FAO/GIEWS - Food Outlook No.1 - February 2002 p. 2

Cereals

^1/ The signs refer only to the direction of change from the previous marketing season
^2/ Tentative.

After a further upward revision since the last report in December, world cereal output in 2001 is now estimated at 1 880 million tonnes (including rice in milled equivalent), 22 million tonnes, or 1.2 percent, above the previous year's level. At the same time, cereal utilization in 2001/02 is expected to grow strongly at 1.7 percent. As a result, the outlook is still for a significant drawdown in world cereal reserves by the close of the 2001/02 seasons. Despite this, however, wheat and coarse grain prices on international markets are likely to remain stagnant, largely because of exceptional large surpluses in a number of countries other than the major exporters.

Prospects for 2002 production

Early indications for the 2002 wheat crops point to a likely increase in global output following larger plantings in some areas and the expectation of a general recovery of yields in many countries after droughts last year. In the northern hemisphere, winter wheat plantings slipped back again slightly in the United States but this could yet be offset if spring plantings were to increase. In Canada, where the crop has still to be planted this spring, a recovery from last year's exceptionally low drought-affected output is expected. In Asia, early indications point to larger crops in several countries, a reflection of generally satisfactory weather conditions compared to dryness in the previous year. In Europe, a larger crop is anticipated in the EC following a significant increase in the winter plantings, but elsewhere in the region latest information would indicate little change in the size of this year's crops. In North Africa, early prospects for the winter wheat crops are mixed: conditions are generally favourable in Algeria and Egypt, but less so in Morocco and Tunisia.

In the southern hemisphere, the 2002 paddy season is already well advanced, with the harvest due to commence in March. Prospects for the crops remain uncertain, but weather conditions have been less than ideal so far, with drought in January in some important producing countries in South America, excessive rains in Indonesia and Malaysia and lower than normal temperatures since the start of the season in Australia. Growing conditions in Southern Africa have been favourable.

Production in 2001

World wheat production in 2001 is now estimated at 582 million tonnes, marginally down from the forecast in December, and virtually unchanged from the previous year's level. For coarse grains, the provisional estimate of output in 2001 stands at 902 million tonnes, 2 million tonnes up since the last report, and now 27 million tonnes, or 3 percent up from 2000. Harvesting of the 2001 main paddy crops is nearing conclusion in the major rice producing countries in the northern hemisphere, some of which are in the process of planting their second paddy crop. FAO has adjusted its estimate of 2001 global paddy production upward to 591 million tonnes (395 million tonnes in milled equivalent). Nevertheless, at the revised level, output would be 7 million tonnes below the level in 2000, with much of the contraction concentrated in Asia.

Trade in 2001/02

The forecast of world cereal trade in 2001/02 has been raised by 3 million tonnes since the previous report to 236 million tonnes, mostly due to larger purchases by the EC. At this level, global cereal imports would be 2 million tonnes above the previous year's level. Imports of wheat and rice are forecast to increase by 4 million tonnes and 1 million tonnes respectively, more than offsetting a decline of 2 million tonnes expected for coarse grains. While aggregate cereal imports by the developing countries are expected to change little compared to the previous season, imports by the Low-Income Food-Deficit countries could rise, mostly in Asia.

World Cereal Production, Supplies, Trade and Stocks

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 (second year shown) for rice.
4/ May not equal the difference between supply and utilization due to differences in individual country marketing years.

Utilization in 2001/02

World cereal utilization by the close of the seasons ending in 2002 is forecast at 1 935 million tonnes, down 7 million tonnes since the previous report, mostly a result of downward adjustments to feed utilization numbers in the CIS countries. Nevertheless, world cereal utilization in 2001/02 would still show an annual growth of around 1.7 percent, significantly higher than the 0.5 percent rate in the previous season. Continuing weak cereal prices in international markets and large cereal supplies are among the main factors for the faster anticipated expansion in overall cereal usage. In fact, the growth in total feed use is now forecast to surpass the anticipated global food consumption, rising by almost 2 percent over the previous season.

Stocks in 2002

FAO's forecast for global cereal stocks for crop years ending in 2002 has been raised by 34 million tonnes since the previous report, to 587 million tonnes, reflecting information of larger than expected stock build-ups in several major producing countries. However, at this forecast level, global cereal inventories would remain 55 million tonnes, or 8 percent, below the previous season's level. World wheat stocks by the close of the seasons ending in 2002 are now forecast at 211 million tonnes, up 11 million tonnes from the previous forecast but still 26 million tonnes down from the preceding season. The aggregate end-of-season inventories of the major exporters are now also forecast to be somewhat larger than earlier anticipated but, nevertheless, at 41 million tonnes, would still be down from the previous year. The forecast for world coarse grain inventories for crop years ending in 2002 has also been raised since the last report, by 10 million tonnes, to 224 million tonnes, but this remains 16 million tonnes below the opening level. Of the total, the major exporters are forecast to hold 72 million tonnes, 9 million tonnes lower than their volume in the previous year. The forecast for global rice stocks has been raised since the previous report, and now stands at about 151 million tonnes, but this still represents a decline of 14 million tonnes from the previous year.

Prices

International wheat prices remain largely unchanged since the last report and are mostly below those of the previous season. Several potentially supportive features of the market such as the stagnation in production in 2001 and the rise in world wheat imports have failed to offset the price-weakening effect of exceptional large surpluses in some countries other than the major exporters. In January, US wheat No. 2 (HRW, fob) averaged US$128 per tonne, unchanged from November 2001, and US$6 per tonne below January 2001. International maize prices weakened slightly since November but, on the whole, the maize market has displayed similar characteristics to that for wheat given their very similar supply/demand conditions. In January, the US maize export quotations for US No.2 Yellow averaged US$92 per tonne, up US$2 from November but still below the corresponding period last year. International rice prices showed some signs of recovery over the past two months, and the FAO Export Price Index for Rice (1982-84=100) averaged 90 points in January, 2 points up from November. However, rice prices continued to show significantly divergent trends according to type and origin.