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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 2015: 05 February, 05 March, 02 April, 07 May, 04 June, 09 July, 10 September, 08 October, 05 November, 03 December.

World cereal supplies to remain high

Release date: 02/04/2015

Since last month, FAO has raised its 2014 world cereal production forecast by 2 million tonnes to 2 544 million tonnes, mainly accounting for a larger than anticipated maize harvest in the EU. At this level, global cereal output in 2014 would outstrip the 2013 record by 1 percent.

Looking ahead to the coming season, global wheat production is anticipated to reach 722 million tonnes in 2015, 2 million tonnes higher than FAO's first production forecast published in March, but still 1 percent (5 million tonnes) below the current estimate for 2014. In the EU, prospects have recently improved but, because of reduced plantings, still signal a 1 percent fall from last year's high. Improved weather has also raised crop prospects in China, India and Pakistan, which are all anticipated to harvest close to last year's record levels. Elsewhere, in the Russian Federation and Ukraine, production is predicted to decline from last year's above-average level, as high input costs is anticipated to cause a reduction of both plantings and yields. By contrast, wheat production in the United States is forecast to rise by 2 percent, as a recovery to near-average yields more than offset an anticipated price-induced decline in plantings. Similarly in Canada, with the main spring crop yet to be planted, wheat production is forecast to expand by nearly 3 percent. As for coarse grains, in the southern hemisphere, where the major coarse grains crops for harvest in 2015 have already been planted, early indications point to a decline in 2015 production from last year's high levels. In South Africa, maize production is expected to decline sharply, by 33 percent, following severe rainfall deficits earlier this year, with production also expected to contract in most neighbouring countries. In South America, smaller plantings in Argentina and Brazil, in response to less-attractive prices (compared with soybeans), could trim output well below the exceptionally high levels of the previous two years. As for rice, 2015 production prospects are generally positive in the southern hemisphere countries, some of which have already begun harvesting the new season crop. Sizeable increases are forecast in Indonesia and Sri Lanka, Colombia and Paraguay, while in Australia output is officially anticipated to fall by 18 percent, reflecting lingering shortages of irrigation water.

FAO's forecast for world cereal utilization in 2014/15 has been raised by nearly 17 million tonnes since March to 2 493 million tonnes, and now stands at 2.6 percent (63 million tonnes) above the previous season's revised estimate. Adjustments to the historical cereal supply and demand balances (2004/05-2013/14) of China and India are largely responsible for this increase. Total wheat utilization is currently projected to approach 711 million tonnes, 7 million tonnes more than predicted last month and 2.7 percent (19 million tonnes) higher than in 2013/14. Larger feed consumption of wheat in the EU is behind most of the year-on-year increase. Consumption of wheat as food, which is projected to rise by 1.1 percent (5 million tonnes) in 2014/15 to 485 million tonnes, still accounts for the bulk of wheat utilization. Total utilization of coarse grains is set to reach 1 282 million tonnes, up 11 million tonnes from the previous forecast last month and almost 3 percent (35.6 million tonnes) bigger than in 2014/15. Feed use of coarse grains is projected to reach 723.6 million tonnes, 3.6 percent (25 million tonnes) higher than in 2013/14. In China, feed use of coarse grains is currently anticipated to grow by almost 6 percent from the previous season's estimate to reach 143.5 million tonnes, which would confirm China as the world largest user of coarse grains for feed, surpassing the United States, the traditionally largest feed market, for the fourth consecutive season. Total feed use of coarse grains in the United States is gauged at 140 million tonnes, up 6.6 million tonnes from the 2013/14 level. Coarse grains feed consumption is forecast to increase significantly also in Argentina and Brazil. World utilization of rice in 2014/15 is anticipated to hover around 500 million tonnes (milled basis), 1.7 percent more than last year, with the bulk destined to human consumption, as rice remains a key staple in many parts of the world. Under current expectations, the average per capita food consumption of rice in 2014/15 stands at 57.4 kilo, about the same level of last year.

