HIGHLIGHTS

FAO’s forecast of the 2005 world cereal output has been revised slightly downward since the previous report in June. Although lower than the record of 2004, the global cereal crop is still expected to be above the average of the past five years. Output of wheat and coarse grains is set to decline but that of rice is forecast to reach a record high.

Most of the anticipated decrease in global cereal output in 2005 is in the developed countries, mainly reflecting smaller coarse grain crops. In developing countries, cereal production is expected marginally up from the good level of 2004.

At the forecast level, global cereal production would not be sufficient to cover expected utilization in marketing year 2005/06, pointing to a larger drawdown in global cereal stocks than earlier anticipated.

Contrary to earlier expectations, cereal inventories held by the major exporting countries are also forecast to decline. However, in the case of wheat and coarse grains, their share of the global totals would remain around the high levels of the previous season.

FAO’s latest forecast of the world cereal trade in 2005/06 indicates a decline from the 2004/05 volume, mainly reflecting good crops in some of the main importing countries.

Cereal food consumption in 2005/06 in developing countries is likely to keep pace with population growth, so the average per caput intake remains virtually unchanged from 2004/05.

Export prices of cereals have increased in the past months and are mostly somewhat above the levels of a year earlier.

Despite recent outbreaks of Avian Influenza (AI) extending westwards from Asia into Europe, international meat prices have been rising since the beginning of 2005 supported by a strong recovery in meat consumption from the previous wave of disruption caused by animal disease in 2004.

International coffee prices declined in recent months after having increased steadily in the past year. However, they are still well above their levels of a year ago. Import prices of banana picked-up in the first half of September in the United States. Negotiations on the rebinding of the EU tariff-quota system for banana imports continue after the WTO arbitration.

Ocean freight rates that declined during the first half of 2005 have increased sharply since late August.