ISSN 0251-1959 Food O utlook

1 F ood Outlook BIANNUAL REPORT ON GLOBAL food MARKETS issn 0251-1959 October 2016 ACKNOWLEDGEMENTSThe designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the food and Agriculture Organization of the United Nations (FAO) concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The mention of specific companies or products of manufacturers, whether or not these have been patented, does not imply that these have been endorsed or recommended by FAO in preference to others of a similar nature that are not : 0251-1959 (print) issn 1560-8182 (Online) FAO 2016 FAO encourages the use, reproduction and dissemination of material in this information product. Except where otherwise indicated, material may be copied, downloaded and printed for private study, research and teaching purposes, or for use in non-commercial products or services, provided that appropriate acknowledgement of FAO as the source and copyright holder is given and that FAO s endorsement of users views, products or services is not implied in any requests for translation and adaptation rights, and for resale and other commercial use rights should be made via or addressed to information products are available on the FAO website ( ) and can be purchased through credits: FAO/Pius EkpeiMorguefileThe food Outlook report is a product of the FAO Trade and Markets Division.

2 This report is prepared under the overall guidance of Boubaker Ben-Belhassen, Director, and Abdolreza Abbassian, Senior Economist. It is written by a team of economists, whose names and email contacts appear under their respective market summary contributions. The report benefited from research support by many staff, namely, Andrea Alesiani, David Bedford, Claudio Cerquiglini, Julie Claro, Grace Karumathy, Lavinia Lucarelli, David Mancini, Emanuele Marocco, Marco Milo and the fisheries statistical thanks go to Claudio Cerquiglini for preparing the charts and statistical tables and to Valentina Banti for her administrative support. Additionally, the team is grateful to Concepci n Calpe and Nancy Hart for their valuable inputs and editorial rice production is predicted to expand in 2016 for the first time in three years, reaching a new record. In the absence of substantial sales, good crop prospects in the Northern Hemisphere weigh on international prices, with early expectations pointing to import demand remaining subdued in 2017.

3 RICEG lobal production to rebound in 2016, largely on anticipation of a record output in the United States. However, world stocks could decline somewhat, led by drawdowns in China, Brazil and South Africa. Large export availabilities are likely to keep international prices under downward pressure. COARSE GRAINSP reliminary forecasts for 2016/17 point to a relatively balanced global supply and demand situation for both meals and oils. Global oil and meal output is anticipated to rebound, underpinned by a recovery in soybean and palm oil production, while world demand is expected to keep growing at a steady is set to resume its status as one of the fastest expanding food crops, with its production rebounding from last year. The significant contraction in international trade so far in 2016 has exposed the high vulnerability of cassava non- food sectors to developments in markets in which cassava competes, especially maize.

4 CASSAVAO verall world meat production is predicted to remain at 320 million tonnes in 2016, with growth in many countries likely to be offset by a fall in output in China and Australia. Global meat trade is expected to recover, growing by percent to million tonnes. MEATNAIROBI DECISION ON EXPORT COMPETITIONR ecord world production and ample inventories keep international wheat prices at multiple-year lows. Large supplies of low quality wheat at competitive prices boost usage of wheat in feed rations. World trade in wheat in 2016/17 is likely to remain at record levels, with the Russian Federation emerging as the world s largest wheat exporter. WHEATG lobal fish production is forecast to grow moderately in 2016, underpinned by sustained gains in aquaculture.

5 After falling sharply in 2015 under the influence of a strong US dollar, the value of seafood trade is forecast to rebound this year. A tightening of supplies for major traded species and firming import demand may keep international seafood prices on the prices of dairy products have moved up since May, as ample export supplies were reduced. World milk production is expected to increase in 2016, even though unfavourable weather and reduced farmgate returns could constrain output in some countries. DAIRYrom a global perspective, food markets are expected to remain generally well balanced in 2016/17 amid large export availabilities and relatively low and more stable international prices, especially for cereals. The world food import bill is set to dip to a six-year low, while still remaining above the USD 1 trillion mark.

