Cereal stocks to decline again in 2003/2004

But Cereal Production Is Forecast to Increase in Coming Season

ROME, 6 April (FAO) – The global cereal stocks will fall sharply again by the end of the 2003/2004 season, the Food and Agriculture Organization (FAO) said today.  The forecast came in the United Nations food agency's Food Outlook, a publication of the Global Information and Early Warning System.  Closing inventories are expected to be down by 89 million tonnes, or 18 per cent from their opening levels.

The anticipated sharp decline in cereal stocks from the previous season would be mainly due to China, although substantial reductions are also anticipated in India, Russian Federation, Ukraine and the European Union, mostly driven by the reductions in their 2003 cereal production, says the report.

Wheat and Rice Production Increases

However, the report says world cereal production in 2004 is forecast to increase to 2,130 million tonnes, some 2 per cent up on last year and 3 per cent above the average of the past five years, and that could help alleviate the tight global supply situation in the new 2004/2005 season.

The bulk of the cereals increase is expected in wheat, although rice output is also seen to rise significantly.  By contrast, coarse grains production could decrease marginally.

The report emphasizes, however, that this first forecast, especially for rice and coarse grains, is tentative and assumes normal weather conditions.

According to the report, “The increase in global cereal output forecast for 2004 would come as a very welcome development for global food supply.  The continued tightening of global cereal supplies for four successive years since 1999/2000 has brought international cereal prices under significant upward pressure in the past months.”

The report says, “Export prices for wheat, maize and rice all registered strong gains, reflecting tight market conditions.”  Because early prospects for wheat crops are favourable, some easing of wheat prices could be anticipated as the harvest approaches in the northern hemisphere in the coming months.

But, the report says that export prices for coarse grains and rice are unlikely to recede any time soon based on current supply-and-demand prospects.

Demand for Cereals to Remain Strong

World cereal utilization in 2003/2004 is forecast at 1,971 million tonnes, up 1 per cent from the previous year, but still slightly below the 10-year trend.  In spite of a significant increase in international cereal prices and major animal disease outbreaks in the second half of the season, global cereal utilization is expected to rise above the previous season because of strong demand for feed and industrial use, especially in the United States.

The report anticipates an increase in food aid costs per unit in view of generally tighter world cereal supplies, strong international prices and soaring ocean freight rates for 2003/2004.  It notes that total food aid shipments during this period "could decline slightly".

Less Food Assistance Made Available

The report adds that although world imports of cereals are forecast to decline by around 10 million tonnes in 2003/2004, higher prices and freight rates, and smaller food aid shipments, are expected to push up the overall cost of cereal imports by 2 per cent from the previous year.

FAO's Food Outlook will be published four times this year, in April, June, September and November.

For information, contact:  John Riddle, FAO Information Officer, e-mail:  John.Riddle@fao.org, tel:  (+39) 06 570 53259.  FAO online newsroom:  http://www.fao.org/newsroom/.  About this mailer:  media-office@fao.org

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