The international cereal production is expected to decrease by 1% in 2006/07, the second year in a row. Wheat production is expected 589 million tonnes, 5% less the previous year and the lowest harvest for the last three years. Droughts in Australia, the USA and Canada are one reason, however China, Ukraine and other Black Sea neighbouring countries reported higher production in 2006/07. In the USA 110 ethanol production units were established, most are maize (corn) based others on sorghum. A doubling of the capacity in 2007 alone is projected. The EU cereal harvest was also reduced with droughts in Spain and Portugal. Prices are predicted to rise further, the export licences established in the Ukraine have driven European prices up and Ukrainian producers suffered because of price drops within their country, due to oversupply. The global oilseed production can currently match demand, however, it is expected that demand will grow faster than supply. The global oilseed production in 2006/07 of 395 million tonnes consisted mainly of soyabeans (227), oilseed rape (47), cotton (44), peanuts (32) and sunflowers (31 million tonnes). The soyabean area in Brazil is decreasing from 23 million ha to 21 million in 2006/07, however Argentina has increased the area by 0.5 to 15.7 million ha. Globally demand is again rising faster than supply and inelastic demand caused by government subsidies for bio-fuel will lead to less cereals being available for food consumption.
