Prospects for world cereal output in 2003 have deteriorated since the previous report in June, following a widespread drought and heat-wave in Europe which reduced cereal yields. As a result, the FAO forecast for world cereal production in 2003 hasbeen sharply reduced by some 48 million tonnes to 1 865 million tonnes (including rice in milled equivalent), which represents just 33 million tonnes, or 1.8 percent, more cereal output than in the previous year. Thus, although at the same time there hasalso been a slight downward revision of the cereal utilization forecast for the current year, the amount of global cereal carryover stocks that could be drawn down in 2003/04 is now forecast to be about 95 million tonnes, much more than expected earlier. Based on the current forecasts for stocks and utilization, the global stocks-to-use ratio in 2003/04 would be about 19 percent, compared to almost 24 percent in the previous year, pointing to much tighter overall global supply-and-demand situation. However, lower import demand, coupled with the expected recovery in production in a number of major exporting countries, is still likely to mitigate the effect of smaller supplies on international prices.
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