Economic and Social Department

 global information and early warning system on food and agriculture

 food outlook
No. 4 Rome, September 2003

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Cereals: Supply/Demand Roundup

Cereals: Current Production and Crop Prospects

Cereals: Trade

Cereals: Carryover stocks

Cereals: Export Prices


Appendix Tables


Cereals: Carryover stocks

Another huge decline in world cereal stocks foreseen in 2004


Following a sharp cutback in the forecast for global cereal production in 2003 and combined with the anticipated cereal utilization during the 2003/04 marketing season, the FAO forecast for world cereal stocks has been lowered significantly. World cereal carryover stocks in 2004 are now forecast to drop to 372 million tonnes, down 20 percent from the previous season1/. As a result, the global stocks-to-use ratio would stand at around 19 percent, compared to nearly 24 percent in 2002/03, pointing to a much tighter global supply-and-demand situation. While falling inventories in China have been the main factor behind successive cuts in world cereal stocks since 1999, the sharp reduction in carryovers also reflects a notable cut in wheat and coarse grain stocks in Europe, particularly in the EU, the Russian Federation and Ukraine.

World Carryover Stocks of Cereals

 Crop year ending in:
 (million tonnes)
Coarse grains210.2165.8141.3
of which:   
Rice (milled)150.6122.4104.7
TOTAL 584.2 466.6 371.9

Source: FAO

The decline in world wheat stocks during the current season is expected to be more significant than for other major cereals. World wheat carryovers in 2004 are now forecast at 126 million tonnes, down nearly 53 million tonnes, or almost 30 percent, from their already reduced opening levels. Wheat stocks held by major exporters are forecast to contract for the third consecutive year, although most of the anticipated drop would be on account of sharply lower wheat inventories in the EU, which are expected to fall by 56 percent following this year’s fall in European production. While a recovery in wheat production in the United States is expected to result in some increase in its stocks, the ratio of major exporters’ wheat carryover stocks to their total disappearance (the sum of their domestic consumption and exports) would still decline, from nearly 17 percent in 2003 to only 15 percent in 2004, which would be also 5 percentage points below the five-year average.

food outlook

In China, wheat stocks are expected to decrease again, dropping by almost 50 percent to around 33 million tonnes, as production continues to fall below domestic utilization. Carryover stocks in India are also expected to be drawn down sharply as the country continues to export wheat at the same time that domestic production is forecast to fall. Wheat inventories in Pakistan are also expected to contract, while stocks among nearly all of the CIS countries are forecast to decline sharply as a result of reduced output.

food outlook

World coarse grain inventories for crop years ending in 2004 are currently forecast at 141 million tonnes, down 24 million tonnes, or 15 percent, from their opening levels. This season’s contraction is the result mainly of reductions in the EU and China. In the EU, an anticipated sharp fall in coarse grain production is expected to cause a drop of nearly 44 percent, or almost 8 million tonnes, in carryover stocks. The decrease in maize and barley inventories would account for most of the decrease in EU coarse grain inventories. Although higher stocks in the United States, and to some extent also in Canada, are expected to make up for most of the decline in EU inventories, aggregate coarse grain stocks held by major exporters would still drop by 6 percent to around 48 million tonnes. As a result, the ratio of major exporters’ coarse grain stocks to their total disappearance would deteriorate further, to a low of about 11 percent, compared to an already reduced level of 12 percent in 2003 and the five-year average of around 16 percent.

food outlook
food outlook

In China, the anticipated decline in this year’s production coupled, with continued large maize exports and increase in domestic utilization, will most likely require that stocks be drawn down further. Total coarse grain stocks in China are forecast to drop by 30 percent during the current marketing season to around 48 million tonnes, most of this maize. By contrast, a sharp increase in stocks is forecast for Brazil due to this year’s record maize crop. Variations in stocks held by most other countries are expected to be relatively small compared with the previous season, although some declines are expected in southern Africa and a number of countries in eastern Europe.

food outlook

Since rice consumption is again expected to outpace production, world rice stocks at the close of the marketing seasons ending in 2004 are forecast to decline to 105 million tonnes, almost 18 million tonnes below their opening level and some 1 million tonnes more than the June forecast.

The contraction is expected to be concentrated mainly among exporting countries, with the bulk of the decline in China. The forecast of the country’s carryover stocks has been revised downward to 64 million tonnes, 15 million tonnes below their opening level and the fourth consecutive drop since 2000. The figure for the closing inventories in India has also been cut and now stands at 11.3 million tonnes, the lowest in the decade. Among the other major exporters, latest information suggests smaller quantities of reserves at the end of the season for Australia, Egypt, Pakistan and the United States. Against that general pattern, closing stocks in Myanmar could increase, while they are unlikely to change significantly in Viet Nam.

As for the major importing countries, FAO anticipates rice reserves by the end of the seasons to fall below their opening levels in Indonesia, Japan, the Philippines and Nigeria, while they might end higher in Bangladesh and Sri Lanka.

The forecast contraction of the world end-of-season inventories would lead to a drop in the world rice stock-to-use ratio from 30 percent in 2002/2003 to 25 percent in 2003/04. While still much larger than for the other main cereals, the reduced size of the rice inventories has revived fears about the possible implications of potential crop failures on food security. Against this backdrop, on 21 August, the Association of South East Asian Nations (ASEAN, composed of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam) and its three partners (China, Japan and the Republic of Korea) agreed to establish an East Asia Emergency Rice Reserve System in early 2004.

1.  World stock data are based on aggregate of carryovers at the end of individual countries’ national crop years.

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