WORLD CEREAL PRODUCTION, SUPPLIES, TRADE AND STOCKS

	1995/96	1996/97  estim.	1997/98  f'cast
	(. . . . . . million tons . . . . . .)
Production 1/	1 729	1 883	1 888
Wheat	547	590	606
Coarse grains	810	912	900
Rice (milled)	371	381	381
Supply 2/	2 049	2 144	2 173
Utilization	1 796	1 852	1 888
Trade 3/	205	198	202
Ending Stocks 4/	261	285	278

SOURCE: FAO
1/ Data refer to calendar year of the first year shown. Rice in milled equivalent.
2/ Production, plus opening stocks.
3/ July/June basis for wheat and coarse grains and calendar year for rice.
4/ Does not equal the difference between supply and utilization due to differences in individual country trade years.

Winter wheat planting of 1998 crops is already underway in the major northern hemisphere producers under generally favourable conditions. Early indications suggest that the area sown will remain similar to the previous year. However, the current strong El Niño weather phenomenon, due to peak in December, continues to give rise to concern in some important southern hemisphere producing areas where related weather extremes could have a serious impact on the 1998 harvests. In the current situation, with the margin of security provided by reserve stocks at a relatively low level, even a small deterioration in prospects for the 1998 crops, could lead to sharp price rises with serious consequences for the food security of many Low-Income FoodDeficit countries, particularly those which depend on imports to meet a large part of their food requirements. FAO’s latest assessment indicates that in total, 31 of these countries, compared to just 25 in 1996, continue to face food shortages of varying intensity (see box on page 4). Thus the situation calls for close monitoring in the months ahead.

As indicated above, FAO's latest forecast for world cereal production in 1997 now stands at a record 1 888 million tons (including rice in milled terms), 19 million tons up from the forecast in the previous report and marginally above the revised estimate of output in 1996. With most 1997 wheat harvests in the northern hemisphere, which account for the bulk of the world's wheat crop, drawing to a close, latest information points to a record global wheat output of 606 million tons in 1997, 16 million tons up from last year's good crop. Larger than expected crops have been gathered in several northern hemisphere countries, particularly in the CIS. In the southern hemisphere, despite earlier concern over the possible effect of El Niño, a good crop is now in prospect in Australia. However, in South America, where the 1997 wheat crop has also still to be gathered, possible El Niño-related rainfall could still have a major impact on harvest results there. For coarse grains, FAO's forecast for global output in 1997 has been increased, by 12 million tons, since the last report to 900 million tons, marginally below the 1996 crop but still above trend. The latest revision mostly reflects upward adjustments to the estimates for Europe, the CIS and Australia. World paddy rice production in 1997 is now forecast at 568 million tons (381 million tons in milled terms), 1 million tons up from the previous forecast, and virtually unchanged from the record crop last year. The latest revision is mostly due to an increase in China's expected production. The main paddy crops in the northern hemisphere are at an advanced stage of development and harvesting has started in some countries.

The 1997 cereal output estimates are now firmer, since the last report, as harvesting has advanced well over the past two months in several countries throughout the globe. However, the major wheat crops in the southern hemisphere and the bulk of the main paddy crop in Asia have still to be gathered. Thus, the above forecasts are still subject to revisions. As mentioned above, the El Niño phenomenon which has been observed since March this year, and, according to latest information is developing as predicted to peak in December, gives cause for concern in some areas of the globe. However, as the most intense impact of El Niño is expected from December this year to March 1998, it is the 1998 cereal crops in several countries of the southern hemisphere, currently being, or soon to be planted, that are most at risk.

