Cereal price squeeze likely as global stocks fall

By staff reporter

- Last updated on GMT

Related tags: Agriculture, Fao

Pressure on prices for cereal ingredients will continue as revised
figures show a draw down in global cereal stocks in 2005.

Global output is expected to reach 1 984 million tonnes, a 3.4 per cent fall on 2004's record output, claims a new report from the UN's Food and Agriculture Organisation.

In terms of production and use, and heralding price squeezes, a cereal shortfall of 31 million tonnes is forecast. Cereal demand is expected to hit 2 015 million tonnes in 2005/06.

Total cereal food consumption is forecast at 983 million tonnes, up 1.3per cent from 2004/05, with most of the increase expected in developing countries.

Much of the anticipated decrease in global cereal output in 2005 is in developed countries, mainly reflecting smaller coarse grain crops.

The FAO reports that in the US, adverse hot and dry weather for maize was responsible for most of the downward adjustment for coarse grains. Drought also hit crops in parts of the European Union.

In developing countries, production is expected to be marginally up from 2004's decent level, largely linked to better crops in several Asiancountries.

On world cereal trade in 2005/06, the report highlights a 3 per cent fall on 2004/05 volumes, coming in at 236 million tonnes.

Meat boost​ Signs are that the meat industry is on the upward curve, recovering from a hammering in sales in the 1980s and 90s after animal disease scares.

Figures from the FAO suggest meat production is forecast to grow by 2.5 per cent in 2005, with nearly 80 per cent of the growth expected in developing countries.

Recovering consumption is supporting near record high meat prices.

Although market disruptions are likely as recent new outbreaks of avian influenza extend westwards from Asia into the Russian Federation.

Coffee, cocoa and tea​ After years of weak pricing in an oversupplied market, coffee prices are today well above 2004 levels.

"The market is being supported by the prospect of a decline in global production in 2005/06,"​ confirms the report.

International cocoa and tea prices remain depressed, reflecting surplus on the market and a stagnant consumption.

The FAO's Food Outlook report can be accessed online​.

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