Global cereal stocks will fall sharply again by the end of the 2003/2004 season, FAO said. The forecast came in the UN food agency's Food Outlook, a publication of the Global Information and Early Warning System.

Closing inventories are expected to be down by 89 million metric tons, or 18 percent from their opening levels.

The anticipated sharp decline in cereal stocks from the previous season would be mainly due to China, although substantial reductions are also anticipated in India, Russia, Ukraine and the European Union, mostly driven by the reductions in their 2003 cereal production, says the report.

Wheat and rice

However, the report says world cereal production in 2004 is forecast to increase to 2 130 million metric tons, some 2 percent up on last year and 3 percent above the average of the past five years and that could help alleviate the tight global supply situation in the new 2004/2005 season.

The bulk of the cereals increase is expected in wheat, although rice output is also seen to rise significantly. By contrast, coarse grains production could decrease marginally.

The report emphasizes, however, that this first forecast, especially for rice and coarse grains, is tentative and assumes normal weather conditions.