The forecast for cereal carryovers for crop years ending in 1997 has been lowered by 13 million tons since the previous report in April to 281 million tons, 24 million tons, or 9 percent, above their reduced opening volume. This months rather unexpected and significant reduction in the size of carryovers mainly reflects a major downward revision to the estimates of coarse grain inventories held in the United States which, according to the latest official reports, are smaller than earlier anticipated. Nevertheless, the combined cereal carryovers held by major exporters are still expected to increase for the first time in three years and to rise above their depleted opening levels, approaching about 36 percent of the world total, compared to 28 percent at the beginning of the season. By contrast, total cereal stocks held by other countries, particularly developing countries, are forecast to decline for the third consecutive year. Globally, the ratio of end-of season stocks to expected utilization in 1997/98 would be just over 15 percent, an improvement from 14 percent in the previous season, but still well below the 17-18 percent range the FAO Secretariat considers the minimum necessary to safeguard world food security.
WORLD CARRYOVER STOCKS OF CEREALS
|Crop year ending in:|
|1996||1997 estim.||1998 f'cast|
|(. . . . million tons . . . .)|
The forecast for wheat stocks for crop years ending in 1997 has been revised downwards to about 110 million tons, only 7 million tons higher than their reduced opening level and 6 million tons lower than was reported earlier. This months downward adjustments mainly reflect revisions to end-season carryovers in Australia, Canada, the EC and the United States. Most of this years likely increase in global cereal stocks would be a result of a large recovery in coarse grains inventories. While the forecast for world coarse grains stocks for crop years ending in 1997 has also been lowered this month, by 9 million tons to 118 million tons, they remain 17 million tons above their reduced opening levels. It is becoming increasingly evident that the decline in maize prices this season has boosted feed use, especially in the United States, and consequently resulted in much smaller carryovers than anticipated earlier in the season. FAO's forecast for global rice stocks at the end of the marketing seasons in 1997 has remained little changed at 52.6 million tons, 0.7 million tons below the 1996 level. Stocks in the developing countries are expected to decline, and most in India. By contrast, stocks in Japan are expected to increase to the highest level in the past decade.
Looking to the 1997/98 season, early indications suggest that cereal carryovers for crop years ending in 1998 could recover further, but only marginally to around 294 million tons, up 13 million tons, or 5 percent, from this year. This modest build-up primarily reflects the expectation that global cereal production in 1997 will slightly exceed the expected world utilization in 1997/98. Nevertheless, the resulting global stock-to-utilization ratio forecast at close to 16 percent, would again remain below the minimum safe level. The global cereal market would be closely balanced for wheat and ending stocks in 1997/98 are expected to remain low. Moreover, wheat inventories held by major exporters, which rose this season after a 4-year decline, are expected to fall back again. By contrast, coarse grain carryovers are projected to continue to expand significantly, particularly among the major exporters. This outcome, however, would very much depend on price developments next season as a fall in prices could trigger more intensive annual feeding and thus help utilization to rise faster than currently anticipated, with an ensuing downward adjustment in stocks.