FAO/GIEWS - Food Outlook No. 5 - Rome, December 2001 p. 8

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Carryover Stocks

Sharp fall in world cereal stocks as utilization would again outpace production

The forecast for world cereal carryovers for crop years ending 2002 has been lowered by 9 million tonnes since the previous report in October, to 553 million tonnes. The revision reflects downward adjustments mostly to estimates in China, subsequent to further fine-tuning of the historical domestic utilization estimates for wheat and maize in that country. At the current forecast level, world cereal stocks would be 75 million tonnes, or 12 percent, below their already reduced opening levels. However, more than 60 percent, or 47 million tonnes, of the expected large reduction in the size of the global cereal stocks would occur in China, where domestic wheat and rice production is forecast to fall, while total cereal utilization would continue to increase reflecting higher food as well as feed and industrial use.

World wheat stocks by the close of the seasons ending in 2002 are forecast to drop to 201 million tonnes, down 6 million tonnes from the October forecast and 36 million tonnes, or 15 percent, below their opening levels. Most of the decline is expected in China (down 22 million tonnes) and in major wheat exporting countries (down 15 million tonnes). While wheat stocks of all major exporting countries are likely to be reduced; those held in the EC, Canada and the United States could decline the most because of a notable reduction in their 2001 wheat production. The decline in wheat stocks held by major exporters would bring about a sharp drop in the ratio of their aggregate wheat stocks to their total disappearance (the sum of their domestic consumption and exports), down from 22.3 percent in 2000/01 to 16.5 percent, the lowest since the price-hike period in the mid-1990s when the ratio fell to below 14 percent. Moreover, the global share of total wheat stocks held by major exporters would also fall sharply, from 22 percent in 2001 to around 19 percent by the end of crop seasons ending in 2002.

World Carryover Stocks of Cereals

Crop year ending in:
2001 estimate
2002 forecast
(. . . . million tonnes . . .)
Coarse grains
of which:
Rice (milled)

Source: FAO


In addition to the major wheat exporting countries and China, a number of other countries with large wheat inventories could also draw down their stocks during the course of this season. India and Pakistan are expected to make large exports this season, which would cut domestic surpluses. In India, the

Government has also reduced the price of wheat sold through the public distribution system and in November made known its intentions to review the overall domestic market management system, with the aim to reverse the recent rising trend in grain procurements. Among other countries, carryover stocks are seen to rise in Brazil and in several eastern European and CIS countries, mostly because of larger crops. By contrast, wheat stocks are likely to be drawn down in a number of drought-stricken countries, such as Turkey and the Islamic Republic of Iran.

The forecast for world coarse grain inventories for crop years ending in 2002 has been lowered by 5 million tonnes since the previous report to 213 million tonnes, down 22 million tonnes, or 9 percent, from the previous year. While the bulk of this season's expected decline is accounted for by China, ending stocks in all major exporting countries are also forecast to decrease. A large reduction is expected in the United States, where an estimated drop of 11 million tonnes in production, amid stable domestic utilization and slightly bigger exports, could result in a drop of around 9 million tonnes in stocks, to 44 million tonnes. At the current forecast levels, total coarse grain stocks held by major exporters would represent around 31 percent of the world total as compared to nearly 33 percent in the previous season. In addition, the ratio of major exporters' stocks to their total disappearance is also likely to shrink, from over 17 percent in 2001 to just around 15 percent by the end of the seasons in 2002; however, still significantly above the lows of about 8 percent registered in the mid-1990s.

In contrast to expected sharp falls in coarse grain inventories held in China and the major exporting countries, those in most other countries are likely to increase, or at least remain at last year's levels, mostly because of good to above-average production. The largest increase is expected in Brazil following a bumper maize crop in 2001. Similarly, maize stocks are also expected to increase in Mexico because of a record maize crop. In Africa, with the exception of few countries in southern Africa, most countries are forecast to end the season with larger stockpiles. Larger coarse grain stocks are also anticipated in a number of CIS and eastern European countries because of higher production.

The forecasts for world rice stocks at the close of the marketing seasons in 2002 has been raised by 2 million tonnes since the last report to nearly 139 million tonnes, which nevertheless remains below their estimated opening level by 17 million tonnes. The recent upward revision mostly reflects the improved production outlook in China, which will imply a smaller drawdown from inventories than previously anticipated. Although the major exporters are expected to account for the bulk of this season's contraction, stocks are expected to fall somewhat also in importing countries, in contrast to last year.

Among the rice exporters, stocks in China (Mainland) are forecast to fall by 11 million tonnes from last year, to 95 million tonnes, up 1.2 million tonnes from the preceding forecast. At that level, the country would account for 69 percent of all carryovers. A marked drop could also be recorded by Pakistan, under the current expectations of falling 2001 production, a factor that could also negatively influence stocks in Egypt. On the other hand, larger exports in 2002 would diminish the size of closing inventories in India, Thailand and Viet Nam. By contrast, they are expected to rise in the United States, as a result of the bumper 2001 crop and subdued exports next year, and in Australia. As for importing countries, a substantial contraction in stocks is anticipated in Indonesia, and to a lesser extent also in Sri Lanka and Brazil following the poor 2001 paddy crop. Smaller import forecast could also lead to reduced inventories in a number of African countries.

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