Saturday, July 19, 2008

Surge in cereal production to bring food market relief

An estimated 2.8 percent increase in world cereal production in 2008 over the last year should contribute to "some improvement" in the global supply and demand situation, a UN agency said Friday.
A report by the Rome-based Food and Agriculture Organization (FAO) said that 2008 is set for a record cereal yield of 2.18 billion tonnes.
Most of the increase is in wheat following significant expansion in plantings in all regions while coarse grains output is expected around the bumper level of last year, but lower than earlier anticipated owing to severe floods in the US, the world's largest producer and exporter.
Rice is tentatively forecast to increase slightly from last year's good level, FAO said.
Despite the anticipated increase in world output, cereal markets will remain tight in 2008-09, according to FAO which said it expected total cereal supply (carry-in stocks plus production) to barely exceed the anticipated utilization.
World cereal reserves will recover only marginally from the current estimated 30-year low, FAO said.
International cereal prices remain at high levels with tight maize supply in the United States underpinning prices of major cereals.
Maize export prices climbed to new record levels in recent weeks, double their levels a year earlier, while wheat prices weakened only modestly, remaining about 40 percent higher than a year earlier.
After reaching a peak in May, rice export prices fell in June and early July reflecting greater export availability in main exporter countries. However, they were almost three times above the level of a year ago, FAO said.
Cereal production, in what are classified as Low-Income Food-Deficit Countries (LIFDCs), as a group, in 2008 is forecast to increase at a slow rate growth of just 1.2 percent.
Excluding the largest countries, China and India, the increase of the remaining countries is even lower and follows a decline in output in the previous year, the UN agency said.
In Southern Africa, the outcome of the recent main season cereal harvest was overall favourable with a recovery in production in South Africa and good crops in several other countries, but output fell well below last year.
In Eastern Africa, the outlook is unfavourable for the cereal harvests in several countries, including Ethiopia, Somalia and parts of Kenya and Uganda, FAO said.
In North Africa, Morocco's cereal production is expected to recover strongly from last year's drought-reduced level, but Tunisia is facing a smaller harvest, it added.
In Asia, the regional cereal output is set to remain close to last year's good level with bumper crops in China and India more than offsetting reductions expected in Pakistan and Iran. Food insecurity is expected to increase in Afghanistan and Tajikistan, FAO said.
In South America, harvesting of the main season coarse grain crops is underway and a record output is expected following larger plantings, in response to high international prices.
Prospects for the wheat crop are mixed; plantings increased in Brazil but policy and weather factors led to smaller plantings in Argentina.
FAO estimates that some 34 countries, including 21 in Africa, will require external assistance due to inadequate food supplies.

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