The UN Food and Agriculture Organisation (FAO) has published its food outlook preview. The report includes estimates of this year's world cereal output, which have deteriorated since the previous report in June as a result of the droughts that have ravaged Europe.
In effect, the FAO's forecast for global cereal output in 2003 has been revised downward to 1,865 million tonnes, some 48 million tonnes below the previous forecast. This is still however 33 million tonnes above last year's reduced level. Wheat output is now expected to fall to its lowest level since 1995, while the recovery anticipated for coarse grains after last year's below-average crop is not likely to be as large as expected earlier.
The reduced outlook means that the amount of global cereal carryover stocks that could be drawn down in 2003/04 will be much larger than expected earlier, and the overall global supply-and-demand situation will be much tighter.
World cereal trade in 2003/04 is forecast to fall to a five-year low of just 227.5 million tonnes, which would be 11 million tonnes, or 5 per cent, below the previous season. Reduced wheat shipments are expected to account for the bulk of the year-on-year decline in world cereal trade, following good crops in several importing countries.
International wheat prices increased over the past two months, mostly in response to a deterioration of prospects for the European crop. In the maize market, prices have remained under downward pressure due to good crop prospects in several major producing countries. International rice prices have risen steadily since May in response to tightening supplies in some major exporting countries.