FAO's forecast of world imports in cereals in 1997/98 (July/June) has been raised by 1 million tons, to about 202 million tons, since September. This would be about 4 million tons, or 2 percent above the revised estimate of the previous year's reduced volume. The latest revision reflects increased forecasts for coarse grains and rice imports which, in aggregate, would more than offset a major downward adjustment to that for wheat. The forecast of global wheat imports in 1997/98 has been lowered by 1 million tons since September to 93 million tons, which would be close to the revised estimate for 1996/97. Although the latest reduction reflects downward adjustments to the expected imports by some developing countries in Asia, total imports by the developing countries as a group are still expected to rise by 3 million tons from the previous year to about 76 million tons. By contrast, and offsetting this increase, aggregate imports by the developed countries are expected to fall by 3 million tons to 17 million tons. Global coarse grain imports in 1997/98 (July/June) are now forecast at 90 million tons, 1 million tons up from the September forecast and about 3 million tons above the previous year’s volume. Increased imports by the developing countries, which are forecast close to the 1995/96 level at about 59 million tons, accounts for all of this year’s anticipated expansion. The expected increase among these countries would more than offset a forecast reduction in coarse grains imports by the developed countries, for the sixth year in succession. With regard to rice, world imports in 1998 are tentatively forecast to increase to about 19 million tons, from the latest estimate of 18 million tons traded in 1997. Many of the major importing countries are expected to enter 1998 with lower stocks than a year earlier, while consumption is forecast to rise.

World utilization of cereals in 1997/98 is forecast at 1 888 million tons, nearly 2 percent or 36 million tons up from the previous year, and above the long-term trend (1984/85-1996/97) for the second consecutive year. Global food consumption of cereals in 1997/98 is forecast to rise by 1.5 percent to 950 million tons, with most of the increase expected in the developing countries. This expansion would be sufficient to maintain per caput food consumption at around the previous year’s level. Global feed use is expected to rise significantly, by about 3 percent, to 667 million tons. The increase in both in the developed and developing countries reflects good coarse grain crops and generally lower prices compared to the previous season.

Based on early indications, cereal food aid shipments in 1997/98 (July/June) are forecasts to remain close to the reduced 1996/97 level, now estimated at about 5 million tons. Last year’s cereal shipments fell for the fourth consecutive year, by some 2.8 million tons or 37 percent below the 1995/96 level. Of the total cereal shipments in 1996/97, LIFDCs received about 4 million tons, 2.6 million tons, or 39 percent, less than in 1995/96, which covered only 6.5 percent of these countries estimated total imports compared with about 13 percent in 1993/94. Shipments of non-cereals as food aid also fell in 1996 (January/December) and early indications point to a further reduction in 1997. Furthermore, as far as the obligation under the 1995 Food Aid Convention is concerned, total grain shipments (including pulses and derived products) in 1996/97 were close to the minimum commitments of 5.35 million tons (in wheat equivalent).

International export prices of most cereals remained firm or strengthened somewhat during September and early October, mainly reflecting active trading. By the third week of October, U.S. wheat No. 2 (Hard Red Winter, fob) was quoted at U.S.$ 158 per ton, up about U.S.$ 8 per ton from September but still some U.S.$ 22 per ton down from a year earlier. International maize prices have strengthened further, reflecting a fundamentally tight supply situation in the long-term, recent strong import demand and concerns over the 1998 production prospects for some southern hemisphere producers where output may be adversely affected by El Niño. By the third week of October, United States maize prices were quoted at around U.S.$ 123 per ton, up by about U.S.$ 11 per ton from September. By contrast, international rice prices remained depressed over the past weeks reflecting the arrival of new crop supplies in some Asian countries and limited new demand. The FAO Export Price Index for rice (1982-84=100) averaged 121 points during the first three weeks of October, 1 point below the previous month. In the same period, quotes for Thai 100B rice averaged U.S.$ 281 per ton, down U.S.$ 2 per ton from the preceding month, and about U.S.$ 40 per ton below the price a year earlier.

FAO's forecast for cereal stocks for crop years ending in 1998 has been lowered by 2 million tons since the last report to about 278 million tons, which would be about 2 percent below their opening levels with the change from the previous year amplified by an upward revision to last year's ending stocks. The bulk of this year's decrease in world cereal stocks is expected in coarse grains and rice. Although wheat inventories are forecast to increase for the second consecutive year, mostly among the importing countries, global wheat inventories will remain much below the levels of the early nineties. Globally, the ratio of end-of-season stocks in 1998 to trend utilization in 1998/99 is forecast at slightly below 15 percent, remaining well below the 17 to 18 percent range which the FAO Secretariat considers as the minimum necessary to safeguard world food security.