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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 2016: 04 February, 03 March, 07 April, 05 May, 02 June, 07 July, 08 September, 06 October, 10 November, 08 December.

World cereal production and stocks in 2016/17 scaled up further

Release date: 10/11/2016

FAO’s latest forecast for 2016 world cereal production stands at 2 571 million tonnes, up marginally from October’s forecast and 1.5 percent (39 million tonnes) above the 2015 output. The revision mostly stems from a more positive outlook for world wheat and barley production, which more than offset reduced prospects for the global maize crop. Global wheat production in 2016 is now expected to rise to 746.7 million tonnes, up 1.7 percent year-on-year and about 1.0 percent (4.3 million tonnes) more than forecast in October, reflecting increases in the Russian Federation’s output - now anticipated at a new record - and in Kazakhstan, where favourable weather boosted yield prospects. The outlook for world barley production was also raised mostly on account of upward adjustments in the Russian Federation and Ukraine, but still remains below the 2015 output. These increases more than compensated for a 4.8 million-tonne (1.0 percent) cut in the 2016 global maize crop, mostly as a result of weather-induced yield downgrades for Brazil, China, the EU and the United States. The forecast for global rice production in 2016 has changed little, confirming October expectations of a 1.4 percent annual recovery to a record of 497.9 million tonnes. At the country level, forecasts were raised for Thailand, mirroring an improved water supply situation. By contrast, the outlook regressed in Viet Nam, due to inclement weather and poor price expectations, with forecasts also trimmed for various West African countries.

Planting of the 2017 winter wheat crop is underway in northern hemisphere countries. In the United States, low price prospects and a subdued export outlook due to a stronger US dollar are likely to result in a reduction in area planted, while dry conditions have also affected parts of the central and southern states. In the EU, the 2017 winter wheat crop is being sown under generally favourable conditions, with recent wet weather expected to benefit early crop development. In the Russian Federation and Ukraine, the sowing pace is ahead of last year’s despite some unfavourable weather, and early projections point to a likely expansion in plantings.

In southern hemisphere countries, the summer 2017 cereal crop is currently being sown, with overall conducive weather in South America benefiting early crop development. In Argentina, the maize area is forecast to expand by 6.0 percent from last year’s high level, reflecting continued strong export demand and high domestic prices. Favourable domestic prices are similarly anticipated to raise first season plantings in Brazil over the drought-reduced level of 2016. In South Africa, early prospects for the 2017 maize crop indicate a production rebound from the drought-reduced 2016 harvest, under expectations that favourable price and rainfall prospects would boost both plantings and yields.

Total cereal utilization in 2016/17 is now forecast at 2 562 million tonnes, up slightly from October and 1.7 percent higher than in 2015/16.  Among the various uses of cereals, global feed use is likely to expand by 2.7 percent in 2016/17, supported by large coarse grain availabilities and ample supplies of low quality wheat. Total feed use of coarse grains is currently projected at 756.6 million tonnes, 2.1 percent more than in 2015/16, while feed use of wheat is expected to reach 146.6 million tonnes, as much as 6.1 percent more than the previous season and representing an all-time high.  The biggest year-on-year increase in feed use of cereals in 2016/17 is forecast for the United States, where total feed use is seen up by 10 percent to 156.5 million tonnes, with 92 percent of this volume, or 143.5 million tonnes, consisting of maize. Global food consumption of cereals in 2016/17 is forecast at 1 106 million tonnes, up 1.3 percent from 2015/16 and sufficient to maintain the average global per caput consumption stable at around 149 kg.

The FAO forecast for global cereal stocks by the end of seasons in 2017 has been raised by 2.5 million tonnes to nearly 662 million tonnes, up 0.6 percent from their already high opening levels and a new record. The revision reflects this month’s improved production prospects for wheat as well as a small downward adjustment in utilization of coarse grains compared to the October report. Based on the latest forecasts, the world cereal stocks-to-use ratio in 2016/17 would stand at 25.3 percent, well above the historic low of 20.5 percent registered in 2007/08, but substantially lower than the record 35.6 percent registered three decades earlier (in 1986/87). Global wheat inventories in 2016/17 are set to expand by 4 percent (9 million tonnes) to 235 million tonnes, with most of the increase taking place in China, the United States and the Russian Federation. By contrast, world coarse grain stocks are projected at nearly 257 million tonnes, 1.7 percent (4.3 million tonnes) below their opening levels with reductions in China, Brazil and South Africa more than offsetting increases in a number of other countries, particularly the United States. World rice inventories at the close of 2016/17 are similarly forecast to fall, but only slightly to 169.9 million tonnes, on anticipation that drawdowns in India and Thailand would be largely compensated by accumulations elsewhere, especially in China.

FAO’s forecast for world trade in cereals in 2016/17 has been raised by 3.1 million tonnes (0.8 percent) from the October forecast to nearly 388 million tonnes. Most of the increase reflects a 3 million tonne upward adjustment to global wheat trade (July/June), which is now put at par with the revised 2015/16 estimate of 168 million tonnes. While low international prices are expected to encourage larger imports by several countries, the Russian Federation is envisaged to emerge as the world’s biggest wheat exporter in 2016/17. Australia and the United States are also set to expand their wheat sales, while an output cut could keep exports by the EU significantly below the 2015/16 level. Global trade in coarse grains in 2016/17 (July/June) is forecast at 176.5 million tonnes, marginally above October expectations but still almost 5 percent (9.2 million tonnes) below the 2015/16 estimate. The sharp year-on-year contraction in world trade of coarse grains reflects significant declines in sorghum, barley and maize trade, with most of these reductions concentrated in one country, China. The outlook for international trade in rice in 2017 is also somewhat subdued at 43.4 million tonnes, with improved domestic availabilities in the Far East limiting the global trade growth recovery to below 1.0 percent.



Summary Tables

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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.