lower plantings are expected to result in lower production and smaller exports. Among other exporters, a strong rebound in barley and maize production in Ukraine could also drive up exports. However, maize shipments from China are forecast to be cut further in 2004/05, reaching 4 million tonnes as a result of tighter domestic supplies. This compares to 11 million tonnes in 2003/04 and 15 million tonnes in 2002/03. In Brazil, with a reduction in overall maize output, exports are also forecast to decline in 2004/05 although, at 4 million tonnes, they would still compare positively with only a few years ago when the country was still a net maize importer. Lower sorghum production in Sudan is seen to cut exports by over 60 percent. A bumper maize crop in Zambia could result in a surge in exports, whereas, sales from the regions’ largest maize exporter, South Africa, may decline.

Coarse grains utilization may increase slightly in 2004/05


World coarse grain utilization in 2004/05 is likely to increase by only 1 percent, to 964.5 million tonnes. While the anticipated expansion is relatively small, at this forecast level, world coarse grains use would still be above the 10-year trend for the second consecutive season. Prospects for continued high coarse grains prices well into the new marketing season coupled with likely improved supplies of feed wheat could restrain the growth in feed use of coarse grains to only 0.3 percent, compared to 3 percent in 2003/04. On the other hand, FAO forecasts continued growth in the industrial use of coarse grains, maize in particular. Recent surges in fuel prices may provide a further boost to the industrial use of maize for ethanol in the United States, building upon the new record set in 2003/04.

World coarse grains stocks falling further


World coarse grains stocks for crop years ending in 2005 are put at 124 million tonnes, down 15 million tonnes, or 11 percent, from their revised opening levels. As for wheat stocks, the recent revision of stocks in China (see box on page..) also affected estimates for global coarse grains stocks, which for crops ending in 2004 have been revised down to 138.5 million tonnes, much below the 152 million tonnes reported in April. Based on the current estimates, China would again account for most of the anticipated reduction in 2005 world coarse grains inventories. Total coarse grains production in China is forecast to increase only slightly from the previous year; with fast rising consumption, further reductions in inventories are foreseen.

food outlook

Aggregate stocks held by the five major exporters by the end of seasons in 2005 are forecast at 42.5 million tonnes, almost unchanged from their opening levels in spite of anticipated reductions in the United States. The decline in the United States is likely to be more than offset by rises in the EU, where a strong recovery in production coupled with the addition of the 10 new countries could result in larger stocks. Nonetheless, ending stocks in 2005 among major exporters, as a group, would still point to relatively tight situation; with the ratio of their total coarse grains stocks to disappearance (the sum of their domestic consumption and exports) dropping to 8.6 percent, slightly below the estimated 9.6 percent in 2003/04, and well below the 16 percent long-term average.

Prices on decline but still firm


The outbreak of the avian influenza in Asia, combined with rising freight rates, reduced feed grain purchases and applied downward pressure on prices. At the same time, reduced sales from China, strong demand in the United States, and a tight feed market in Europe have had an opposite effect. Coarse grains prices during this time of year are most sensitive to the weather situation and the size and condition of the new crop in the United States. Maize prices moved within a US$124-138 per tonne range since March but began to weaken more consistently only in recent weeks as prospects for new crops began to improve. In May, the export price of US maize (US No.2 Yellow) averaged US$130 per tonne, as much as US$22 per tonne, or 20 percent, above the corresponding month last year. Influenced by favourable planting conditions, weaker soybeans and smaller trade prospects for the next season, the Chicago maize futures fell sharply in May. By the fourth week of the month, September futures stood at around US$118 per tonne, some US$5 per tonne below the values quoted in March. Production in 2004 is currently forecast to increase, and supplies among major exporters have improved, but a recovery in Asia and lower exportable supplies in China and Brazil could keep prices firm into 2004/05.


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