Highlights

Prospects for the 2005 global cereal crop remain favourable. Latest production forecasts indicate a decline from the record output of 2004 but not as large as anticipated earlier.

FAO’s first forecast of world cereal trade in the 2005/06 marketing season points to a slight decrease from the revised 2004/05 level, mainly due to lower wheat import demand.

Global cereal utilization is expected to increase somewhat in 2005/06, which coupled with the forecast decrease in production will result in a drawdown in global cereal stocks after a substantial build-up in 2004/05. However, stocks held by major exporting countries are anticipated to increase.

Prices of cereals remain well below their levels of a year earlier. This mainly reflects large exportable supplies of wheat and coarse grains and for rice, seasonal downward pressure from the 2004 secondary crops harvests.

World milk output is forecast to grow in 2005, mainly in developing countries, but prices remain high due to lower supplies from major exporting countries.

A record 2004/05 oilcrop harvest is limiting the potential for increases in prices for oilseeds and meals, while prices for oils and fats are expected to remain firm due to strong demand and below average stock levels.

Another good world pulse crop is expected in 2005, although somewhat lower than last year’s bumper harvest.

World sugar production is forecast to expand in 2004/05 but to fall short of growing consumption. As a result, prices of sugar remain at high levels.

Coffee prices that started to recover in late 2004 surged in the first quarter of 2005 and by late May were almost 60 percent higher than a year ago.

Prices of fertilizers have continued to increase in the past months. Urea quotations by late May were between 74 and 90 percent above the corresponding period last year.

 

Corrigendum - Please note that in the previous issue of Food Outlook (No.1, April 2005) reference was erroneously made to the Arab Gulf when the intention was to refer to the Persian Gulf. We apologize for this error.