September 9, 2011

Global cereal output to reach 2,307 million tonnes

The forecast of world cereal production for this year is 2,307 million tonnes, 3% more than last year.

However, this latest forecast is nearly six million tonnes lower than the previous forecast published in July, said Food and Agriculture Organisation (FAO). Among the major cereals, the corn supply situation is a cause for concern following downward revisions to corn crop prospects in the US, the world's largest corn producer, due to continued hot weather in July and August.

Average wheat prices were also up 9% in August, given the strong demand for feed wheat and shrinking supplies of high quality wheat. Nonetheless, world wheat production is forecast to increase by 4.3% or 28 million tonnes, four million tonnes below the 2009 record.
 

World coarse grain production is still heading for a record level of 1,147.5 million tonnes, up 2.4% or 27 million tonnes from 2010 in spite of lowered corn production prospects in the US, the world s largest corn producer, according to FAO.

Total cereal utilisation in 2011/12 is forecast to increase by 1.4%, almost matching anticipated 2011 production. As a result, global cereal inventories by the close of seasons in 2012 are likely to remain close to their already low opening levels. Only rice stocks are expected to increase significantly supported by record production. Wheat inventories are likely to decline to their lowest level since 2009 and world stocks of coarse grains are also forecast to plunge with corn inventories falling to 124 million tonnes, their lowest level since 2007. Given the tight global supply and demand balance for coarse grains, its stocks to use ratio is forecast to fall to a historical low of 13.4%.

World food prices remained virtually unchanged between July and August 2011, according to the FAO Food Price Index published Thursday (Sep 8). The Index averaged 231 points last month compared to 232 points in July. It was 26% higher than August 2010 but seven points below its all time high of 238 points in February 2011. Within the index, cereals prices rose, reflecting the fact that although cereal production is expected to increase, it will not do so by offsetting the additional demand. Thus, stocks continue to be low and prices continue to be high and volatile.

The FAO Cereal Price Index averaged 253 points in August, up 2.2% or five points from July and 36% higher than August 2010. However, the firmer cereal prices were largely offset by declines in international prices of most other commodities included in the Food Price Index. Cereal price raise stems from a supply and demand balance that remains tight despite the anticipated increase in production, the report noted.

Meanwhile, the FAO Dairy Price Index averaged 221 points in August, significantly down from 228 points in July and 232 points in June but still 14% higher than the same period last year. The FAO Meat Price Index averaged 181 points in August up 1% from July.