Special announcement
As readers will hopefully appreciate, FAO is presenting a new version of one of its longest standing regular reports, Food Outlook. The new Food Outlook is a modied version of the old one, changed in structure as well as in content and coverage. It will be a biannual publication focusing on developments affecting world markets for food and feed commodities. The subtitle "Global Market Analysis" reflects its focus on developments in international commodity markets. Food Outlook maintains a close synergy with the newly established sister publication, Crop Prospects and Food Situation, particularly in regard to the close monitoring and coverage of cereals.
Behind the scene, the new Food Outlook is also a product of enhanced analysis using a quantitative approach to short-term market assessment and forecasts. This has been made possible by linking the various commodity markets through a Short-term Consistency Model (STCM), further details of which are included in this report. It is hoped that the combination of expert judgment and quantitative analysis will enhance the accuracy of FAO's feed commodities.
Market summaries
OVERVIEW
The recent months saw commodity markets as a whole becoming more volatile with a steady upward trend in prices. In agricultural markets, some important food and feed commodities gained on supply tightness and stronger demand while in the energy complex and metals, the tighter supply and demand balance resulted in a steep increase in prices. Amid political uncertainties and surging energy prices, agricultural markets over the past year have also had to confront abnormal incidences of natural disasters, ranging from devastating hurricanes to fast spreading animal diseases. Based on current indications, several agricultural commodities are likely to experience still more unstable months ahead and, in most instances, the fundamentals point to even further gains in prices. This eventuality seems strongest for cereals, as world cereal demand is forecast to surpass its supply in the new season and push down stocks to an uncomfortably low level. For sugar, while a further surge in prices from the current high levels could be considered as less probable, the main risk remains the continuing price volatility. For the oilseed complex, as well as meat and dairy, fundamentals at this point in time do not support a tightening in the markets and the near-term price prospects are more on the downside instead. Against this background of mixed outlook but generally rm prices, FAO is forecasting an increase of over 2 percent in the world food import bill in 2006 compared to 2005. The increase is expected to be strongest for cereals and sugar but smallest for meat. Given their higher share as importers of food and feed, the developing countries' bill is forecast to grow by 3.5 percent while that of the Low Income Food Deficit Countries is forecast to jump by nearly 7 percent.
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