World grain output to hit five-year high

ROME, Dec. 9 (UPI) -- Global grain output will likely reach its highest level in five years, the Food and Agriculture Organization said Thursday.

The Rome-based agency said worldwide grain and cereal production for 2004 is expected to reach 2.04 billion tons, up 2.4 percent from a year ago, which will likely lead to a "significant surplus" for the first time since 1999.

As a result, "global cereal reserves should increase by the end of the 2004/2005 seasons, a positive development for world food security after sharp (declines) in the past four years," the FAO said.

The agency expects a fall in cereal demand from the European Union, which would offset an increase in imports by developing countries, especially China.

As for prices of the grains, the FAO said wheat and coarse grains are broadly lower from a year ago, but the price of rice will remain well above 2003 levels.

"The larger grain availabilities and lower prices are essentially good news for developing countries," said Henri Josserand, the FAO's head of global information. But he pointed out higher oil prices could increase transport cost of food, thereby offsetting any price decrease of the grains.