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News : Global Economy Last Updated: Aug 1, 2013 - 8:34 AM

World cereal production to hit record in 2013; Asia awash with rice
By Michael Hennigan, Finfacts founder and editor
Jul 31, 2013 - 6:26 AM

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World cereal production is forecast to hit a record high in 2013 while Asia is awash with rice as a result of both favourable weather and public supports for rice farmers. World total cereal production is forecast to increase by about 7% in 2013 compared to last year, helping to replenish global inventories and raise expectations for more stable markets in 2013/14, according to the latest issue of the United Nations' Food and Agriculture Organisation's (FAO) quarterly Crop Prospects and Food Situation report. The increase would bring world cereal production to 2 479m tonnes, a new record level.

FAO now puts world wheat output in 2013 at 704m tonnes, an increase of 6.8%, which more than recoups the previous year's reduction and represents the highest level in history. World production of coarse grains in 2013 is now forecast by FAO at about 1 275m tonnes, up sharply (9.7%) from 2012.

World rice production in 2013 is forecast to expand by 1.9% to 500m tonnes (milled equivalent) although prospects are still very provisional.

The Wall Street Journal says Thailand, a top exporter, is trying to sell some of its own 17m ton rice surplus, the result of a subsidy program in which the government bought rice from farmers at above-market prices. India, the world's biggest exporter, is expecting near-record harvests in a couple of months, as is Pakistan. Meanwhile, demand from large importers, including the Philippines and Nigeria, is dropping.

"If Thailand is successful in offloading its rice, it will certainly put downward pressure on prices," said Darren Cooper, a senior economist with the International Grains Council.

The council's index of global rice prices fell to 200 on Friday, its lowest since September 2010 and down almost 5% this year. However, prices vary widely from country to country, because rice is largely sold where it is produced. Just 8% is traded internationally, compared with about 20% for wheat and 36% for soybeans.

The Journal adds that consumer groups have raised concerns that some long-stored rice may not be safe because of high levels of methyl bromide, which is used on crops in storage to prevent infestation by rice weevils and other insects. Rice has a shelf life of at least three years, if kept away from moisture, though even when dry it can be eaten by rats and insects if not properly protected.

The FAO report focuses on developments affecting the food security situation of developing countries. In its review of food insecurity hotspots, the report highlights the following countries, among others:

In Syria, 2013 wheat production dropped significantly below average due to the escalating civil conflict leading to disruptions in farming activities. Livestock sector has been severely affected. About 4m people are estimated to be facing severe food insecurity.

In Egypt, civil unrest and dwindling foreign exchange reserves raise serious food security concerns.

In Central Africa, serious food insecurity conditions prevail due to escalating conflict affecting about 8.4m people in Central African Republic and Democratic Republic of the Congo.

In West Africa, the overall food situation is favourable in most parts of the Sahel following an above-average 2012 cereal harvest. However, a large number of people are still affected by conflict and the lingering effects of the 2011/12 food crisis.

In East Africa, although household food security has improved in most countries, serious concerns remain in conflict areas  in Somalia, the Sudan, and South Sudan, with 1m, 4.3m and 1.2m food insecure people, respectively.

In Madagascar, damage caused by locusts and a cyclone is expected to reduce crop production in 2013, causing increased hunger, especially in the southern and western regions of the country.

In the Democratic People's Republic of Korea (North Korea), despite improved cereal harvest of the 2012 main season and the near normal outcome of the ongoing harvest of the 2013 early season, chronic food insecurity exists. An estimated 2.8m vulnerable people require food assistance until the next harvest in October.

In total, there are 34 countries requiring external food assistance, of which 27 countries are in Africa.

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