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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 2019: 7 February, 7 March, 4 April, 9 May, 6 June, 4 July, 5 September, 3 October, 7 November, 5 December.

Global cereal production and inventories to decline but overall supplies remain adequate

Release date: 06/12/2018

FAO’s latest forecast for 2018 world cereal production stands at 2 595 million tonnes, down marginally from November and 2.4 percent (62.5 million tonnes) below last year’s record high1.

FAO’s forecast of world rice production in 2018 has remained broadly stable since November, pointing to the global output expanding by 1.3 percent year-on-year to a new high of 513 million tonnes. At a country level, production estimates were downscaled for Madagascar, as field assessments indicated that uneven rains and storm damages resulted in a more restrained output recovery than previously envisaged. By contrast, prospects have improved for a few Latin American and Caribbean producing countries, in particular Peru, chiefly reflecting better than expected yields.

Global wheat production is forecast at 725.1 million tonnes, 2.8 million tonnes lower than the November figure, reflecting reduced estimates for this year’s harvests in Turkey and the Russian Federation. The forecast for world production of coarse grains has also been lowered, by 3.1 million tonnes, to 1 357 million tonnes, following some downward adjustments to barley and sorghum outputs. However, the forecast of global maize production remains unchanged, with an upward adjustment in Ukraine, driven by better-than-expected yields, largely offsetting lower prospects in the United States.

Looking ahead, planting of the 2019 winter wheat crop is progressing in the Northern Hemisphere. In the United States, higher producer prices are expected to instigate enlarged plantings, although the expansion could be curbed by excessive wet conditions that has slowed seeding progress. A rebound in winter-wheat sowings is forecast in the EU although dry weather is affecting some countries, while expansions are also foreseen in the Russian Federation and Ukraine, where generally beneficial weather prevails. Similarly, in Asia, favourable weather is benefiting crop establishment in China and India; however, reduced water availability in Pakistan has somewhat affected early crop prospects.

In the Southern Hemisphere, the 2019 summer cereal crop is currently being sown. Conducive weather and higher prices have boosted production prospects for maize in Argentina and Brazil, with outputs expected to rebound from the declines in 2017. In South Africa, maize sowings are anticipated to expand, and while early weather conditions were mostly favourable, increased prospects of anomalous dry conditions associated with a possible El Nino event, impairs the outlook for the country and the subregion.

World cereal utilization in 2018/19 is pegged at 2 649 million tonnes, slightly below the November forecast but still up 1.3 percent from 2017/18. Total utilization of coarse grains is expected to reach a new high of 1 401 million tonnes, supported by a sharp (3.3 percent) anticipated increase in maize utilization, to 1 107 million tonnes, largely on strong demand for feed and industrial use, especially in China and the United States. However, unchanged from November, global wheat utilization is heading to only a marginal rise in 2018/19 to 740 million tonnes. While food consumption of wheat is foreseen to keep pace with population growth and reach 510 million tonnes, wheat feed utilization is expected to stagnate at around 141 million tonnes, constraint by lower production and higher prices. FAO’s forecast of global rice utilization in 2018/19 is forecast at 509 million tonnes, down slightly from November, but still pointing to a 1.0 percent annual rise owing to a population-driven expansion in food intake.

International trade in cereals is seen heading to a small decline in 2018/19, contracting by 0.9 percent from the previous season’s record level to 416.6 million tonnes. World wheat trade is pegged at 172.5 million tonnes, down 2.1 percent from 2017/18 and only marginally below the November projection. Aided by higher domestic production this year, wheat purchases by Algeria, Morocco and India are expected to decline the most in 2018/19. Regarding exporters, wheat shipments from the Russian Federation, the world’s largest wheat exporter, are now forecast at 34.5 million tonnes, down 15 percent from 2017/18, reflecting this year’s sharp decline in domestic production. The decline in exports from the Russian Federation is expected to be largely compensated by a significant rebound in sales from the United States, up almost 28 percent from 2017/18, to 29.5 million tonnes. Higher exports are also forecast for Argentina and Canada, offsetting likely reduced shipments from Australia, the EU and Ukraine.

The forecast for 2018/19 global trade in coarse grains is raised by 1.5 million tonnes, to almost 197 million tonnes, just slightly above the 2017/18 estimated level and marking a new record level. Upward revisions to maize imports by the EU, followed by China, Mexico and Canada, account for most of the month-to-month increase.  World maize trade in 2018/19 is expected to reach 157.2 million tonnes, up 1.4 percent from 2017/18, mostly due to anticipation of a stronger import demand by the EU.  By contrast, trade in sorghum is likely to fall significantly in 2018/19 and drop by 21 percent from 2017/18 to just over 6 million tonnes, with nearly all the expected decrease in China. Trade in barley is expected to drop marginally, to just under 30 million tonnes, on reduced purchases by several countries in Africa and Asia.  Regarding exports of coarse grains, Ukraine is set to boost its maize shipments in 2018/19 following this year’s record production, while larger exports are also forecast for Argentina and the United States, more than offsetting anticipated sharp declines in sales from Brazil (maize) and the Russian Federation (maize and barley).
International trade in rice in 2019 (calendar year) is expected to subside by 1.4 percent year-on-year to 47 million tonnes, unchanged from November. Among exporters, Thailand is anticipated to see the largest contraction in shipments, followed by Pakistan and Brazil, while China, India, the United States and Viet Nam are all seen exporting more. 

The forecast for world cereal stocks by the close of seasons in 2019 stands at 762 million tonnes, unchanged from November and down nearly 53 million tonnes (6.5 percent) from their all-time high opening levels. Among the major cereals, the largest year-on-year contraction is forecast for maize inventories, which are expected to decline by 14 percent (44 million tonnes) to 157 million tonnes, mostly due to large drawdowns in China followed by the United States, Argentina and Brazil. Wheat inventories are also forecast to decrease in 2018/19, down at least 12 percent (4.4. million tonnes) from their record opening levels, and with most of the drawdown concentrated among the major exporters. World rice stocks are anticipated to reach a historical high of 177 million tonnes, up 2.7 percent from their opening levels and sufficient to cover 34.3 percent of projected uses in 2019/20. Overall, at the current forecast levels, the ratio of global cereal carryovers to utilization would be 28.1 percent, down from a 17-year high of 30.8 percent registered in the previous season and the smallest since 2013/14.

1 The FAO’s latest forecast has not incorporated historical revisions to area and production of cereals in China published by China’s National Bureau of Statistics in October 2018. The revisions reflect the results of China’s Third National Agricultural Census and cover the period 2007 to 2017. The revisions are very significant in size, especially with regard to maize production. For this reason, FAO is undertaking a detailed review of its supply and demand balances for China with the view to publish the results early next year.

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.