World cereal stocks at the close of individual countries' crop years ending in
1996 are currently forecast at 267 million tons, some 49 million tons, or 15 percent, lower
than their opening levels and about 1 million tons more than reported in December. The
recent upward adjustment mainly reflects revisions of ending wheat stocks estimates in a
number of countries. By contrast, the forecast of coarse grain carryovers has been lowered
again largely due to a further reduction of maize inventories in the United States. Ending rice
stocks are also expected to be somewhat smaller than earlier reported. At 14-15 percent of
trend utilization in 1996/97, global cereal stocks at the end of 1995/96 crop years would
remain well below the 17-18 percent range that the FAO Secretariat considers as the
minimum necessary for world food security.
|Crop year ending in:|
| 1994 || 1995 |
| 1996 |
|(. . million tons . . )|
| 135.8 |
| 110.2 |
| 106.9 |
|| 337.3 || 315.8 ||267.3|
Global wheat stocks for crop years closing in 1996 are now put at 107 million
tons, somewhat more than reported in December but still the smallest volume since 1980/81.
Among developed countries, most of the decline this year is expected to occur in the United
States and the CIS. In the United States one indication of the tight export supply situation
was the recent authorization to release up to 1.5 million tons from the 4 million tons wheat
reserve to meet food aid needs of developing countries. In the EC, ending wheat stocks are
now expected to be above earlier forecasts due to constraints placed on exports. Ending
wheat stocks in eastern Europe have also been adjusted upward based on official revisions
of the supply and utilization balances in Bulgaria and Romania. By contrast, in Hungary,
forecasts of ending inventories have been lowered due to larger than expected exports
during the first half of the marketing season and in the CIS they are forecast to fall by some 3
million tons from last year, or 23 percent. Production shortfalls in the Russian Federation
during the past three years are estimated to have pushed wheat stocks down in the CIS to
one-third of those estimated for the early 1990s.
Aggregate ending wheat stocks of the developing countries in 1996 are forecast at 57
million tons, exceeding last year's volume by almost 4 million tons, or 7 percent. In Asia, two
successive bumper crops in India have boosted wheat supplies to record levels while in
China above-average crops and continued large imports are likely to increase that country's
inventories. In North Africa, by contrast, severe droughts in Morocco and Tunisia are
expected to reduce their combined stocks by two-fifths. Weather-reduced production is also
forecast to result in smaller wheat stocks in Latin America and the Caribbean, in particular in
World coarse grain carryovers are forecast at 104 million tons, 43 million tons,
or 30 percent, below their opening volume and about 2 million tons less than reported in
December. Most of the recent adjustment is due to developments in the United States where
a reduction in the estimate of the 1995 maize output, combined with a continuing strong
domestic and export demand, has led to a further lowering in ending stocks by 3 million tons
to 17 million tons, the lowest volume in over three decades. The forecast of EC coarse grain
inventories have been revised upwards since December, but they are still at their lowest level
since the early 1980s. Coarse grain stocks in the CIS are forecast to decline in 1996 by over
40 percent from last year's already reduced volume, largely due to production shortfalls and
in spite of the substantial reduction in livestock inventories during the past few years. Last
season's drought in South Africa has resulted in a reduction in maize stocks to one of the
lowest levels since the mid-1980s.
Aggregate coarse grain stocks held in the developing countries are forecast to fall by
over 4 million tons compared with last year, to 50 million tons. The bulk of the decrease is
expected in the Far East where rising demand for feed grains is outpacing production
increases. In Africa, most of the drawdown in coarse grain stocks is forecast for Morocco and
Zimbabwe to offset lower output. In Latin America and the Caribbean, most of the decline is
anticipated in Mexico due to smaller maize and sorghum crops harvested last year. Brazil, by
contrast, should be able to increase its coarse grain stocks due to the bumper maize crop in
Global rice stocks are forecast to decline further by 2.1 million tons to 56.6
million tons at the end of the marketing seasons in 1996, the third consecutive decrease.
