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Crop prospects and food situation - No. 3, Oct 2006

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HIGHLIGHTS CONTENTS

- The FAO's latest assessment shows that 40 countries are facing food emergencies and require external assistance. Among them, the most pressing humanitarian problem remains the crisis in the Darfur region of Sudan. The already precarious food supply situation may worsen if deteriorating security disrupts the main harvest due to start in the coming few weeks.

- Prospects for the 2006 world cereal harvest have deteriorated further since July. Exceptionally hot and dry weather is adversely affecting the wheat crops in Australia, Argentina and Brazil, while drier-than-normal weather in parts of South Asia is also raising some concern for the second 2006 paddy crop.

- Latest information confirms a tighter world cereal balance in 2006/07. Compared to earlier expectations, global cereal output is seen to be smaller, and to meet the anticipated utilization in 2006/07, world closing stocks are forecast to be lower. As a result, international prices of most cereals have increased sharply so far this year.

- Low supplies call for a closer monitoring of world food situation. Despite good crops in many of the Low-Income Food-Deficit Countries, this year's anticipated sharp fall in global stocks may lead to a more precarious situation next season should weather problems prevent an increase in world cereal production in 2007.

- The early outlook for the northern hemisphere's main winter cereal crops for harvest in 2007 is generally favourable so far. Planting is reported to be proceeding well in Europe, and in the United States, where a large expansion in wheat area is expected.

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