The FAO forecast for world cereal stocks by the close of crop seasons ending in 2015 has been revised up sharply since last month's report and now stands at 645 million tonnes. This figure is 14.8 million tonnes higher than anticipated in March and 6.2 percent (38 million tonnes) above the 2014 level. Based on the current forecast for cereal stocks and utilization, the cereal stocks-to-use ratio is expected to reach 25.9 percent in 2014/15, its highest value since 2001/02. This month's revision of world cereal stocks mostly reflects changes to the historical stock figures (2004/05-2013/14) in China and India. In the case of China, total cereal stocks are projected at around 250 million tonnes, the highest carry-over inventory since 2000/01 and 17 million tonnes more than previously forecast. Most of the revision concerns maize stocks, which have been adjusted upwards significantly since 2005/06 and are now projected at 95 million tonnes, 13 million tonnes more than reported last month. By contrast, in India, maize reserves at the close of the country's 2014/15 season have been scaled down by 3.7 million tonnes since last month, reflecting revisions to consumption estimates, especially between 2004/05 and 2009/10. Total inventories of coarse grains are projected at nearly 264 million tonnes, 8 million tonnes more than the previous forecast and up 12.8 percent (30 million tonnes) from 2014. The bulk of this season's expected build-up, relative to 2014, is likely to originate in the United States (13.6 million tonnes), the EU (7.7 million tonnes), Brazil (3.0 million tonnes), China (2.8 million tonnes), and the Russian Federation (2.0 million tonnes). Turning to wheat, global inventories by the close of crop seasons ending in 2015 are now forecast to approach 205 million tonnes, 6.3 million tonnes more than anticipated in March and 6.3 percent (12.2 million tonnes) more than in 2014. Much of the year-on-year expansion is expected to be concentrated in the EU, as well as in India, the Russian Federation and the United States. As regards rice, for the first time since 2004, world inventories may decrease, with an anticipated year-to-year drawdown of over 4 million tonnes, or 2.4 percent, to 176.6 million tonnes. Seen from a trading status perspective, the reduction in rice reserves is likely to concern the major rice exporting countries most, in particular India and Thailand, as a consequence of government decisions to trim publicly held inventories.

The forecast for global cereal trade in 2014/15 has been raised by 3.0 million tonnes this month to 347.2 million tonnes. The upward adjustment largely concerns trade in coarse grains, now estimated to reach 154.5 million tonnes (July/June), 2.7 million tonnes higher than reported in March, although still down 2.6 percent (4.2 million tonnes) from the 2013/14 record level. The 2014/15 decline in coarse grains trade from the previous season would be mostly the result of an 8.5 million tonne contraction in maize to about 116 million tonnes that would more than offset an anticipated increase of almost 4 million tonnes in sorghum trade to 10.5 million tonnes. China is expected to lead the anticipated growth, with a projected import volume of 7 million tonnes of sorghum in 2014/15, compared to negligible imports in earlier years. Given the strong feed demand and high domestic maize prices, coupled with restrictions on GM maize imports, China has become a much larger importer of sorghum, and to a lesser extent also of barley, from international markets. Trade in wheat is forecast to reach 151.4 million tonnes in 2014/15 (July/June), up slightly from the previous report in March but still more than 5 million tonnes (3.4 percent) below the record in 2013/14. The contraction is largely the result of smaller imports by China, following another record crop in 2014. Although still very tentative, rice trade in calendar year 2015 may dip by 2.5 percent to 41.3 million tonnes, from the all-time high achieved in 2014. Although several major exporters faced production setbacks in 2014, large inventories will keep tradable supplies abundant, enabling most of them to maintain or increase shipments in 2015, with the exception of India, which is anticipated to incur a fall. On the import side, good crop results should enable several large traditional buyers to reduce their purchases, including Bangladesh, Indonesia, the Philippines and Sri Lanka.

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.