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





Rice production

2004 cf
 (million tonnes)%
ASIA 538.3 555.7 3.2
AFRICA 18.1 18.2 0.6
North Africa6.26.20.4
Sub-Saharan Africa12.012.00.6
SOUTH AMERICA 19.8 22.7 14.5
NORTH AMERICA 9.0 9.9 9.2
EUROPE 3.2 3.3 2.4
OCEANIA 0.4 0.6 52.1
WORLD 591.6 613.2 3.7
Developing countries568.5587.93.4
Developed countries23.125.49.6
Source: FAO. Note: Totals computed from unrounded data.

Global paddy production could reach record high in 2004


FAO’s forecast of global paddy production in 2004 has been raised marginally since the April report, taking it to an all-time high of 613 million tonnes, almost 22 million tonnes more than in 2003. The figure is still highly tentative, since most northern hemisphere countries, which account for the bulk of world production, are just planting their main crops.

Larger 2004 crops in the southern hemisphere and equatorial belt


In the southern hemisphere and along the equatorial belt, harvesting of the 2004 main paddy crops is virtually complete, with excellent results generally reported. In Asia, growing conditions have been favourable in Malaysia and in Indonesia, with the latter set to achieve the government production target of 53.1 million tonnes, or 2.5 percent over last year. By contrast, in Sri Lanka, paddy production is expected to dip, as low and erratic rainfall severely impaired the main Maha crop and may also hinder the second, irrigated Yala crop currently at the planting stage. In southern Africa, production is anticipated to fall in Madagascar, reflecting the effects of cyclones Elita and Gafilo. In Mozambique, rice production is estimated to decline markedly due to a late arrival of rainfall. In South America, most countries are reporting sizeable production gains, rising prices having stimulated expansion in areas, while generally favourable growing conditions have boosted yields. Bumper crops are forecast to be harvested in Argentina, Brazil and Uruguay. By contrast, in Peru, severe drought may cause production to fall by 15 percent. In Guyana, the outlook for the main crop, currently at the harvest stage, has also deteriorated due to persistent excessive precipitation. Production in Australia is expected to rise sharply from last year’s drought-reduced level, despite a poor start of the season.

Production to surge in the northern hemisphere, assuming normal weather conditions

Most northern hemisphere countries have started planting their main 2004 crops. In Asia, Bangladesh, which harvested a record crop of 39.9 million tonnes in 2003, is expected to increase production further this year, especially if the Government confirms larger subsidies on fertilizer and seeds. Cambodia, which also produced a record output in 2003, may experience some reduction in 2004, as yields return to normal levels. In China , the Government has launched several measures to reverse the falling trend in production of the past four years: re-instatement of protective prices for the early and late rice crops, designation of specialized grain areas, and a reduction in fiscal pressure on farmers. These measures together with higher market prices are expected to boost production by 7 percent to 177.2 million tonnes. In India, planting of the main Kharif crop has already started following an early arrival of monsoon rains. Assuming a normal monsoon rainfall pattern, the country is forecast to harvest 136 million tonnes, 4 million tonnes more than last season. Production in Japan may partially recover from last year’s low levels. In the Philippines, support from the Government should sustain growth in 2004, despite possible delays in planting, due to dry weather. High prices are expected to boost production in Pakistan and Thailand. The Republic of Korea may also post a modest recovery in production, in spite of a reduction in official procurement prices. A small contraction is foreseen in Myanmar and, according to the official production target, in Viet Nam.

In Africa, production in Egypt is forecast to remain at a high 6.2 million tonnes. In most of western Africa, increased production is anticipated, fostered by the propagation of high yielding varieties and by reduced competition from higher priced imports. In Central America and the Caribbean, prospects are positive in Costa Rica, Cuba and Mexico. In North America, the season is well underway in the United States, where output is now forecast at 9.9 million tonnes, 10 percent above 2003. Production in Europe is expected to increase marginally, according to increased planting intentions among the EU rice producers.

International trade in rice set to fall in 2004, a reflection of tight export supplies


The forecast for international rice trade in calendar 2004 has been raised slightly since the previous report to 25.7 million tonnes, which would still be 2.3 million tonnes less than in 2003. The upward revision to the global exports forecast is mainly on account of larger expected sales by China and the United States, which have more than offset a reduction for Myanmar. Exports by China (mainland) are now forecast at 1.7 million tonnes, up from earlier expectations, but still much less than in 2003. Likewise, despite an upward revision to the forecast of exports by the United States to 3.3 million tonnes, sales by the country would still be some 500 000 tonnes short of the 2003 level. Myanmar is anticipated to ship a mere 300 000 tonnes reflecting a prevailing export ban. Similarly, sales by India are expected to be sharply reduced by export restrictions and are now forecast at just 2.5 million tonnes compared to 4.4 million tonnes in 2003; they could fall even further unless restrictions are lifted. Increased shipments are expected from Viet Nam , while those from Pakistan are unlikely to change much from the previous year. In Thailand, recent sales of rice from Government stocks should help the country reach the 8.5 million tonne official export target. Among other major exporters, Egypt, Argentina, Uruguay are also expected to make larger rice deliveries this year.

