FAO/GIEWS - Food Outlook No.2 - April 2001 p. 8

Carryover Stocks

Global cereal stocks fall sharply but export supplies remain adequate

Since the previous report in February, the forecast for global cereal stocks by the close of the seasons ending in 2001 has been raised by 5 million tonnes to 645 million tonnes, down 48 million tonnes, or 7 percent, from their opening levels. This year's sharp decline in cereal stocks would be mostly in view of significant drawdown in China, while smaller inventories are also anticipated in the United States. The declines in China and the United States would more than offset the likely expansion in the cereal carryovers in India, the EC and the Russian Federation. Despite the drastic fall in the level of world cereal stocks this season, exportable supplies have continued to exceed import demand, leading to persistent downward pressure on international prices. The ratio of the volume of cereal stocks held by the major cereal exporters to the total disappearance (their domestic cereal consumption plus exports) in 2000/01 is currently estimated to reach 33 percent, down slightly from the previous season but over one percentage point above the average levels in the 1990s. For coarse grains, the anticipated increase in production in the five major exporting countries is expected to keep the stocks-to-disappearance ratio at around 17 percent, unchanged from the previous season and above average. The ratio for wheat is likely to decline slightly to 19 percent, but even that would be considerably above the 17 percent ratio registered in the 1990s. The ratio for rice is seen to drop to 61 percent, which would be considerably below the estimated 64 percent for last year. However, most of this decline would be account of a sharp (10 million tonnes) drop in 2000 production in China, a major rice exporter.

World stocks of wheat for crop years ending in 2001 are currently put at 243 million tonnes, up slightly from the previous report. At this level, world wheat inventories would be 14 million tonnes, or 5 percent,

below the previous year's volume. Total wheat stocks held by the five major exporters are also likely to decline this year, mostly in the United States. However, their global share is likely to remain stable, at around 20 percent for the third consecutive year. Most of the decline in global stocks from the previous season would be in China, where reduced plantings and drought lowered last year's wheat production resulting in at least 12 million tonnes drawdown of stocks to 120 million tonnes. While large reductions are also anticipated in a number of countries affected by drought last year, especially in North Africa and in the Middle East, end-of-season inventories are expected to surge in India because of a record crop and in spite attempts to sell large amounts of publicly-held stocks to world markets.

Global coarse grain inventories for crop years ending in 2001 are currently put at 249 million tonnes, 3 million tonnes higher than that reported earlier but 26 million tonnes less than the opening levels. However, total coarse grain stocks held by the five major exporters are forecast to rise slightly compared to the previous year mainly because of above-average crops in the United States and the EC. As a result, the overall share of world stocks held by major exporters is forecast to rise above the average in the 1990s to 32 percent. In the United States, maize production in 2000 was near record but despite continued strong domestic demand and larger exports, carryover stocks are forecast to increase by almost 3 million tonnes. The increase in the EC is less significant although much remains uncertain because of the precarious situation facing the livestock sector. As in the case for wheat, the bulk of the anticipated sharp reduction in global inventories of coarse grains would be on account of a large drawdown in China, caused by policy changes, as was reported in the previous issue of Food Outlook. A drastic cut in 2000 maize production coupled with continued large exports could bring China's total coarse grains stocks to 133 million tonnes, down 22 million tonnes, or 14 percent, below the previous year and the smallest in more than a decade. Smaller coarse grain stocks are also anticipated in several central and eastern European countries because of last year's reduced output, especially in Poland, Bulgaria and Romania.

Global rice stocks at the close of the marketing seasons ending in 2001 are forecast to fall by about 8 million tonnes from their opening levels, to 153 million tonnes. The contraction reflects smaller 2000 crops, as a result of which consumption is expected to outpace production. The bulk of the stock reduction is anticipated to be concentrated in China (Mainland) and India, the two countries that recorded the steeper contraction in output last season. Stocks are also expected to be draw down in Indonesia and the Philippines on anticipation of smaller imports both in 2000 and 2001. By contrast, a built-up is expected in exporting countries, in particular Egypt, Myanmar, Thailand and Viet Nam, in light of the good crops harvested in 2000 and, in the latter case, relatively poor export performances expected in 2001. Ending inventories in the United States, however, are forecast to drop, following the cut in production last season.

World Carryover Stocks of Cereals

Source: FAO