Food Outlook 10/96

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After last year’s sharp decline in global cereal stock levels, end-of-season carryovers for crop years ending in 1997 are now forecast to increase to almost 285 million tons, i.e. 17 million tons, or 6 percent, above their reduced opening volume and some 8 million tons more than anticipated in September. The increase in this month’s forecast stems from higher production estimates for several major exporting countries and smaller international trade anticipated for 1996/97. This year’s anticipated stock build-up, which is the first in four years, is likely to be largely concentrated in the major exporting countries, which historically have provided the primary buffer against production shortfalls at the global level. At the current anticipated volume, the ratio of end-of- season stocks in 1997 to trend utilization in 1997/98 would edge close to 15.5 percent, but still remain below the 17-18 percent range the FAO Secretariat considers the minimum necessary to safeguard world food security. This implies that the moderate build-up of stocks during this season, while a welcome development, would be insufficient in the event of a substantial production shortfall in 1997.


Crop year ending in:

1995 1996 estim. 1997 f'cast

(. . . . million tons . . . .)
Wheat 117.2 107.8 111.6
Coarse grains 146.6 106.7 121.0
Rice (milled) 54.7 52.8 52.0
TOTAL 318.5 267.2 284.6
of which:

Main exporters 108.7 79.9 107.6
Others 209.7 187.3 177.1


A combination of bumper to record crops being harvested in several important grain producing regions and favourable production prospects in the southern hemisphere are expected to contribute to a notable improvement in the global cereal supply situation, a development also reflected in the decline in international prices for wheat and coarse grains in recent months. After falling for three successive years, cereal carryovers held by major cereal exporters are currently forecast to rise in 1996/97 to around 108 million tons, 28 million tons or 35 percent above their reduced opening level. By contrast, total cereal stocks held by all other countries together are anticipated to decline for the fourth consecutive year to 177 million tons, 10 million tons or 5 percent below 1995/96, mainly in the CIS.

Most of this year’s anticipated recovery in global cereal stocks would reflect larger inventories of coarse grains. The forecast for world coarse grain stocks for crop years ending in 1997 has been revised further upwards this month to 121 million tons, about 14 million tons, or 13 percent, above the low opening level and more than 3 million tons higher than anticipated in the previous report. The bulk of this month’s revision is on account of higher production forecasts among the major exporters, especially the United States and the EC, and to some extent Canada. Faced with lower export demand in the current season and despite an expected recovery in domestic feed use, carryovers of coarse grains in the United States are expected to increase by about 16 million tons to twice the volume of last year (Table A.7). Despite an anticipated increase in domestic use as well as in exports from the EC, coarse grain stocks in the EC are also likely to expand this year, to 17.5 million tons, about 1 million tons above their opening levels. By contrast, coarse grain inventories could be drawn down further in several other countries, including Brazil, Bulgaria, China, Colombia, Kazakhstan, Saudi Arabia and Ukraine, mainly on account of strong domestic demand, and in some cases, also production shortfalls.

The forecast for wheat stocks for crop years ending in 1997 has been revised upwards to 112 million tons, about 4 million tons above their reduced opening level and more than 1 million tons higher than anticipated in September. Major exporters would register the first increase in three years and are likely to end the season with wheat inventories of some 39 million tons, 8 million tons higher than at the start of the season and 2 million tons more than anticipated in September. By contrast, stocks held by other countries are expected to fall for the third consecutive year.

FAO's forecast for global rice stocks at the end of the marketing seasons in 1997 is 52 million tons, about 0.8 million tons lower than the 1996 level. This is a higher 1997 forecast than the figure held in the previous month to take into account the upward revision of estimates of the paddy crops that will be harvested this year.

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