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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 2018: 1 February, 1 March, 5 April, 3 May, 7 June, 5 July, 6 September, 4 October, 1 November, 6 December.

Record-breaking production to lift world cereal stocks to an-all time high in 2017/18, despite growing consumption and robust trade

Release date: 05/04/2018

FAO’s forecast of 2017 cereal production raised, while early indications point to smaller wheat and coarse grain crops in 2018

• Largely on the back of greater maize production expectations, FAO’s latest forecast points to world cereal production expanding by 33 million tonnes (1.3 percent) in 2017 to reach nearly 2 646 million tonnes. At this level, global cereal output would be 3.5 million tonnes above February’s forecast, mostly reflecting an upward revision to the maize output in the European Union. FAO’s forecast of world rice production was also raised to a record high of 503 million tonnes, as improved prospects for the secondary crop in India more than compensated for downward adjustments to output in Indonesia and the United Republic of Tanzania.

• Prospects for wheat production in 2018 are more restrained, given less favourable weather conditions and lower prices. The latest forecast for world wheat production in 2018 stands at 750 million tonnes, down 7 million tonnes from the 2017 near-record level but still 6 million tonnes higher than projected last month, reflecting increased projected plantings in the United States and improved prospects in the Russian Federation. In the United States, based on the latest USDA estimate (29 March 2018) for the 2018 sowings, projecting higher wheat plantings than last year, total wheat production could rebound somewhat from last year’s decline. In the Russian Federation, recent beneficial weather conditions bolstered winter wheat prospects although, assuming yields remain below last year’s exceptional level, overall wheat production could still fall below the record registered in 2017. Among the other CIS countries, increased plantings combined with favourable weather are expected to result in a small production increase in Ukraine. Despite mostly favourable crop conditions in the EU, the winter wheat output is forecast to fall mostly on account of a reduction in sowings. In Asia, harvesting of the 2018 wheat crop is underway. Outputs in China and India, the largest wheat-producing countries, are foreseen to contract marginally from the record highs of 2017, while in Pakistan good weather is forecast to instigate a production increase this year. Prospects in North Africa have improved moderately as a result of recent beneficial rains, following a dry winter, although pockets of dryness still persist in Tunisia and Algeria. In the southern hemisphere, planting of the wheat crop will start soon.

• With regard to coarse grains, harvesting of the 2018 crop is commencing in southern hemisphere countries, while sowings are currently underway in the northern hemisphere. In South America, production is expected to fall from the record highs of 2017, amid bad weather in Argentina and a shift away from maize cultivation towards soybeans in Brazil. In Southern Africa, although recent beneficial rains have partly reversed earlier concerns associated with dry weather conditions, production is still forecast to fall from the high levels of 2017. A cut in area sown in South Africa, reflecting lower maize prices, further negatively weighed on the production prospects in 2018.

Global cereal utilization to expand in 2017/18

• The FAO forecast of global cereal utilization has been raised by 4.6 million tonnes (0.2 percent) since February to 2 612 million tonnes; 39.3 million tonnes (1.5 percent) higher than in 2016/17. The month-on-month increase largely stems from upward revisions to the forecasts of maize and wheat utilization.

• World wheat utilization in 2017/18 is set to reach an all-time high level of 736.4 million tonnes, up 0.4 percent (2.8 million tonnes) from the previous month and now 0.3 percent (2.5 million tonnes) above the 2016/17 estimated level. The increase from last month mostly reflects higher forecasts for industrial use, whereas the expansion from 2016/17 is mainly attributed to a 1.2 percent projected growth in the food use of wheat. 

• The forecast for total utilization of coarse grains in 2017/18 has been raised from last month by 2.5 million tonnes to 1 373 million tonnes, mostly because of upward revisions to feed use of maize in the EU and several Asian countries. Driven by larger supplies and lower prices, total feed use of maize in 2017/18 now stands at 601 million tonnes, 2.6 million tonnes (0.4 percent) more than projected in February and 18.2 million tonnes (3.1 percent) higher than in 2016/17.

• Following slight downward adjustments to the 2016/17 utilization figures, world rice use in 2017/18 is now pegged at 503 million tonnes. This level would be 0.6 million tonnes below February expectations, but it would still represent a 1.1 percent annual expansion owing to greater anticipated food intake. 

Robust trade in 2017/18

• International trade in all cereals in 2017/18 is forecast at 406.6 million tonnes, slightly up on the previous month’s figure and 0.2 percent (almost 0.9 million tonnes) higher than last year’s record level.

• World trade in wheat in 2017/18 (July/June) is now forecast at 173.8 million tonnes, nearly at par with February’s projected volume as import demand is seen to remain steady in nearly all regions with the exception of South America, where total imports could decline slightly, mainly on reduced purchases by Brazil. On the export side, export supplies are expected to be more than adequate to meet global demand, with an upward adjustment to exports from the Russian Federation compensating downward revisions in several other leading exporters.

• Global trade in coarse grains in 2017/18 (July/June) is currently forecast to reach a record level of 185.8 million tonnes, 2.6 percent (4.7 million tonnes) above the 2016/17 volume. Much of this expansion would be accounted for by higher world maize trade, which is seen reaching almost 145.5 million tonnes, largely underpinned by stronger import prospects for the EU, Turkey and several Asian countries.

• Despite a 0.9 million tonnes upward revision since February, international trade in rice in calendar 2018 is still expected to fall slightly (1.9 percent) below the 2017 record to 46.9 million tonnes, owing to waning import demand in all regions other than Asia.

Global cereal stocks in 2017/18 still expected at record levels, in spite of a downward revision since February

• FAO’s latest forecast of world cereal stocks at the close of crop seasons ending in 2018 has been lowered by 4.6 million tonnes, mainly reflecting downward adjustments to coarse grains inventories. At 748.2 million tonnes, the revised cereal carryover forecast would still be almost 4 percent (28 million) higher than a year earlier and a record level.

• Global wheat stocks (ending 2018) are projected slightly down from the February forecast but still at an all-time high and 8 percent (20 million tonnes) above their opening levels. At this level, the world stocks-to-use ratio of wheat is projected at 36.3 percent, up from 2016/17 and the highest since 2001/02.

• World coarse grains stocks (ending 2018) are now forecast at 305 million tonnes, down 1.6 percent (4.8 million tonnes) from the February forecast but still almost 2 percent (5.8 million tonnes) higher than their opening level. The adjustment since last month largely reflects downward revisions to the size of maize carryovers in the Republic of Korea and the US.

• FAO has raised its forecast of world rice inventories at the close of 2017/18 seasons by 0.9 million tonnes to 171 million tonnes, up 1.4 percent from 2016/17. This month’s adjustment chiefly stems from higher expected inventories in the world’s leading global rice exporter, India, in line with expectations of a larger domestic crop and also a robust pace of government procurement.

Summary Tables

 

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.