June 23, 2011

 

FAO cuts 2011 world grain output view, sees high prices

 

 

World cereals output in 2011 will be lower than expected with adverse weather hitting European and US crops, while output will undershoot consumption this year keeping prices volatile, the UN's food agency said on Tuesday (Jun 21).

 

The United Nations' Food and Agriculture Organisation (FAO) has cut its global grain estimates just as farm ministers from the G20 group of the world leading economies are meeting in France to work out ways to ease the threat of food shortages and rein in surging prices.

 

The FAO has cut its forecast of world cereals output to 2.302 billion tonnes in 2011 from an earlier estimate of 2.315 billion tonnes, driven by an official cut in US corn forecast and lower wheat and barley crops expected in the EU.

 

Earlier this month, the USDA cut its estimate for the US corn crop.

 

"With total cereal production in 2011 below the anticipated utilisation, international prices are likely to remain high, especially in the wheat and coarse grain markets," the FAO said in its Crop Prospects and Food Situation report.

 

"With grain inventories remaining at low levels, especially for corn, international grain prices are expected to stay not only high, but also volatile in the 2011-12 marketing season," the report added.

 

World cereal stocks at the end of 2011-12 season are expected to fall 0.6% below their opening levels to 486 million tonnes, the FAO said cutting its previous forecast of 494 million tonnes.

 

World cereals utilisation in the 2011-12 season is forecast to rise 1.2% from the previous season, down from a 2% rise in 2010-11 due to a slowdown in the pace of growth in demand for biofuels production, the FAO said.

 

It has cut its view on 2011 world wheat output to 671 million tonnes from an earlier estimate of 674 million tonnes after bad weather hit US and EU crops, but confirmed its forecast of strong output recovery in Russia after 2010 drought.

 

Libya, hit by months of civil unrest, is facing the risk of serious food shortages as its food stocks are being rapidly depleted and the country needs aid also to prevent food insecurity from spreading in North Africa, the FAO said.

 

Elsewhere the region, grain crop prospects are generally favourable with North Africa's aggregate wheat output expected to rise 14% to 18 million tonnes in 2011, it said.

 

As a result, grain imports from the region, which includes the world's biggest wheat importer Egypt, are likely to be lower in the 2011-12 marketing year than in 2010-11, it said.