California rice field
The FAO came out with an updated report on global cereal supplies.
World cereal production lower than anticipated earlier but still the third highest on record. Under the present forecast world cereal utilization would slightly exceed production in 2010/11. This would trigger a two percent contraction in world ending stocks from their 8-year-high opening levels and a small decline in world cereal stocks-to-use ratio. At 23 percent, however, the ratio would still remain well above the 19.5 percent low witnessed in the 2007/08 food crisis period.
Note that the FAO's cereal category includes wheat, rice, barley, maize, rye, oats, millets, etc.
As for the wheat situation, as of now, there is no cause for alarm:
Wheat markets remain tight but supplies are adequate. A further cut in the forecast for 2010 world wheat production since the previous update (4 August) puts this year’s wheat production at 646 million tonnes, down 5 percent from 2009 but still the third highest on record.... the forecast for world wheat ending stocks in 2011 has also been lowered, to 181 million tonnes, down 9 percent from their 8-year high opening level. The stock-to-use ratio for wheat in 20010/11 is projected to reach 27 percent, down 3 percentage points from the previous season but still 5 percentage points higher the 30-year low in 2007/08.
Corn, rice, and barley supplies are also looking adequate:
Coarse grains and rice markets are more balanced. World production of coarse grains is forecast to reach 1,125 million tonnes, down 6 million tonnes from the previous forecast in June but up marginally from 2009 and the second highest on record.
About rice, specifically:
Global supplies (production plus opening stocks) are also foreseen to be much more ample than they have been for the past three years.
But, prices of cereals are still higher:
The surge in wheat prices is the main driver for the jump in the FAO Food Price Index in August. The FAO Food Price Index (FFPI) averaged 176 points in August 2010, up 5 percent, or nearly 9 points from July. At this level, the FFPI stands at its highest level since September 2008 although still down 38 percent from its peak in June 2008.
Due to the recent marked run-up in wheat and other cereal prices, the FAO is calling a special meeting of its members:
The Director-General of the Food and Agriculture Organization of the United Nations has called for the one-day extraordinary Intersessional Meeting of the Intergovernmental Group on Grains and the Intergovernmental Group on Rice. This exceptional meeting is convened in response to the recent episode of disturbance in world cereal markets and the sudden increase in prices happening only two years after the 2007/08 food crisis.
All in all, this is yet another reassuring report. Still, there are reporters and investors out there who love to sensationalize this subject. That said, panic buying, hoarding, investor speculation, individual national inflation rates, currency valuations, infrastructure availability for transport and storage, and global macro economic health all impact regional food security.
source: FAO [pdf]