Even as the Reserve Bank of India has expressed concern over rising global food prices, a recent report by the Food and Agricultural Organisation says that prices of major cereals the world over is likely to stay firm in 2008 despite a record harvest because of tight maize supply in the US.
FAO, in its latest report on world food production and consumption, said cereal production, which includes wheat, coarse cereals and milled rice, is projected to rise by 2.8% in 2008 to a record 2,180 million tonne, with a bulk of the increase expected in wheat, which is forecast at 658 million tonne, representing a significant around 8.3% increase from 2007.
Coarse grains output is expected around the bumper level of last year but lower than earlier anticipated due to severe floods in the US, the world’s largest producer and exporter, FAO said. While rice output is tentatively forecast to increase slightly from last year’s good level.
Despite the anticipated increase in world output, cereal markets will remain tight in 2008/09 (July-June).
“Among major cereals, the maize situation remains a concern, given the large drop in output expected in the US, the world’s largest producer and exporter,” FAO’s report said.
Total cereal supply (carry-in stocks plus production) will barely exceed the anticipated utilisation and the world cereal reserves will recover only marginally from the current estimated 30-year low, the report said.
On region-wise growth in production, FAO said, in most countries, excluding the largest countries, China and India, the increase of the remaining countries is even lower and follows a decline in output in the previous year.
In Asia, the regional cereal output is set to remain close to last year’s good level, with bumper crops in China and India more than offsetting reductions expected in Pakistan and the Islamic Republic of Iran. Food insecurity is expected to increase in Afghanistan and Tajikistan.
On international trade in cereals, FAO said world trade in cereals in 2008/09 (July-June) is forecast to fall to close to 255 million tonne in 2008/09. “This represents a sharp decline of almost 12 million tonne, or 4%, from the record in 2007/08 mainly driven by lower trade in maize, because of an anticipated cut in imports from the EU,” FAO said.
World trade of wheat and rice are in fact forecast to increase in 2008/09 but their combined expansion may not be sufficient to offset the sharp expected decline in trade of coarse grains, it added.