Outlook and Policy Reports
Latest market assessments and short-term forecasts for wheat and coarse grains are available in FAO's bi-annual Food Outlook and bi-monthly Crop Prospects and Food Situation. The OECD-FAO Agricultural Outlook includes the medium-term projections for grains, and Basic Policies for Food Commodities reports on the main policy developments that have taken place during the periods under review.
June 2009 Food Outlook
Wheat
International wheat prices increased considerably in recent weeks. While a weakening United States Dollar has been a factor, changes in outside markets, including the recent recovery in oil prices and sharp gains in many other agricultural commodity markets, have also been supportive to wheat. In this context, the possibility for international wheat prices to strengthen further cannot be ruled out but, based on the current supply and demand indications, such a gain would be limited. Indications suggest that 2009 will witness another large global wheat harvest, second only to last year’s record, which is a positive development from the world supply and global food security perspectives. In fact, stocks in the new season are likely to remain unchanged from their opening level with world production closely matching demand. While the global economic slow down may have little direct implications for wheat consumption, international trade in wheat is expected to contract significantly. This decline would primarily reflect the expected increase in production in several wheat importing countries which could lessen their imports.
Coarse grains
International prices rose sharply in recent weeks, supported by production shortfalls in South America and outside factors, in particular the surge in soybeans and renewed strength in crude oil prices. Tightening export supplies of coarse grains and reduced feed wheat availability are likely to sustain prices in the new season, but markets remain vulnerable to unfavourable macroeconomic developments and factors influencing demand negatively. The global economic downturn is expected to depress feed demand while the growth in the industrial use of coarse grains for biofuels may also be less pronounced than in the previous two or three seasons. The forecast drop in production in 2009, coupled with an anticipated increase in utilization, albeit much smaller than in recent years, is expected to result in a decline in inventories. World trade in 2009/10 is forecast to change little compared with 2008/09, remaining well below the record in 2007/08.
April 2009 Crop Prospects and Food Situation
High food prices persist in developing countries despite an improved global cereal supply situation and sharp decline in international prices. This is affecting access to food of large numbers of low-income vulnerable populations.
Wheat and Coarse Grains Policies: 2003-2004
Conclusions
The review demonstrates that, in most countries, grains policies have remained geared towards reducing government interventions and promoting a more market-oriented environment. However, international price developments and production shortfalls, mostly driven by unfavourable weather conditions, encouraged some countries to resume market intervention which, in several cases, also implied reverting to more protectionist trade and price measures.
With respect to production policies, the use of producer support prices generally declined, in line with the trend towards domestic market liberalization and less price-distorting policy stances. Nevertheless, several countries, especially from the developing world, continued to rely on guaranteed prices to sustain production, reflecting the importance of grains in national food security and also their lack of budgetary resources. In developed countries, on the other hand, governments relied increasingly on income support measures, particularly those categorized as "non-, or minimally distorting" policies in the WTO agreements, thus exempt from reduction commitments. In a number of countries, direct assistance to grain farmers was provided in the form of input subsidies and credit at preferential terms. Similarly, several governments pursued their efforts to increase grain production by bringing additional land into cultivation or promoting a wider use of high-yielding hybrid varieties.
With regard to consumption, marketing and stocks policies, most countries aimed at keeping their involvement to a minimum, so as not to interfere with market forces. Many countries continued with their efforts to enhance their grain marketing systems, by investing more in infrastructure, like storage facilities and ports, and by letting the private sector to expand its role in the supply chain. However, unfavourable weather conditions caused supply problems and forced many governments to intervene to contain price rises. This was especially the case in Europe where a sharp decline in production resulted in several countries releasing grains from state reserves to protect consumers from price escalations.
As for trade policy developments, in most cases, interventions by governments represented temporary adjustments within the same policy framework - mainly to stabilize domestic markets. While some countries also continued with their reforms in preparation of their WTO accession, in many cases, these policy directions were disrupted by internal market fundamentals. In fact, inadequate grain supplies prompted several countries to resort to different types of border measures (such as lowering import duties, administering import quotas, introducing export restrictions) in order to improve availabilities and control prices. In the meantime, with stalled multilateral trade negotiations under the WTO umbrella, the review period also witnessed a continued proliferation of bilateral and regional trade agreements, with many of them involving grains.
