World cereal output revised downward in new UN report

World cereal production in 2005 is forecast at 1,984 million tonnes, slightly down since the previous forecast and 3.4 per cent less than 2004's record output, according to the latest United Nations Food and Agriculture Organization (FAO) report issued today.

“With this revision, the shortfall in production compared to the expected utilization in 2005/06 has grown, and a larger drawdown in global cereal stocks is now forecast,” the report, Food Outlook, says.

Most of the anticipated decrease is in developed countries, mainly reflecting smaller coarse grain crops. In the United States, adverse hot and dry weather for the maize crop was responsible for most of the downward adjustment for coarse grains. Drought also hit crops in parts of the European Union (EU).

In developing countries, production is expected to be up marginally from the good level of 2004, mostly on account of better crops in several Asian countries.

With regard to the meat industry, the market has been recovering from the wave of disruption caused by animal disease problems in 2004. Production is forecast to grow by 2.5 per cent, with nearly 80 percent of the growth expected in developing countries. Recovering consumption is supporting near record high meat prices.

But recent new outbreaks of bird flu extending westwards from Asia into Russia are raising concerns about potential market disruptions.

In other sectors, the report noted that coffee prices remain well above 2004 levels due to the prospect of a decline in global production as demand is seen to grow and exporting countries' stocks decline. But cocoa and tea prices remain depressed, reflecting surplus on the market and stagnant consumption.