The November issue of the FAO Food Outlook, a bi-annual international market report, released on Friday notes that fewer global cereal purchases coupled with reduced freights are very likely to bring down global expenditure on food this year.
Readjusting the forecasts for the worlds food import bill for 2012, FAO predicts a 10 percent decrease over the last year, with the annual global foodstuff import bill set to hover around the $1.14 trillion ton mark, a forecast that also heavily takes into account the lower than average food prices during the first 10 months of the year.
Averaging 213 points in October, the FAO Food Price Index also climbed down by one percent over last month, mainly off the back of depressed international prices of cereal and fats which successfully managed to offset the steady price hikes seen for other commodities including dairy and meat.
However, despite statistics showing a slight easing off of pressure from global food prices, FAOs global index continues to hover dangerously close to the price levels seen before the 2008 world food crisis which saw price spikes inducing riots across various countries.
Continuing pressure from grains remains a concern late into the year, as the Food Outlook reports that the balance between global cereal supply and demand is set to tighten significantly in 2012/13 as a consequence of the declines in maize and wheat outputs.
The years droughts in the key producing regions including the Black Sea has cut wheat output in Russia and Ukraine by as much as 30 percent, while the US corn belt disaster has been the primary factor behind the year-on-year decrease in global wheat production, which has now been forecast at 856 million tons, 3.2 percent down from last year.
Consequently, world cereal production figures are predicted to fall by 2.7 percent from last years record yield, leading to an overall 25 million ton contraction in global ending stocks.
However, rice continues to lend significant stability to cereals. With the seasons maize and wheat supplies being compromised with disappointing harvests, supplies for rice remain steady, and a build-up of inventories is in the works.
It is reported that the world rice production this year is likely to beat last seasons yield, helped enormously by excellent growing conditions. A steady global import demand coupled with more than ample export quality supplies are also expected to aid the expansion of international rice trade in 2012, which experts believe is going to cross over 37 million tons this year, with a further small increase being foreseen during 2013.
This global import demand for rice continues to originate this year from the Near East and Africa- in particular by Iran and Nigeria, as well as a surge in purchases by China which had managed to get into a position to become a net importer last year for the first time since 1996.
This year, the giant is set to purchase some two million tons of rice by the year-end, mainly fuelled by high prices at home, a factor which is going to play in the favour of importing nations such as Pakistan.