FAO's quarterly Crop Prospects and Food Situation (CPFS) report published here forecast world cereal production will total 2,310 million tonnes this marketing season, 3 percent or 68 million tonnes higher than in 2010/11.
This was 3 million tonnes more than FAO forecast last month, largely because of improved expectations for wheat and rice crops.
The overall year-on-year increase includes a 4.6 percent (30 million tonnes) rise in global wheat production, a 3 percent (14 million tonnes) rise in the rice harvest and a 2.1 percent (24 million tonnes) hike for coarse grains. Total cereal utilization in 2011/12 is also forecasted to increase slightly at 2,302 million tonnes, 1.3 percent up from 2010/11.
But despite the expected production gains, the report warns that because of the slowdown in the global economic recovery and increased risks of recession, there is uncertainty as regards the impact on world food security. Worsening economic conditions could result in higher unemployment and lower incomes for the vulnerable and needy in the developing countries.
The report said the anticipated recovery in global cereal production combined with lower than earlier anticipated demand, including for ethanol, are contributing to a decline in prices.
In September, international prices of all cereals with the exception of rice fell sharply, driven by large export supplies from the Black Sea region and prospects for a weakening of demand.
FAO's monthly Food Price Index, also released yesterday, fell 2 percent in September compared to August, to 225 points, mostly on lower international prices of grains, sugar and oils. The Index is now 13 points below the peak of 238 reached in February 2011, but still higher than its September 2010 value of 195 points.
Global cereal stocks by the close of seasons in 2012 are forecast at 494 million tonnes, 7 million tonnes up from their opening level.
The increase would principally stem from a 10 million tonne build-up of world rice inventories, as wheat stocks are anticipated to grow only marginally and, in the case of coarse grains, to contract by 4 million tonnes to 161 million tonnes, the lowest level since 2007. Overall, the stock-to-use ratio for cereals is expected to remain low at around 21 percent.
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