(Xinhua)
Updated: 2008-04-12 09:14

ROME  -- The world cereal production in 2008 is expected to increase by 2.6 percent to a record 2,164 million tones with the bulk of the increase expected in wheat, which could ease the current tight global cereal supply, the UN Food and Agriculture Organization (FAO) said on Friday.

"Should the expected growth in 2008 production materialize, the current tight global cereal supply situation could ease in the new 2008/09 season," the report said.

But much will depend on the weather, FAO cautioned, recalling that at this time last year prospects for cereal production in 2007 were far better than the eventual outcome. Unfavorable climatic conditions devastated crops in Australia and reduced harvests in many other countries, particularly in Europe.

"Favorable climatic conditions will be even more critical in the new season because world cereal reserves are depleted," the report said.

According to FAO's forecast, world cereal stocks are expected to fall to a 25-year-low of 405 million tones in 2007/08, down 21 million tones, or 5 percent, from their already reduced level of the previous year.

"Any major shortfalls resulting from unfavorable weather, particularly in exporting countries, would prolong the current tight market situation, contribute to more price rallies and exacerbate the economic hardship already facing many countries," the report said.

Worldwide, 37 countries are currently facing food crises, according to the report.

International cereal prices have continued to rise sharply over the past two months, reflecting steady demand and depleted world reserves, the report said. Prices of rice increased the most following the imposition of new export restrictions by major exporting countries. By the end of March prices of wheat and rice were about double their levels of a year earlier, while those of maize were more than one-third higher, according to the report.