|Global Market Analysis|
FAO's forecast for world cereal production in 2009 now stands at 2 238 million tonnes (including rice in milled terms), confirming it as the second largest crop ever, and putting it just 2 percent below last year's record. Most of the reduction is among coarse grain and rice output, estimated to fall by 3 and 1.9 percent, respectively, while wheat production is seen fractionally below last year's record level. The reduction this year is largely due to smaller plantings, partly in response to generally lower cereal prices after the previous year's exceptionally high levels that prompted many farmers to bring extra land into production, but is also due to adverse weather conditions; most notably the drought in Argentina which has affected both the coarse grains and wheat crops.
An improved global supply situation and generally lower prices are expected to contribute to stronger growth in world cereal utilization in 2009/10, bringing the figure to 2 228 million tonnes, up 1.8 percent from last season. World food consumption of cereals, representing almost 47 percent of all cereal utilization, is forecast to keep pace with population growth and reach 1 045 million tonnes or around 153 kg of consumption per person per year.
Following a contraction in 2008/09, world feed utilization of cereals in 2009/10 is expected to expand by one percent and approach the prior season's level of around 769 million tonnes. The strongest expansion is forecast for the developing countries but slightly higher feed usage is also anticipated in the developed countries; led by wheat in the European Union and the Commonwealth of Independent States (CIS). The usage of coarse grains in animal feed, which represents over 80 percent of total cereal feed use, is forecast to reach 631 million tonnes, marginally higher than in the previous season with feed usage of major coarse grains in the developed countries remaining stagnant, following a 3.7 percent contraction witnessed in the previous season. Among other uses, the industrial use of cereals (mostly for the production of starch, sweeteners and biofuels) is likely to register relatively strong growth in 2009/10 but given the difficult global economic conditions, the expansion is expected to be less robust than in recent years.
Based on the latest estimates of cereal production and utilization, world cereal stocks by the close of seasons ending in 2010 are forecast to approach 510 million tonnes, the highest level since 2002. While the figure is 7 million tonnes less than the forecast published in June, it nonetheless represents an increase of around 4 million tonnes from the previous season, mostly on account of a continued rise in wheat stocks. At the current forecast level, the ratio of world cereal stocks to utilization, an important indicator for global food security, is put at 23 percent, virtually unchanged from the previous season's level and slightly higher than its five-year average.
World cereal trade in 2009/10 is forecast to reach 260 million tonnes, down 8 percent, or 23 million tonnes, from the record in 2008/09. The anticipated sharp contraction in world cereal trade is largely due to a fall in wheat transactions, following bumper crops in North Africa as well as strong production gains in several wheat importing countries of Asia. Global wheat trade is now forecast to reach 117 million tonnes, down 16 percent, or 22 million tonnes, from the previous season's record. International trade in coarse grains in 2009/10 is forecast to reach 112 million tonnes, down just 1.5 percent from the estimated level of last season but well below the record of almost 131 million tonnes registered in 2007/08. The early forecast for rice trade in 2010 stands at 31.2 million tonnes, 2.7 percent more than in 2009, sustained by prospects for larger imports by Asian countries. The increase is expected to be met by a surge of exports from Thailand but also China mainland, Myanmar and the Republic of Korea, compensating for lower sales from India and the other traditional suppliers.
The FAO Cereal Price Index averaged 170 points in November 2009, up 3 percent from October but down 38 percent from April 2008 when the index peaked to an all time high of 274 points. The near record 2009 cereal crop and a continuing improvement in the level of world cereal inventories kept cereal prices below levels of last year. However, recent weeks have witnessed a renewed strength in the prices of major cereals, mostly on the back of delays in maize harvesting in the United States, anticipation of a decline in winter wheat plantings and stronger import demand for rice than earlier anticipated. External developments have also been responsible, including a weakening of the United States Dollar and higher prices of soybeans coupled with stronger energy markets.
Table 1. World cereal market at a glance 1/
* January-November 2009
1/ Rice in milled equivalent
2/ Trade data refer to exports based on a July/June marketing season for wheat and coarse grains and on a January/December marketing season for rice.
3/ Low-Income Food Defecit Countries
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