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, Russia, 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 percent up on last year and 3
percent 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
percent 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 percent
from the previous year.