6 FHIGHLIGHTSD espite a general rise since the beginning of 2016, international food commodity prices have remained well below their peak values and are not projected to return to those high levels over the next decade (OECD/FAO 2016). In this context, the Decision agreed at the 10th WTO Ministerial Conference, held in Nairobi in December 2015 , to eliminate export subsidies can be important as it prevents members from reverting to their use. 120170220270320 SAJJMAMFJDNOS201520162002-2004=100 DairyVegetable oilsCerealsSugarMeatCONTENTS1-988-121122 -13274-8768-7311-67 Wheat 11 Coarse grains 18 Rice 26 Cassava 34 Oilcrops, oils and meals 40 Meat and meat products 48 Milk and milk products 54 Fish and fishery products 60 Grains 75 Rice 79 Oilcrops 83 Meat 86 Dairy 87 Futures markets 123 Ocean freight rates 126 food import bills 128 The FAO price indices 130 Nairobi Decision on export competition 69p69 Nairobi Decision on export competition MARKET SUMMARIES MARKET ASSESSMENTS SPECIAL FEATURE MAJOR POLICY DEVELOPMENTS STATISTICAL TABLES MARKET INDICATORSFAO food Commodity Price Indices (Sep 2015 - Sep 2016)

7 /Envatop130 Market summaries4 food OUTLOOKOCTOBER 2016 MARKETSUMMARIESM arket summaries1 food OUTLOOKOCTOBER 2016A positive outlook for global cereal production in 2016, together with abundant stocks, points to a generally comfortable supply and demand balance in 2016/17. In 2016, world cereal production is set to increase by percent, or 38 million tonnes, to hit a new record of 2 569 million tonnes, topping by at least million tonnes the previous peak of 2014. The current FAO forecast is million tonnes higher than projected in September, with most of the upward revisions concerning wheat and rice. World wheat production in 2016 is expected to exceed the 2015 record by percent, underpinned by output increases in India, the Russian Federation and the United States. Similarly, global rice production is forecast to grow by percent, to an all-time high, driven by recoveries in Asia, as well as by gains in Africa and North America.

8 Global production of coarse grains is set to rebound by percent from last year s reduced level, mostly reflecting prospects for record maize crops in the United States, Argentina and India. Global cereal utilization in 2016/17 is projected to expand by percent to 2 560 million tonnes, with feed usage, in particular, seen increasing by percent in 2016/17, amid large supplies of maize and low quality wheat. In spite of the projected year-on-year growth in total cereal utilization, the rise in world cereal production in 2016 would still result in an increase in the level of global cereal inventories. All would be in the form of wheat, as ending inventories of coarse grains and rice are anticipated to slide below their opening the world-stock-to-use ratios for wheat, coarse grains and rice are all estimated to decline somewhat in 2016/17, export availabilities are predicted to remain ample. This is particularly the case for coarse grains, which are likely to face a decline in import demand in 2016/17.

9 PRODUCTION, UTILIZATION AND STOCKSWORLD CEREAL MARKET AT A GLANCE 12014/152015/16 f castChange: 2016/17 over 2015 /16million tonnes%WORLD BALANCEP roduction2 utilization2 uses stocks3 AND DEMAND INDICATORSPer caput food consumption:World (kg/yr) (kg/yr) stock-to-use ratio (%) exporters stock-to-disappearance ratio (%) FAO CEREAL PRICE INDEX (2002-2004=100)201420152016 Jan-SepChange: Jan-Sep 2016 over Jan-Sep 2015 % 192 162 Rice in milled Trade refers to exports based on a July/June marketing season for wheat and coarse grains and on a January/December marketing season for May not equal the difference between supply and utilization due to differences in individual country marketing Low-Income food -Deficit tonnesMillion tonnesf castStocks (right axis)Production (left axis)Utilization (left axis)Market summaries2 food OUTLOOKOCTOBER 2016 The international wheat market in 2016/17 is likely to witness another season of abundant supplies, amid expectations of record production and rising stocks.

10 At million tonnes, FAO s current forecast for global wheat production in 2016 is percent above the 2015 all-time high, with increases in India, the Russian Federation and the United States accounting for most of the year-on-year growth. This forecast is million tonnes higher than the projection reported in September, largely reflecting improved crop prospects in Argentina and Australia. The forecast for world wheat trade (including wheat flour in wheat equivalent) in 2016/17 (July/June) has been raised by million tonnes since September, and now stands at 165 million tonnes, similar to the 2015 /16 record. On a regional basis, wheat imports in 2016/17 are predicted to remain close to the previous season s levels. However, on the export side, an emerging feature is the anticipated emergence of the Russian Federation as the world largest wheat exporter, taking over from the EU which is expected to occupy a distanced second place, almost on par with the United States.