FAO Cereal Supply and Demand Brief
The Cereal Supply and Demand Brief provides an up-to-date perspective of the world cereal market. The monthly brief is supplemented by a detailed assessment of cereal production as well as supply and demand conditions by country/region in the quarterly Crop Prospects and Food Situation. More in-depth analyses of world markets for cereals, as well as other major food commodities, are published biannually in Food Outlook.
Monthly release dates for 2017: 02 February, 02 March, 06 April, 04 May, 08 June, 06 July, 07 September, 05 October, 02 November, 07 December.
Cereal supplies to remain ample in 2017/18
Release date: 04/05/2017
Although world cereal production is set to decline in 2017, supplies are likely to remain large with next season’s cereal ending stocks remaining close to their record high opening levels. The cereal stocks-to-use ratio in 2017/18 could however drop slightly below the current season’s level to 25.8 percent.
Cereal production prospects improve slightly
• FAO’s outlook for world cereal production in 2017 has been raised marginally (0.1 percent) since April, continuing to suggest a 0.4 percent decline in global production from the 2016 record high.
• This month’s upturn mostly results from expectations of a larger global maize output, now put at 1 054 million tonnes, some 3.3 million tonnes (0.3 percent) higher than in April. An upward revision to Brazil’s production forecast, driven by higher than previously anticipated yields, accounts for most of the adjustment.
• Wheat production in 2017 is set to fall some 20 million tonnes (2.6 percent) short of the 2016 record to reach 740 million tonnes, nearly unchanged from last month’s expectations. The lower year-on-year production estimate reflects smaller crops in Australia, Canada, the Russian Federation and the United States, which more than outweigh the expansions in the EU, India and Morocco.
• Rice production in 2017 is pegged at 504 million tonnes, up 0.9 percent from the 2016 record and only marginally below April’s forecast. Deteriorating prospects in Bangladesh due to floods were partly compensated by upward revisions to crops in Argentina and Cambodia.
Cereal utilization in 2017/18 to exceed the 2016/17 level
• Despite a slight downward adjustment since last month, FAO’s forecast of world cereal utilization in 2017/18 continues to point to a one percent annual growth.
• Wheat utilization is expected to reach 731 million tonnes in 2017/18, lower than projected in April, as large supplies of coarse grains are set to reduce feed use of wheat even further.
• Total utilization of coarse grains in 2017/18 is expected to grow by 1.6 percent to nearly 1 358 million tonnes, largely driven by a 2.2 percent expansion in maize utilization to 1 058 million tonnes. Strong gains in feed use in China and South America account for the bulk of the projected growth.
• World rice utilization is predicted to reach 506 million tonnes in 2017/18, unchanged from April expectations and up 1.2 percent year-on-year due to expanding food intake.
Cereal trade set to contract in 2017/18
• World cereal trade in 2017/18 is heading towards a 2.2 percent annual decline to around 386 million tonnes.
• International wheat trade is set to decrease by 2.2 percent in 2017/18 (July/June) to 170 million tonnes. The EU is envisaged to regain its position as the world’s largest wheat exporter, shipping 29.7 million tonnes. This level would exceed Russia’s exports in 2017/18 by 1.0 million tonnes.
• Trade in coarse grains is forecast at nearly 173 million tonnes in 2017/18 (July/June), some 3 percent lower than in 2016/17. Smaller maize and barley flows account for bulk of this decrease. In the case of maize, reduced demand from Brazil and several countries in southern Africa is envisaged to more than offset larger anticipated imports by the EU and several Asian countries.
• World trade in rice is tentatively forecast to remain on its path of recovery in 2018 (calendar year), rising by another 2 percent to 44.1 million tonnes. Although larger local crops may curb import growth in the Far East in 2018, demand is expected to remain strong in the Near East and in Africa.
Total cereal stocks to remain high in 2017/18
• Following a 1.4 percent upward adjustment since last month, FAO’s forecast of world cereal stocks ending in 2018 points to global inventories nearly matching their openings level.
• Global wheat stocks (ending in 2018) are set to expand by 3.3 percent to a new high of 247.6 million tonnes. Higher inventories in China and, to a lesser extent, the EU, Morocco and the Russian Federation account for most of the year-on-year increase.
• FAO’s forecast of total coarse grain stocks (ending in 2018) has been raised by 3.2 percent since last month’s report to nearly 271 million tonnes, following upward adjustments to historical maize inventory estimates for China. Despite the revision, China is seen driving a 2.9 percent drawdown of world coarse grain reserves, cutting the size of its stockpiles by a sharp 20.5 million tonnes.
• Global rice inventories (ending 2018) are forecast to remain close to their opening levels at 171 million tonnes. Drawdowns in some of the major exporters, namely the United States and Thailand, are expected to be largely compensated by accumulations elsewhere, especially in China.
1/ Production data refer to the calendar year of the first year shown. Rice production is expressed in milled terms.
2/ Production plus opening stocks.
3/ Trade data refer to exports based on a July/June marketing season for wheat and coarse grains and on a January/December marketing season for rice (second year shown).
4/ May not equal the difference between supply and utilization due to differences in individual country marketing years.
5/ Major wheat exporters are Argentina, Australia, Canada, the EU, Kazakhstan, Russian Federation, Ukraine and the United States; major coarse grain exporters are Argentina, Australia, Brazil, Canada, the EU, Russian Federation, Ukraine and the United States; major rice exporters are India, Pakistan, Thailand, the United States, and Viet Nam. Disappearance is defined as domestic utilization plus exports for any given season.