Highlights

The world cereal balance will tighten in 2006/07: the latest forecast for cereal production in 2006 continues to show a slight decrease in global output, while utilization is expected to grow significantly. With a recovery in feed use and an expansion of industrial uses, world stocks are expected to be drawn down sharply.


International prices of most cereals remained firm or rose further in recent months, supported by strong demand and tighter supply prospects.


In the Low-Income Food-Deficit Countries, as a group, a modest growth in cereal output is forecast in 2006, while their imports are expected to increase after the substantial decline of 2005/06.


In North Africa, cereal production recovered well from the drought-reduced crop of 2005.


In the eastern part of the Sahel, seasonal rains are late and spotty. The situation in Niger warrants very close monitoring.


In Eastern Africa, despite improved rains, emergency food assistance continues to be needed in pastoral areas of the Horn that were severely affected by drought in 2005. In Kenya, prospects for the current main cereal crop are favourable, but in Somalia, the outlook is poor and output is expected to be reduced for the third consecutive year.


In Southern Africa, much improved coarse grain harvests were gathered in most countries affected by drought last year, and total import requirements will be sharply reduced. However, output dropped sharply in South Africa reflecting a large reduction in plantings, and in Angola due to drought in major producing areas. In Zimbabwe, despite a significant recovery from last year, maize production remains well below requirements.


In Asia, above-average or bumper wheat crops were gathered in many countries. Early prospects for the main coarse grain and rice crops are generally favourable following a timely arrival of the monsoon in the main producing areas. Democratic People�s Republic of Korea, however, is still facing a large cereal deficit (see special feature). In Afghanistan, reduced precipitation this year has compromised the rainfed wheat crop.


In Central America and the Caribbean, the 2006 Atlantic hurricane season started on 1 June. Early forecasts indicate that this year the season will be again very active. In Mexico, another good wheat crop is in prospect.


In South America, harvesting of the 2006 main coarse grain crops is well advanced in southern parts. Preliminary estimates point to about-average output at the aggregate level; the sharp recovery in Brazil offsetting most of the reduction elsewhere.


In North America, a smaller wheat crop is being harvested in the United States because of reduced plantings and winter drought. In Europe, prospects are mixed with several larger crops expected in the EU but reductions in the Balkans and CIS countries.

