World Food Situation

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 2020: 6 February, 5 March, 2 April, 7 May, 4 June, 2 July, 3 September, 8 October, 5 November, 3 December.

Global cereal production heading for a record high in 2019

Release date: 05/12/2019

FAO’s latest forecast for 2019 world cereal production is pegged at an all-time high of 2 714 million tonnes, up some 0.4 percent from the November figure and now almost 57 million tonnes (2.1 percent) above the reduced outturn in 2018. The month-on-month increase primarily reflects an upward revision to world coarse grains production, associated with higher-than-previously predicted yields in China, the Russian Federation and Ukraine. At the current level, the forecast for world production of coarse grains stands at nearly 1 433 million tonnes, 1.7 percent (24.5 million tonnes) higher year-on-year and marginally short of the record high level registered in 2017.

Global wheat production forecast for 2019 has also been raised slightly since the previous month, to 766.4 million tonnes, 4.8 percent (34.8 million tonnes) above the previous year’s outturn. The bulk of the monthly revision resulted from upward adjustments to the production estimates in the European Union (EU), which more than offset a trimming of the output estimate in the United States.

Planting of the 2020 wheat crops, for harvest next year, is well underway in Northern Hemisphere countries. In the United States, winter wheat sowings were almost complete at the end of November, a faster pace than the previous year but in line with the average timing. Early indications suggest that the area sown may contract on lower price prospects compared to last year, while crop conditions were reported to be slightly inferior to normal levels. In the EU, following early-seasonal rainfall deficits, improved precipitation in November helped to recuperate soil moisture levels, benefiting winter crop establishment. In far eastern and western parts of the EU, however, dry weather persisted, resulting in suboptimal planting conditions that may impede early crop development. Conditions of the winter wheat crop were favourable in the Russian Federation, which, coupled with continued government support aiming to stimulate export growth, could boost the area sown. By contrast, in Ukraine, limited rains and warmer-than-average temperatures hampered planting of the winter wheat crop in key producing areas.

In the Southern Hemisphere, coarse grain crops are being currently sown while wheat crops will be planted later in the year. In South America, elevated grain prices, underpinned by robust export demand, are expected to sustain high levels of maize plantings in Argentina, despite unfavourable rainfall that hindered sowing operations, and in Brazil. Similarly, in South Africa, the largest maize producer on the Africa continent, remunerative grain prices are foreseen to spur an increase in maize sowings, with preliminary indications pointing to an area that would surpass the five-year average. However, the short-term weather forecast indicates likely reduced rains, a factor that may represent a downside risk to the production outlook in 2020. FAO’s forecast of world rice production in 2019 has been increased from November by 1.6 million tonnes to 515 million tonnes, implying a mere 0.5 percent output decline from the 2018 all-time high. Adverse weather and tight water supplies for irrigation dampened the outlook for off-season crops in Thailand and Viet Nam this month. However, these adjustments were outweighed by area-based output upward revisions for Pakistan and various African countries, namely Egypt and Nigeria, which together with Madagascar are now set to spearhead a rebound in African rice production this season.

World cereal utilization in 2019/20 is forecast at 2 709 million tonnes, nearly unchanged from the previous month; still a record of around 21 million tonnes higher than in 2018/19. At 758 million tonnes, the forecast for global wheat utilization in 2019/20 has been slightly lowered since last month, but still a record exceeding the 2018/19 estimated level by 1.4 percent. The forecast for total utilization of coarse grains in 2019/20 is pegged at 1 434 million tonnes, up only marginally from the previous season with an expected decline in feed use of maize more than outweighed by a foreseen rise in feed use of other coarse grains, barley in particular. Higher than previously predicted food intake is behind an almost 1 million tonne increase in FAO’s latest forecast of global rice utilization in 2019/20, which now stands at a record 517 million tonnes.

The forecast for world cereal stocks by the close of seasons in 2020 has been raised by almost 14 million tonnes (1.6 percent) since the previous month to 863 million tonnes; marginally down from the previous season and the third highest on record. At this level, the global cereal stock-to-use ratio would also approach a relatively high level of 31 percent, underscoring a comfortable supply situation. The forecast for world wheat inventories has been scaled up by 3 million tonnes since the previous month to close to 278 million tonnes, mainly on expectations of larger stock build-ups in several major exporting countries. At just over 403 million tonnes, total coarse grain inventories are also seen higher than earlier anticipated by almost 10 million tonnes, reflecting upward revisions to maize inventories especially in China and, to a lesser extent, in the United States. Despite another small upward revision, world rice stocks at the close of 2019/20 could still fall by 0.8 percent from their record opening levels to 182 million tonnes; on expected stock reductions in rice importing countries, in particular China and Indonesia.

World trade in cereals in 2019/20 is forecast at 416 million tonnes, up slightly from last month and now 1.1 percent (4.5 million tonnes) higher than the 2018/19 level. At 172 million tonnes, world wheat trade in 2019/20 (July/June) would be up 2.3 percent from the sharply reduced volume registered in the previous season. While the latest global forecast is close to last month’s, revisions were made to some individual countries. Imports by Algeria were trimmed by almost 1 million tonnes to reflect the recent government decision to restrict soft wheat purchases from world markets to 4 million tonnes, down from over 6 million tonnes. On the other hand, Kazakhstan, a major wheat exporting country, is seen to import at least 1.4 million tonnes of wheat because of a reduced domestic production.  At 197.5 million tonnes, the forecast for world trade in coarse grains in 2019/20 (July/June) is up 2 million tonnes from the previous month and now close to the 2018/19 record level. This month’s upward revision primarily stems from a stronger pace in exports from Brazil and Ukraine, more than offsetting a slowdown in sales by the United States.  By contrast, the forecast of world rice trade in 2020 (January-December) has been lowered by 1.0 million tonnes to 47 million tonnes, reflecting improved prospects for domestic supplies in several countries in Africa, but also efforts to curb unofficial inflows, namely by Nigeria. The revised forecast suggests that world rice trade in 2020 would likely recover only partially (by around 2.5 percent) from the 2019 reduced level.

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.