Stocks in most of the major producing and consuming countries are likely to remain
depressed as the increase in output in 1995 is not expected to be sufficient to keep pace with
the projected growth in demand. Stocks in Bangladesh, China and India are likely to fall. By
contrast, following the large imports made in 1995, Indonesia's rice stocks at the close of the
1995/96 season (31 March 1996) are likely to end higher than a year ago. Among developed
countries, stocks in the United States are expected to fall steeply because of a reduced 1995
crop, while in Japan official indications are that rice inventories in 1996 will increase to 2.3
million tons, one of the highest volumes in recent years.
International wheat prices rose further during the months of December and
January. Depending on type and origin, wheat export prices in December were quoted at
between 2 to 7 percent above their November levels. Larger purchases together with some
weather concerns and the imposition of a wheat export tax by the EC were among the main
factors contributing to the December rise in prices. While by mid-January wheat prices from
most origins had fallen slightly compared to the beginning of the month, this decline was
temporary as the market began to take note of large purchases by China and rumours of
possible credits for the Russian Federation to buy wheat. Therefore, by the end of January,
United States wheat export prices (fob, Gulf) rose to U.S.$ 215 per ton, above prices reached
by the end of December and nearly 38 percent higher than a year earlier.
By the end of January, Chicago Board of Trade (CBOT) futures had also reacted
strongly to China's purchases and to reports of colder temperatures in the Great Plains that
threatened the production prospects for the United States wheat crop. Nearby March
contracts for soft red winter wheat rose to a new 15-year high of over U.S.$ 193 per ton.
Similarly, a new high was also set for July contracts at over U.S.$ 166. This indicates that
wheat export prices could be expected to remain strong well into the early months of the
|(. . U.S.$/ton . . . .)|
Rice, white 7/
Rice, broken 8/
SOURCE: FAO, see Appendix Table A.9
* Prices relate to the fourth week of the month.
1/ No. 2 Hard Winter (Ordinary Protein).
2/ February shipments.
3/ January shipments.
4/ April shipments.
5/ November shipments.
6/ Indicative traded prices; prices relate to the third week.
7/ 100% second grade, f.o.b. Bangkok.
8/ A1 super, f.o.b. Bangkok.
Maize export prices continued their steady rise in recent weeks
following very active trading in a persistently tight market. By late January, the price of
United States No 2 yellow maize (delivered Gulf ports) rose to over U.S.$ 163 per ton, a gain
of nearly U.S.$ 19 per ton since November, and almost U.S.$ 57 per ton or 54 percent above
a year earlier. This development is a result of reduced coarse grain supplies in general and
smaller barley and maize shipments from several exporters in particular.
While traders anticipate a significant increase in the United States' maize area, in 1996,
the futures market has continued to remain extremely volatile in recent weeks and CBOT
futures surged to new contract highs on several occasions. In early January, Chicago maize
futures for March contracts rose sharply and daily quotations increased to highs not seen
since 1983, reaching U.S.$ 147 per ton. This development was a result of continuous, strong
export activity, dry weather conditions in South America and the release of data on livestock
numbers in the United States, which confirmed that domestic feed reductions due to high
prices had not yet started. By mid-January, weather improvement in the southern
hemisphere resulted in a large sell-off by some funds and led to a temporary fall in the
futures market with the March price losing some U.S.$ 7 per ton. However, prices regained
some of their earlier losses and by the end of January they rose again to U.S.$ 145 per ton.
With spring planting in the northern hemisphere still some months away and supplies tight, a
continued volatile market and firm prices are likely possibilities in the next few months.
International rice prices were generally firm in January because of a tightening
of export supplies from Thailand. The FAO Export Price Index for Rice (1982-84=100), which
had fallen by one point to 142 in December, recovered in January to 143 points. Thai 100 B
was quoted at U.S.$ 380 per ton, U.S.$ 30 up from November. Thai A1 Super fluctuated, but
ended lower at U.S.$ 269 per ton, U.S.$ 3 less than in the corresponding week in the
previous month. Vietnamese rice prices remained high with its 5 percent brokens quoted at
about U.S.$ 330 per ton. The price of PR106, 10 percent brokens from India eased slightly
from its December level. United States long grain rice prices weakened substantially with US
No. 2 4 percent brokens quoted at about U.S.$ 396 per ton, U.S.$ 11 per ton down from in
December. California medium grain No. 1, 4 percent, however, remained firm.