Record global grain crop ahead

Global foodgrain production is expected to rise by about 101 million tonnes, or 5.3 per cent, in 2004-05, to a record 1985 million tonnes, against 1884 million tonnes in 2003-04.

This is marginally higher than the anticipated 1984 million tonnes projected for the year. Abundant supplies should cool down the global trade in grain and stabilise international prices.

Prices of cereals, notably wheat and coarsegrains, have tended to weaken in the past three to four months and chances of any upward movement in the next year have diminished, said the latest report released by the United Nations Food and Agriculture Organisation (FAO) on the global food scenario.

The monthly average price of US wheat is reported to have dropped from $155 a tonne in August 2003 to $146 in August 2004.

Argentinean wheat, on the other hand, has fallen during the same period from $155 to $126 a tonne.

Global rice prices were bullish till May 2004 and softened since then. The FAO rice price index of all types, which has 1998-2000 as base year, has dropped by six points since May to 103 in August 2004.

Revised production estimates have put the likely wheat harvest in 2004-05 at 613 million tonnes, against 560 million tonnes in 2003-04 and 570 million tonnes in the previous year.

Output of rice (milled) is forecast to grow to 406 million tonnes from 390 million tonnes in 2003-04 and 382 million tonnes in 2002-03.

Production of coarse cereals is projected at 966 million tonnes in 2004-05, against 934 million tonnes in 2003-04 and 882 million tonnes a year earlier.

International trade in cereals is expected to drop to 228 million tonnes in 2004-05 from the previous season's 234 million tonnes.

"While reduced flows of wheat and coarse grains are forecast as a consequence of low demand from several importing countries with big domestic crops this year, for rice, tight supplies among major exporters is the primary cause of the anticipated decline in trade", the FAO said in its report.

Surplus production is expected to check, though not totally stop, the shrinkage in global cereal stocks that has been seen in the last four years.

FAO expects food inventories to be around 402 million tonnes by the end of the season. Stocks are now only about five million tonnes below the opening level of 407 million tonnes, representing the smallest decline in five years.

The decline in 2003-04 was 71 million tonnes from the 2002-03 level of 478 million tonnes.