June 20, 2006

  

FAO says grain prices would rise while meat prices fall 

 

 

The world's grain prices are likely to rise in the coming months while prices for livestock products and oilseeds weaken, the UN's Food & Agriculture Organization (FAO) said.

 

Global demand for grains would exceed expected supplies in the coming crop year, forcing much lower stocks, FAO said in its publication Food Outlook.

 

Wheat stocks are also expected to fall to the lowest level in 30 years.

 

However, in the meat, dairy and oilseed sector, supplies are not expected to tighten.

 

In a market with mixed outlook but generally firm prices, FAO is forecasting an increase of over 2 percent in the world food import 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, imports to developing countries is forecasted to grow by 3.5 percent.

 

Prices have strengthened in recent months in global coarse grain markets because of tighter exports, demand from the growing ethanol sector and a potential recovery in feed use, FAO said.

 

World coarse grain production in 2006 is forecasted to decline by 13 million tonnes, but trade is would remain unchanged at around 105 million tonnes, the agency added.

 

On international meat markets, animal diseases like bird flu, mad cow disease and foot-and-mouth disease would still dominate. The main issues would be how consumers react to these diseases and whether their governments respond by restricting trade, the FAO said. 

 

Global meat markets have again been unsettled by animal disease concerns in 2006, FAO said. Consumer responses to bird flu, together with disease-related bans on North American beef and South American red meat exports, would have a big impact on meat markets in 2006, FAO said.

 

Global meat consumption this year is expected to show the slowest growth in more than 20 years. The FAO noted that governments are increasingly restricting the meat trade

 

These conditions are expected to limit global meat production to 272 million tonnes for 2006/07, the FAO said.