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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.

Global cereal stocks higher as production raised while consumption lowered -Early prospects for 2016 harvests are mixed

Release date: 04/02/2016

FAO's latest forecast for world cereal production in 2015 stands at close to 2 531 million tonnes, 3.9 million tonnes more than reported in December but still 30.1 million tonnes (1.2 percent) below the 2014 record. This month’s upgrade mostly reflects positive output revisions for wheat, mainly in Canada and Russia, and coarse grains in China, Canada and Paraguay, more than compensating for reductions of coarse grains production in the EU, the Sudan, Russian Federation, Ukraine and the United States. The 2015 world rice production forecast was also raised, but only slightly, as much of the improved outlook in China, Viet Nam and the United States made up for a worsening in Japan and Nepal.

Early prospects for 2016 cereal crops are mixed, partly influenced by the prevailing El Niño-associated weather patterns. In the Northern Hemisphere, planting of the 2016 winter wheat crop, which accounts for the bulk of the wheat cultivated globally, is complete. In the United States, preliminary indications point to winter plantings falling to their lowest level since 2010. In Europe, dry weather forced Ukraine to sharply cut the area under wheat, but conditions are generally favourable in the Russian Federation, despite some excessive wetness in the southern and central parts of the country. Wheat plantings in the EU are anticipated to be slightly down, but overall beneficial rains promoted crop establishment, with early prospects pointing to a third successive large output this year. In Asia, reduced water supplies in India, following a poor 2015 monsoon and below-average rains since October 2015, have hindered 2016 wheat plantings, with the area expected to decline. Wheat cultivation in China is anticipated to remain unchanged from last year, reflecting continued government measures to support domestic prices and beneficial weather. In the Southern Hemisphere, early-season dryness in Brazil and Argentina could result in reduced plantings. Conditions are mostly unfavourable in Southern Africa where El Niño-associated dry and hot weather has severely weakened crop prospects, especially in South Africa where preliminary indications point to a 25 percent likely cut in production. As for rice, the 2016 outlook for crops along and south of the Equator is dim, with insufficient water lowering plantings in Australia and delaying them in Indonesia, while excessive rains and low returns are negatively affecting sowings in South America.

The FAO forecast for world cereal utilization in 2015/16 has been lowered by 2.3 million tonnes since the previous report to 2 527 million tonnes, only 0.8 percent more than in 2014/15. Food consumption of cereals is projected at 1 096 million tonnes, up 1.2 percent from 2014/15, while feed utilization is forecast at 906 million tonnes, 1.3 percent higher than in 2014/15. Among the major cereals, wheat utilization is anticipated to increase by 2.0 percent to 729 million tonnes. After a contraction in 2013/14, feed use of wheat is forecast to expand for a second consecutive season, spurred by greater usage in the European Union, the United States and the Russian Federation. Total utilization of coarse grains in 2015/16 is put at nearly 1 300 million tonnes, slightly less than anticipated in December. Maize usage is seen rising by only 0.3 percent (3 million tonnes), in spite of a relatively strong expansion in food consumption and resilient feed demand in a number of developing countries, with growth dampened by a shift towards feed wheat in Europe. China, Mexico and Argentina account for most of the anticipated rise in maize use for animal feed in 2015/16. Usage of barley by the livestock sector may also rise, although not enough to compensate for projected declines in the usage of sorghum and other secondary coarse grains. World rice utilization is projected to expand by 1.1 percent, sufficiently to keep per caput consumption stable at around 54.7 kg per year.

World cereals stocks by the close of seasons ending in 2016 are forecast at 642 million tonnes, down 1 million tonnes from December but still 2.5 million tonnes (0.4 percent) above their already elevated opening level. Based on this forecast and the expected utilization, the global cereal stock-to-use ratio would remain steady at around 25 percent. The FAO forecast for world wheat inventories has been scaled up to nearly 211 million tonnes, 3.7 million tonnes more than reported in December and 4.7 million tonnes (1.8 percent) above last year. The increase since December largely reflects upward adjustments to earlier forecasts in Argentina, China, Russian Federation and Ukraine. However, this season's build-up of global wheat inventories would mostly result from an accumulation in the United States (up 5.1 million tonnes), European Union (up 5 million tonnes) and China (up 2.4 million tonnes), more than offsetting significant stock reductions elsewhere, especially in Canada (down 2.9 million tonnes), India (down 2.5 million tonnes) and the Islamic Republic of Iran (down 1.8 million tonnes). The forecast for world coarse grains stocks has been trimmed by 5.7 million tonnes from the previous report to 265 million tonnes, but still 3.2 million tonnes (1.2 percent) above last year's. This month's downward revision mostly ensues from a reduction in Brazil and lower historical (2004/05-20015/16) figures of maize carryovers in the European Union, which more than offset upward adjustments to stocks held in Canada, China, Paraguay and the United States. Compared to December, FAO slightly raised its forecast of global rice inventories in 2016, mainly reflecting more buoyant expectations for 2015 crops in China and western African countries. However, compared to last season, world rice carryovers are anticipated to decline by 5.5 million tonnes, or 3.2 percent, to 166.6 million tonnes, as world production this year would not be sufficient to cover expected consumption.

The latest FAO forecast for international trade of cereals in 2015/16 stands at 368 million tonnes, 3.3 million tonnes more than anticipated in December, but remains 2.6 million tonnes (0.7 percent) below the 2014/15 trade estimate. Global wheat trade in 2015/16 (July/June) is now forecast at 151.5 million tonnes, 2 million tonnes more than anticipated in December. Yet, under current expectations, global wheat trade would be 5.0 million tonnes lower than in 2014/15, mostly on a much weaker import demand in Morocco, Islamic Republic of Iran and Turkey. Among exporters, Canada and the European Union are expected to bear the brunt of the shrinking world trade, while shipments from Argentina and the Black Sea region are likely to exceed the previous season's levels. At almost 171 million tonnes, world trade of coarse grains in 2015/16 (July/June) has also been lifted by around 1 million tonnes since December, on higher expected barley imports by China and of maize by Vietnam and South Africa. In spite of this upward revision, global trade of coarse grains is predicted to contract in 2015/16 comp compared to the previous season, largely because of lower imports by several countries in Asia, namely China, Indonesia and the Islamic Republic of Iran. Prospects for international trade in rice in calendar 2016 were somewhat up-scaled, to reflect greater purchases by China and Indonesia than last anticipated. As a result, rice trade is now predicted to rebound by 1.5 percent in 2016 to 45.4 million tonnes, almost matching the 2014 record.

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.