Regarding imports, the forecast for China (mainland) has been lowered to 800 000 tonnes since the last report, following reported releases of rice from state-owned reserves onto the market. However, this level of imports would still be three times higher than last year’s. In Bangladesh, following a further upward revision to last season’s production estimate, the import forecast has been cut by one-third to 400 000 tonnes, down from 1.6 million tonnes in 2003. In Indonesia, improved production prospects have also led to the lowering of the country’s import forecast, by 500 000 tonnes to 1.5 million tonnes, or only half the level in 2003. The reduction further reflects the import ban recently extended to July 2004. By contrast, the forecast of imports by the Philippines has been raised to 950 000 tonnes, close to last year’s level, reflecting the high level of purchases already committed this year by the National Food Agency (NFA) and the announcement that the unused portion of the farmers’ import rights will be covered by the NFA or by private traders. Larger imports are also forecast in Sri Lanka, because of reduced output in 2004. Iraq , the Islamic Republic of Iran and Saudi Arabia are also expected to import more than previously thought.

Overall rice imports to Africa are set to fall somewhat compared with last year’s. Much of the decline would be on account of Nigeria, where shipments might drop to 1.3 million tonnes, following a tightening of controls against illegal rice inflows. Higher world prices could also prompt a reduction in imports by Kenya, Senegal, South Africa and Tanzania. By contrast, imports by Côte d’Ivoire are anticipated to rise. In Egypt, the Government recently declared it would purchase 100 000 tonnes of rice and announced a cut in the rice import duty from 20 percent to 1 percent. In Latin America and the Caribbean, overall imports are forecast to decline this year, with some increase in shipments to the Dominican Republic and Peru more than offset by a reduction for Brazil. In the rest of the world, purchases by the United States should remain close to last year, while the enlargement of the EU to include ten new members resulted in a new import estimate of 880 000 tonnes in 2004 for the enlarged EU-25, up from 674 000 tonnes in 2003 for the EU-15.

Global stocks expected to keep falling


The forecast of world rice inventories by the close of seasons ending in 2004 has been raised to 103.4 million tonnes, 1.7 million tonnes up from April, largely due to an adjustment for Indonesia, but still 11 percent down from the previous year. The bulk of the annual contraction is expected in China, where stocks are now forecast to fall more than expected to about 61 million tonnes, 12.5 million tonnes down from their opening level. The reduced figure follows a revision to the country’s pattern of rice utilization since the early 1980’s. Among other major exporters, rice inventories are set to fall in Thailand and in the United States, while export restrictions should help India and Myanmar rebuild their reserves somewhat.

There is considerable uncertainty regarding the level of stocks by the close of the new 2004/05 crop year. Based on expectations of only a moderate recovery in global production in 2004, and of steady growth in world rice utilization, global inventories could fall by another 4 million tonnes. China is likely to account again for much of the drop: even with the substantial increase in production forecast in 2004, output will not cover the expected rise in requirements, especially if the country refrains from large imports. Stocks in Thailand and Viet Nam could also fall, while smaller imports could lead to depletion of stocks in Indonesia and the Philippines. By contrast, export restrictions should help India raise its inventories.

International prices


International rice prices have strengthened since December 2003, with the FAO All Rice Price Index (1998-2000=100) topping the 100 point threshold in March, for the first time since September 1999. The rise in the first 5 months of the year has been most pronounced for low and high quality Indica rice, major exporters such as India and Myanmar being absent from the market. In May, however, firmness in prices was tempered by the release of rice from government inventories in Thailand and China, which have, respectively, contributed to a rise in export supplies and a drop of import demand. As a result, high quality Thai 100% B rice was quoted at US$236 per tonne in May, US$12 per tonne less than in April.

In the coming months, prospects for world prices are still positive overall, with additional strength stemming from the surge of crude oil prices, the resulting rise in costs being passed along. Currently, however, the pressure for prices to rise appears to be slacking, especially after China gave clear signs that the country still has enough supplies to keep imports within reasonable bounds.


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