Crop prospects and food situation - No. 1, Feb 2008

HIGHLIGHTS

- Early prospects point to the possibility of a significant increase in world cereal production in 2008, mainly following expansion of winter grain plantings in Europe and the United States coupled with generally satisfactory weather conditions.

- International prices of most cereals remain high and some are still on the increase. Continuing strong demand and dwindling stocks are providing the backdrop to a prevailing tight global cereal supply and demand situation in the current 2007/08 marketing season, keeping upward pressure on international markets.

- Cereal imports of the LIFDCs as a group in 2007/08 are forecast to decline by about 2 percent but as a result of soaring international cereal prices and freight rates, the cereal import bill is projected to rise by 35 percent for the second consecutive year. A higher increase is projected for Africa. Prices of basic food have increased in many countries across the world mostly affecting vulnerable populations.

- The aggregate level of world trade in cereals is expected to peak in 2007/08, driven mainly by a sharp rise in demand for coarse grains, especially for feed use in the EU.

- In North Africa, early prospects for the 2008 winter cereal crops are mixed but in Southern Africa the overall outlook is satisfactory, despite severe localized floods. In Eastern Africa, another bumper cereal crop was gathered in 2007 but poor secondary crops are been harvested in Kenya and Somalia.

- In Asia, early indications point to a 2008 aggregate wheat crop around last year's record level. However, in some central Asian countries, particularly China, Mongolia, Afghanistan and Tajikistan, extreme cold weather has caused crop and livestock losses. In South America overall prospects for the 2008 maize crop are satisfactory, but the outlook is uncertain in Argentina. In Bolivia, severe floods have resulted in crop and livestock losses.