|Global Market Analysis|
World cereal production set to decrease in 2009
World cereal production in 2009 is forecast to reach 2 219 million tonnes (including rice on a milled basis), 3 percent down from last year’s record high but nonetheless the second largest crop ever gathered. Reductions are forecast for wheat and coarse grains while the global rice crop may register another marginal increase. Early indications point to smaller grain crops, partly as a result of a return to trend yields after strong productivity gains last year, but also a reduction in overall plantings (mostly wheat) again after last year’s exceptional level. In several major producing countries, farmers have been discouraged by poor expected returns: sharply lower grain prices and relatively high input costs.
FAO’s first forecast for world cereal utilization in 2009/10 suggests a relatively weak growth of around 1.3 percent from the estimated 2008/09 level, to 2 230 million tonnes. This compares with nearly 4 percent growth in the previous season. World food consumption of cereals is likely to rise by roughly 1.4 percent to 1 042 million tonnes in 2009/10, allowing average global per caput consumption of cereals to remain stable at around 153 kg per person. Total feed usage is forecast to increase by less than 1 percent, driven by much slower growth in the Commonwealth of Independent State (CIS) countries, sharp contractions in the United States and in several countries in South America. On balance, feed utilization is expected to stagnate or even fall in developed countries as a whole, but to rise in developing countries, though well below the estimated 3.4 percent expansion last year. Continued strong growth in feed demand in Asia would account for much of the overall increase in developing countries’ feed utilization. Industrial applications of cereals is another usage category that is expected to experience slower growth in the new season. This would mostly stem from slowing demand for cereals as a feedstock in the production of biofuels, which is forecast to reach 125 million tonnes, up 9 percent from 2007/08. This still represents a strong increase but much less so than the estimated expansion of 25 percent between 2008/07 and 2008/09. The deceleration in global cereal feedstock demand, where maize accounts for more than 90 percent, mostly reflects events in the United States.
Based on the aforementioned production and utilization prospects in 2009/10, world end-of-season cereal stocks for crop years closing in 2010 could decline slightly to 521 million tonnes. At this level, world reserves would be roughly 7 million tonnes, or 1.4 percent, smaller than their opening levels. This is not expected to result in any significant variation in the global stock-to-use ratio which is forecast to remain stable at roughly 23 percent, considerably up from the lows observed in the 2006/07 and 2007/08 seasons. Among the major cereals, world wheat inventories are forecast to remain unchanged, rice to increase, but coarse grains could decline.
FAO’s first forecast for world cereal trade in 2009/10 is 257 million tonnes, down by nearly 4 percent from the estimated trade volume of 2008/09. This contraction mostly concerns wheat imports, which could fall by as much as 10 million tonnes in the new season, reflecting a strong anticipated recovery in wheat production in several major wheat importing countries, especially those situated in North Africa and in Asia. By contrast, aggregate trade in coarse grains is forecast to remain unchanged. An increase in maize imports would compensate for declines in nearly all other coarse grains, in particular barley. International trade in rice is forecast to increase marginally in 2009.
The FAO Cereal Price Index averaged 183 points in May 2009, up 4 percent from April but down 32 percent from April 2008 when the index peaked to its all time high of 274 points. The record 2008 cereal crop and the recovery in export supplies helped international prices to ease considerably during the 2008/09 season. Prospects for another good crop this year, bringing with it stable supplies, have kept prices under pressure but in recent months grain quotations have rallied helped by a weakening United States Dollar and external developments, including the recent surge in oil prices.
Table 1. World cereal market at a glance
* Jan-May 2009
1/ Rice in milled equivalent
|GIEWS||global information and early warning system on food and agriculture|