Wheat prices hit record-high levels
5 October 2007, Rome – International wheat prices have increased sharply since June, hitting record highs in September in response to tightening world supplies, historically low levels
of stocks and sustained demand, according to FAO’s latest Crop Prospects and Food Situation report, issued today.
The combination of higher export prices and soaring freight rates is pushing up domestic prices of bread and other basic food in importing developing countries, hitting the group of Low-Income
Food-Deficit countries (LIFDCs) particularly hard and causing social unrest in some areas, the report said.
The total cereal import bill of the LIFDCs is forecast to increase considerably for the second consecutive year, reaching an all-time high of US$28 billion in 2007/08, up roughly 14 percent
from last year’s already high level. Overall, developing countries are likely to spend a record US$52 billion on cereal imports, according to the report.
Maize prices are also well above last year’s levels, despite the bumper crop materializing this year, mainly reflecting continued strong demand from the biofuel industry, the report said.
In the United States, the world’s largest producer of maize, output is forecast to increase 26 percent from 2006 to an all-time high. According to the report, record maize harvests are also
expected in South America, with production in Brazil increasing by one-quarter from last year’s good level, and in Mexico, the largest producer in Central America.
Cereal stocks – particularly wheat – at historic lows
“On current indications, this year’s cereal harvest would only just meet expected utilization levels in the coming year, which means that stocks will not be replenished,” said Paul Racionzer
from FAO’s Global Information and Early Warning System. “We anticipate cereal stocks to remain at very low levels for the foreseeable future.”
The report calls the situation of wheat stocks “worrying”. Sustained demand amid insufficient increase in production this year, especially among the major exporting countries, which are also
among the leading stock holders, is expected to result in at least a 14 million tonne drawdown of world inventories to 143 million tonnes, the lowest in 25 years.
Floods cause localized losses, but rains benefit crop prospects overall
Severe floods in recent months in Asia and Western and Eastern Africa resulted in loss of life, population displacement and damage to infrastructure, adversely affecting the livelihood of
millions of people. However, in spite of serious localized crop losses, the abundant rains benefited developing crops and overall prospects for the 2007 cereal harvests are favourable in these
regions, the report said.
In the Caribbean, an active 2007 hurricane season resulted in infrastructure damage and severe losses of food and cash crops in countries throughout the region.