The UN Food and Agriculture Organisation has upped its forecasts for World cereal production once more, as many of the Earth's breadbasket regions continue to bask in more clement weather. According to FAO's latest estimates, total cereal production is forecast to increase by about 7 percent in 2013 compared to last year, helping to replenish global inventories and raising expectations for more stable markets in 2013/14.

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The organisation's quarterly Crop Prospects and Food Situation report suggests world wheat output in 2013 will reach 704 million tonnes, a year-on-year increase of 6.8 percent, which more than recoups the previous year's reduction and, if realised, would be the highest production level in history.

The increase would bring world cereal production to 2,479 million tonnes, also a new record level.

Worldwide, coarse grain production is also predicted to rise sharply; FAO's prediction of 1,275 million tonnes represents a 9.7 percent increase from 2012 levels. Although prospects for rice are still "very provisional," according to the UN farming bureau, 2013 production is forecast to grow by 1.9 percent to 500 million tonnes (milled equivalent).

Cereal prices, import forecasts

International prices of wheat declined slightly in June with the onset of the 2013 harvests in the Northern Hemisphere. By contrast, maize prices increased, supported by continued tight supplies. Export prices of rice were generally stable.

The results of the latest Food Price Index, released last week, show cereal prices dropped one percent over the past month, largely due to the "expectation of bumper crops this year". However, FAO analysts said, "Tight supplies are likely to continue supporting major coarse grains until the start of this year’s harvests in October."

Also covered in the Crop Prospects report are cereal import estimates. Imports of Low-Income Food-Deficit Countries for 2013/14 are predicted to rise by some 5 percent, compared to 2012/13, to meet growing demand. Egypt, Indonesia and Nigeria, in particular, are forecast to import larger volumes.

FAO also noted that food insecurity is rife in Syria, where wheat production has dropped well below average due to the continuing conflict and around 4 million people are estimated to be facing severe food insecurity. In Egypt, too, civil unrest and dwindling grain reserves are also cause for concern.

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