Cereal demand to exceed production

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Reuters Rome

GLOBAL supply of key cereal staple foods including wheat were to tighten sharply in the 2012/13 crop season as wheat and maize output felt the pinch of the worst US drought in more than 50 years, data from the UN food agency showed yesterday.

Separate data showed a slight easing of pressure on overall food prices yesterday, but the Food and Agriculture Organisation’s (FAO’s) global index stayed close to levels seen in the 2008 crisis.

The FAO’s November Food Outlook report pointed to continuing pressure on grains output in the current season following the severe weather conditions experienced in key producer regions.

Wheat production, which had also suffered heavily in the droughts in eastern Europe and central Asia, was seen falling 5.5 percent to 661 million tons, the agency said.

World cereals production was expected to fall 2.7 percent to 2.284 billion tons in the 2012/13 season, it said, trimming slightly its previous output forecast of 2.286 billion tons.

“This season’s world cereal supply and demand balance is proving much tighter than in 2011/12 with global production falling short of the projected demand and cereal stocks declining sharply,” the FAO said.

On wheat, it noted that levels were close to the average of the past five years and it said that plantings in major producing regions next year would match or even increase over levels seen this year, pointing to a rise in production next season.

World food prices eased slightly last month, largely because of weaker cereals and oils prices, the FAO said.

The agency said its monthly food price index declined to 213.5 points from 215.5 points the previous month, but stayed near 2008 levels.

It said reduced wheat trade activity and slowing demand for maize by livestock and industrial consumers during the month had reduced grains prices, while higher palm oil output in southeast Asia and weak import demand had reduced oil prices.

The FAO lifted its estimate of rice output but cut its forecast for coarse grains production and slightly lowered its estimate of global grains stocks at the end of the 2012/13 season to 497.4 million tons.

It said global cereal utilisation in 2012/13 would decline slightly from the utilisation in the previous season, but would still exceed production.

Declines in animal feed use and industrial maize for ethanol production in the US would cut utilisation of wheat and coarse grains but would be balanced by a 1.5 percent increase in rice consumption.

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