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Food Outlook - June 2007

Year of publication 2007

Author Trade and Markets Division

Product type Book (stand-alone)

Series title Food Outlook

Series number 1560-8182|0251-1959

Edition 1

Synopsis (short abstract) World cereal production in 2007 is forecast to reach 2125 million tonnes, up 6 percent from the reduced level in 2006. It would exceed world cereal utilization in 2007/08 which is forecast to grow by 2 percent, to 2 114 million tonnes. As a result, world cereal stocks are likely to rise by 10 million tonnes to 413 million tonnes, still a very low level. World trade in cereals in 2007/08 is forecast at 247 million tonnes, down slightly from 2006/07. While the prospect of a strong recovery in glob al cereal production in 2007 is a positive development for the 2007/08 marketing season, total supplies in the new season would still be barely adequate to meet an anticipated rising demand, not only from the traditional food and feed sectors but in particular from the fast-growing biofuels industry. As a result, international prices for most cereals are likely to remain high and volatile again in 2007/08...

Language English

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    Agricultural commodity prices rose sharply in 2006 and, in some cases, are soaring at an even faster pace this year. The FAO food price index rose by 9 percent in 2006 compared to the previous year. In September 2007 it stood at 172 points, representing a year-on-year jump in value of roughly 37 percent. The surge in prices has been led primarily by dairy and grains, but prices of other commodities, with the exception of sugar, have also increased significantly...
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    The recent months saw commodity markets as a whole becoming more volatile with a steady upward trend in prices. In agricultural markets, some important food and feed commodities gained on supply tightness and stronger demand while in the energy complex and metals, the tighter supply and demand balance resulted in a steep increase in prices. Amid political uncertainties and surging energy prices, agricultural markets over the past year have also had to confront abnormal incidences of natural disa sters, ranging from devastating hurricanes to fast spreading animal diseases. Based on current indications, several agricultural commodities are likely to experience still more unstable months ahead and, in most instances, the fundamentals point to even further gains in prices. This eventuality seems strongest for cereals, as world cereal demand is forecast to surpass its supply in the new season and push down stocks to an uncomfortably low level. For sugar, while a further surge in prices from the current high levels could be considered as less probable, the main risk remains the continuing price volatility. For the oilseed complex, as well as meat and dairy, fundamentals at this point in time do not support a tightening in the markets and the near-term price prospects are more on the downside instead. Against this background of mixed outlook but generally firm prices, FAO is forecasting an increase of over 2 percent in the world food import bill in 2006 compared to 2005. The increase is expected to be strongest for cereals and sugar but smallest for meat. Given their higher share as importers of food and feed, the developing countries’ bill is forecast to grow by 3.5 percent while that of the Low Income Food Deficit Countries is forecast to jump by nearly 7 percent.
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