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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 forecast up 22 million tonnes, global stocks and trade also raised

Release date: 08/09/2016

World cereal supply and demand forecasts for the 2016/17 marketing season have been adjusted considerably since July, following sharp upward revisions to production forecasts in several countries. Based on these latest updates, FAO expects global cereal supply and demand situation in 2016/17 to be even more comfortable than predicted at the start of the season.

FAO’s current forecast for 2016 world cereal production stands at nearly 2 566 million tonnes, 22 million tonnes (0.9 percent) above the July forecast and 40 million tonnes (1.6 percent) higher than in 2015. The buoyant outlook mainly reflects improved prospects for the coarse grain output, now put at 1 329 million tonnes, 1.0 percent above the July forecast and 2.1 percent higher than in 2015. The bulk of this increase rests on a significant, 18-million-tonne, upward revision to the maize crop in the United States, where beneficial weather conditions are expected to boost yields. Maize output forecasts are also raised in Ethiopia, Mexico and the Sudan. These increases were partly offset by cuts in maize and barley production in the EU and of maize in Brazil due to much lower yields. The outlook for wheat also improved (by 1.2 percent), putting this year’s world production forecast above the 2015 record, at 741 million tonnes. Large revisions for wheat production in Australia, Canada, India, the Russian Federation, Ukraine and the United States account for much of this month’s upturn, which more than offset a significant cutback in the EU wheat crop forecast, mostly due to wet-weather damage in France.  The 2016 rice production forecast now stands at almost 496 million tonnes, up 700 000 tonnes from previous expectations and reaching a new record. The upward adjustment is the result of larger planting estimates than previously envisaged in Asia, owing to favourable weather conditions, and in the United States, chiefly on account of less attractive prices for competing crops. Rice output forecasts were, however, lowered somewhat for China, Brazil and Sri Lanka since July, in all cases mirroring the negative impact of excess precipitation.

In spite of this month’s significant upward revisions to production figures, the FAO forecast for world cereal utilization in 2016/17 has remained nearly unchanged from the previous report, at close to    2 555 million tonnes. At this level, total cereal utilization would exceed the previous season’s level by 1.6 percent, with maize, wheat and rice accounting for most of the increase. Total world maize utilization is set to reach an all-time high of 1 029 million tonnes in 2016/17, up 2.2 percent from 2015/16. The biggest increase is expected to concern the United States, where a record 2016 maize crop and lower domestic prices could drive animal feed use of maize up by nearly 9 percent (12 million tonnes) year-on-year. The forecast for world wheat utilization in 2016/17 has been revised up slightly since the previous report to 728.7 million tonnes. An abundance of low quality wheat supplies is seen to boost global feed use of wheat to 145 million tonnes, up 5.8 percent from 2015/16. Total wheat used for direct human consumption is projected at 499 million tonnes, about 1.0 percent higher than in 2015/16. At this level, average consumption would remain stable at around 67 kg on a per capita basis. By contrast, prospects for rice utilization in 2016/17 were downscaled by 600 000 tonnes from the July forecast to 502.6 million tonnes. Despite this revision, world rice use is still predicted to exceed the 2015/16 record by 1.4 percent, resulting in a slight expansion in global per capita food use to 54.4 kg.

The FAO forecast for global cereal stocks by the end of seasons in 2017 has been scaled up by 28 million tonnes (4.5 percent) since July to nearly 664 million tonnes, up 0.7 percent from their opening levels. As a result, the 2016/17 world cereal stocks-to-use ratio, a leading global food security indicator, is now projected to reach 25.3 percent, one percentage point over the July figure and well above the historic low of 20.5 percent registered in 2007/08. World wheat inventories are forecast to expand by 3.5 percent (7.9 million tonnes), to reach 233 million tonnes, 7.5 percent (16 million tonnes) higher than the last forecast. The largest upward adjustments this month are in China, followed by India, Morocco and the United States, more than offsetting a cut in the EU. Compared to their opening levels, wheat inventories are currently projected to increase significantly in China (up almost 11 million tonnes) as well as in the United States (up 3.2 million tonnes) and the Russian Federation (up 2.2 million tonnes).  The forecast for world coarse grain stocks has also been lifted significantly, by around 11 million tonnes (4.4 percent), to around 265 million tonnes, which is slightly higher than their opening level. Upward revisions to maize inventories accounted for most of the adjustment; in particular in the United States, where maize carry-overs are projected at nearly 61 million tonnes,  some 10 million tonnes more than the July forecast and as much as 18 million tonnes (41 percent) over the previous season’s level.  World rice inventories at the close of 2016/17 are now projected at 165.8 million tonnes, down 3.8 million tonnes from their opening levels, but 1.0 million tonnes above July forecasts. India, the United States and Viet Nam, all major rice exporters, were behind this month’s upward revision, reflecting higher than previously anticipated outputs combined with reduced export prospects.

The FAO forecast for world trade in cereals in 2016/17 has been raised by nearly 9 million tonnes (2.4 percent) this month to around 383 million tonnes. Given an even more significant upward adjustment (11 million tonnes) to the 2015/16 global trade estimate since July, the revised 2016/17 cereal trade forecast would fall short of the 2015/16 level by almost 10 million tonnes, or 2.5 percent.

Global wheat trade (July/June) is now anticipated to reach 163.5 million tonnes, 5 million tonnes over the July forecast, but still 1.4 million tonnes lower than in 2015/16. The wheat trade forecast has been raised following upward adjustments to imports by the EU as well as several countries in Asia (Bangladesh, China and the Philippines) and Africa (Algeria, Egypt, South Africa and Sudan).  On the export side, the Russian Federation is expected to emerge as the world’s biggest wheat exporter (29.5 million tonnes) for the first time. By contrast, this year’s reduced harvest is foreseen to cut shipments from the EU (previously the world’s leading exporter) by 24 percent, to a 4-year low of 25.5 million tonnes. International trade in coarse grains in 2016/17 (July/June) is forecast at 175.5 million tonnes, up 4 million tonnes from the previous report but still 4.7 percent (8.6 million tonnes) below the 2015/16 estimate. Among the major coarse grains, world trade of maize is now forecast at 135 million tonnes, 3 million tonnes more than earlier predicted, with South America accounting for the bulk of the upward adjustment. The forecast for world barley trade has also been raised, by 1.5 million tonnes to 27 million tonnes, with China and Saudi Arabia accounting for most of the increase. As with wheat, lower prices and ample supplies are anticipated to promote larger trade in coarse grains, even though the overall trade volume is still expected to remain below the previous season’s level, thus fuelling competition among the leading exporters. At a slightly revised level of 43.7 million tonnes, forecasts of international trade in rice in 2017 continue to point to a third successive year of passive global demand, owing to improved local availabilities in important Asian markets.

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.