June 8, 2007

 

Corn, grains and cereals 2007 output to hit record highs

 

 

Global production of wheat and major other grains is seen to reach an all-time high this year with corn leading the pack due to the growing demand of alternative energy fuels, the United Nations Food and Agriculture Organization (FAO)  said on Thursday (June 7).

 

In its semi-annual Food Outlook, FAO has hoisted its 2007 global cereals output prediction to 2,125 million tonnes, including milled rice, up 6.2 percent from 2006 and surpassing the 2 percent growth in global demand seen at 2,114 million tonnes. 

 

Barely matching the rising demand from the existing total supplies and the emerging biofuels industry will make prices for most cereals high and volatile in 2007/2008 marketing season, according to FAO.

 

World output of corn-which is used for food, feed and bioethanol-is set to hit a record high of 770 million tonnes in 2007 after bumper crops have been gathered in South America and in the United States where the biggest areas since 1944 have been planted.

 

FAO quoting the US Agriculture Department said the US has some 86 million tonnes of corn to be used for ethanol production in 2007/2008, up 60 percent from the previous all-time high use last season.

 

World output of barley, the second most important coarse grain, is expected to rise nearly 6 percent to 148 million tonnes in 2007, and total coarse grains output would jump 9 percent to a record high of 1,073 million tonnes.

 

FAO said the expansion of corn acreage would be partially achieved at the expense of soybeans, whose output is expected to fall, dragging down the entire oilseeds output and boosting prices.

 

Total oilseeds production in 2007/2008 could fall short from the two previous seasons' levels as the anticipated rise in rapeseed production may not be sufficient to offset the prospective soybean decrease, the report said.

 

World wheat output forecast has been raised to under 630 million tonnes, up 5.2 percent from 2006 due to anticipated bigger harvests in Europe, North America and Asia, FAO said.

 

In Europe, total wheat crops are expected to rise 6 percent, despite hot and dry weather much of the spring.

 

In the United States, the 2007 harvest may be the biggest since its record in 2003, after crop damage from April winter turned out to be less than feared and the bulk of crops were in good to excellent conditions, according to FAO.

 

In Canada, a smaller wheat output is expected because farmers planned to switch to more profitable crops while Australia's winter wheat plantings are favourable after needed rains and exports have salvaged crops from last year's drought.

 

World total wheat consumption is seen rising to 632 million tonnes in 2007/08 with food use accounting for more than 70 percent of the total, but wheat use for biofuels has been growing in Canada and the European Union, FAO said.

 

Total wheat inventories by the close of the crop season in 2008 are seen at 147.5 million tonnes, down 1.5 million tonnes from already low opening levels, and thin stocks would contribute to wheat price volatility.

 

FAO foresees world meat output to rise by 2.3 percent to 283 million tonnes in 2007 due to the sector's recovery from disease outbreaks and the increasing demand from developing countries.

 

World milk output, on the other hand, is set to rise 2.7 percent to 675 million tonnes this year.