FAO/GIEWS - Food Outlook No.4, September1998

CARRYOVER STOCKS

The forecast for global cereal stocks by the close of the seasons ending in 1999 has been raised to 330 million tonnes, up 2 million tonnes from the previous report. This would be 1 million tonnes above the revised opening level, which has also been raised by over 7 million tonnes, mainly reflecting upward revisions to rice inventories in China and to coarse grain carryovers in the United States and the EC. Although cereal stocks in China and the CIS are forecast to decline sharply this season, the anticipated increase in 1998 grain production among the major exporting countries combined with the expected slower growth in global feed demand would offset these reductions. The largest increase is expected in maize and barley inventories while wheat carryovers would remain close to their opening levels and rice stocks are likely to decline to the lowest volume in three years. At the current forecast level, the ratio of global cereal carryovers to trend utilization in 1999/2000 would be 17.3 percent, close to that in the previous year and within the 17 to 18 percent range which the FAO Secretariat considers as the minimum necessary to safeguard world food security.

WORLD CARRYOVER STOCKS OF CEREALS

SOURCE: FAO

World stocks of wheat for crop years ending in 1999 are currently put at about 135 million tonnes, 1 million tonnes down from the forecast in the previous report. At this level, world wheat inventories would be virtually unchanged from the previous year. Among the major exporting countries, wheat stocks are forecast to increase significantly, by almost 7 million tonnes, to 47 million tonnes. The increase in aggregate production of the major exporting countries would more than offset the expected increase in their exports and domestic utilization, resulting in a stock build-up. The largest expansion is expected in the EC, where this year’s bumper crop, for the third year in succession, would result in a further rise in stocks, to over 15 million tonnes, up 3 million tonnes, or 24 percent, from their already high opening levels. The expansion in wheat carryovers in the EC also represents a significant build-up in its intervention stocks, for the third consecutive year. Wheat carryover stocks are also forecast to increase in the United States despite this month’s small downward revision following the Government’s announcement in August to increase food aid donations. At almost 23 million tonnes, inventories in the United States would be some 3 million tonnes, or 16 percent, more than their opening levels and the highest since 1991. Elsewhere, the expected sharp fall in output in the Russian Federation could result in a contraction of their stocks by as much as 3.5 million tonnes. Similarly, lower production could also result in a draw-down in wheat stocks in some other major producing countries such as China, India and the Ukraine, while in several other countries, especially in North Africa and eastern Europe, this year’s larger crops are likely to result in some build-up of inventories.

Global coarse grain inventories for crop years ending in 1999 are forecast to rise for the third consecutive year to nearly 142 million tonnes, 3 million tonnes less than the previous report but 4 million tonnes above their opening levels. This month’s downward revisions mainly result from further reductions in the forecast for stocks in China and the Russian Federation. In China, despite this year’s satisfactory production prospects for coarse grains, maize stocks which were already reduced substantially last year, are again anticipated to decline, by some 3 million tonnes, due to further growth in domestic utilization. The expected drop, by more than 3 million tonnes, in stocks held in the Russian Federation, however, would be mainly on account of the anticipated 30 percent contraction in its coarse grain production. By contrast, total coarse grain stocks held by major exporters are seen to rise to 86 million tonnes, up 12 million tonnes from their opening level to their highest level in 6 years, mainly in the United States and in the EC. In the United States, the world’s largest maize producer, total coarse grain stocks could reach 53 million tonnes, up 11 million tonnes from their opening level and the highest since 1993, as a result of this year’s expected above-average crop. In the EC, total coarse grain stocks are likely to rise by nearly 1.5 million tonnes to over 27 million tonnes, almost half of this being in intervention stocks. During the previous season, total coarse grain intervention in the EC rose sharply from a 20-year low level of less than 2 million tonnes at the start of the season to almost 11 million tonnes; of this total, over 7 million tonnes consisted of barley. Despite the forecast increase in barley and rye exports during the 1998/99 marketing season, the EC’s intervention stocks may rise further given the favourable crop prospects for this season.

Rice stocks for the marketing seasons ending in 1998 have been adjusted upwards by about 3 million tonnes from the previous report to 56.5 million tonnes, almost unchanged from their opening levels. The adjustment is largely the result of an upward revision in the 1997 paddy output figures for China (Mainland) and India. However, stocks are projected to decline in Indonesia, the Philippines and Brazil where the El Niño-related weather problems affected the 1997 and/or 1998 paddy output. A reduction in stocks is also expected in Pakistan due to the anticipated increase in exports. FAO is tentatively forecasting a 7 percent reduction in global rice stocks at the end of the marketing seasons in 1999 to 52.6 million tonnes. The decline is mostly attributed to flood-related problems that are expected to adversely affect output in several Asian countries, including China (Mainland).