FAO/GIEWS - Food Outlook No.4 - September 1999 p. 5

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Global cereal stocks to contract in 1999/2000

Although a contraction in world cereal stocks is likely, the reduction would be largely limited to wheat and barley stocks and is likely to be significantly less than was anticipated earlier, following improved production prospects in several regions. The forecast for world cereal stocks by the close of the seasons ending in 2000 has been raised to 323 million tonnes, up 8 million tonnes from the previous report, but still 13 million tonnes, or 4 percent, below their opening level. At the current forecast level, the ratio of global cereal carryovers to trend utilization in 2000/2001 would be 16.9 percent, pointing to a small improvement from the last report and approaching closer to the 17 to 18 percent range which the FAO Secretariat considers as the minimum necessary to safeguard world food security. The moderate build-up of stocks in the major exporting countries in recent years, which represent an important buffer against any global production shortfall, is also expected to represent at least 45 percent of the global total, which is close to the previous year and significantly above the average level registered in more recent years.

World Cereal Carryovers and Stocks/Utilization Ratio

A sharp decline in wheat stocks is the primary reason for most of the anticipated contraction in world cereal stocks. World stocks of wheat for national crop years ending in 2000 are currently put at nearly 132 million tonnes, down 11 million tonnes, or 8 percent, below opening levels. However, this forecast would be some 9 million tonnes more than was anticipated earlier given the improved production outlook in several major producing countries. Most of this year's anticipated decline in wheat stocks is expected to occur in Asia and Europe. In Asia, the overall balance points to a reduction of about 4 million tonnes in wheat stocks. The drought-reduced production in several countries, including the Islamic Republic of Iran, Syria and Turkey, is expected to result in a large draw down of their inventories, while a forecast decline of 8 million tonnes in China's production could also lead to a large decrease in its ending stocks.

Share of World Cereal Stocks Held by major exporters

    Wheat stocks in Europe are forecast to decrease by about 5 million tonnes compared to opening levels. In the Russian Federation, following last year's drastic decline in production and the likelihood of yet another poor crop this year, wheat inventories are forecast to be fall to the lows of around 3 million tonnes, one million tonne smaller than last year. A likely decline in production in Bulgaria and Hungary is also expected to result in smaller stocks, despite the possibility of curtailed exports. In the EC, lower production combined with higher export prospects is expected to result in a draw down of 2.5 million tonnes in ending stocks. However, wheat stocks are still relatively large and could prove to be a financial burden, particularly as far as the intervention storage costs are concerned, if the world price continues to stay below the EC intervention price. Among other regions, smaller ending stocks are expected in Africa, especially in Morocco and South Africa, mostly on account of reduced output. By contrast, most countries in the Latin American and Caribbean region are expected to end their respective marketing seasons without any major variation in their carryover stocks.

Global stocks of coarse grains for crop years ending in 2000 are forecast to reach 137 million tonnes, down 4 million tonnes from their high opening levels and 3 million tonnes lower than was reported in June. Among the individual coarse grains, a forecast reduction in global barley and rye stocks could offset an expected rise in world maize inventories. The expected depletion of global barley stocks, by about 6 million tonnes, to nearly 24 million tonnes, would be mostly on account of smaller stocks in the EC, Morocco, Turkey and the Russian Federation. In the EC, two years of consecutive decline in production and a rebound in barley and rye shipments are expected to result in a 7 million tonnes, or 33 percent, reduction in total coarse grains stocks, which would include a significant draw down of also the intervention stocks. While the drought would be mostly responsible for a likely decrease in barley stocks in Morocco and Turkey, poor crop prospects in the Russian Federation could also bring that country's ending coarse grains stocks to a low of less than 1 million tonnes, of which barley is estimated to count for only a half of that total. By contrast, global maize carryovers are expected to rise by about 5 million tonnes, from their already high opening levels to roughly 94 million tonnes, representing about two-thirds of the world total coarse grain reserve. Most of the build-up is expected in the United States while a recovery in Brazil's production could also result in higher ending stocks there.


Crop year ending in:
1999 estim.
2000 f'cast
(. . . . million tonnes . . . .)
Coarse grains
Rice (milled)
of which:
Main exporters

FAO is tentatively forecasting a 3 percent increase in global rice stocks at the end of the marketing seasons in the year 2000 to 54.5 million tonnes. The rise is mostly attributed to the expected record world production. Large increases are anticipated in the United States, India and Brazil. Rice stocks for the marketing seasons ending in 1999 are almost unchanged from the previous report. However, global stocks would still be about 2 million tonnes below their opening levels. Most of the decline in stocks for the marketing seasons ending in 1999 is accounted for by Japan and China (Mainland). Japan's policy of limiting domestic production aims at reducing the country's stocks over time. The anticipated decline in China's stocks is attributed to domestic supply problems associated with the floods that affected the country in 1998-99. Smaller carry-over inventories in China are not expected to lift international prices as the reduction is being outweighed by a 17 percent anticipated contraction in global import demand, together with ample exportable supplies from many of the other major exporters.

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