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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 2014: 06 February, 06 March, 03 April, 08 May, 05 June, 03 July, 11 September, 09 October, 06 November, 04 December.

Large cereal supplies and record trade in 2013/14; wheat production to decline and rice to increase slightly in 2014

Release date: 03/04/2014

The outlook for global cereal supplies in 2013/14 marketing season has improved since the last report in March. FAO’s estimate for world cereal production in 2013 has been raised by 6 million tonnes to 2 521 million tonnes (including rice in milled terms). The latest adjustments reflect higher estimates for production of coarse grains and rice in several countries. The FAO’s forecast for ending stocks has also been raised and world trade is set to increase significantly more than earlier expected.

World wheat production in 2014 is forecast at 702 million tonnes, down 2 million tonnes from the March forecast and 2 percent lower than last year’s record harvest. In Canada, reduced plantings could result in a significant (22 percent) drop in production. By contrast, wheat production  is anticipated to rise by (3.5 percent) in the United States, assuming good results from spring plantings and despite the adverse impact of continued dryness on winter crops. In the EU, overall prospects are good and production could increase somewhat. In Australia, production could decline from last year’s above average level, mostly on drier conditions. China expects to top slightly last year’s bumper harvest, owing to higher plantings, while in India, official forecasts point to a record production. In the major producing CIS states, yields are expected to fall from the relatively high levels in 2013, which may result in lower production in Kazakhstan, the Russian Federation and Ukraine. Regarding early production prospects for coarse grains, conditions in southern hemisphere countries are mixed. The outlook is generally favourable in southern Africa, where plantings have already taken place. In South Africa, maize production could increase (by 5 percent), on an expected yield recovery. In Southern America, conditions are positive in Argentina but production of the first maize crop in Brazil could be adversely affected by unfavourable weather. According to the first FAO forecast, world rice production in 2014 could rise by a modest 0.8 percent to 500.7 million tonnes (milled basis), as growth is likely to be dampened by falling world prices and fears of a recurring el Niño event. In those countries located along and south of the equator, where the 2014 season crops are approaching the harvest stage, production is seen rising in Brazil, Indonesia and Madagascar, while drought problems are anticipated to depress output in Australia, Peru, Sri Lanka and Tanzania. In the northern hemisphere, where crops are soon to be planted, prospects point to growth in China, India, Myanmar, the Philippines and the United States, while the removal of price support in Thailand may prompt farmers in the country to reduce plantings and production.

World cereal utilization in the 2013/14 marketing season is expected to reach 2 421 million tonnes, 4 percent (94 million tonnes) higher than in 2012/13. The growth would be largely on account of higher utilization of coarse grains, which is seen to expand by nearly 7 percent, driven mostly by a surge in the use of maize for animal feed to 534 million tonnes, 10 percent higher than in the previous season. This increase reflects a strong recovery in maize supplies following last year’s record production and lower prices. By contrast, total use of wheat is likely to remain steady at 688 million tonnes, as a 2.0 percent contraction in feed utilization, amid large supplies of more competitively priced coarse grains, offset a 1.4 percent rise in the food use of wheat. World rice utilization is forecast to increase by 2.5 percent to 490 million tonnes, sustained by a 2.0 percent gain in food demand. Although growing, rice consumed as feed and for other end uses remains limited, accounting, overall, for 16 percent of the total rice utilization.

The forecast for world cereal stocks by the close of crop seasons ending in 2014 has been raised by 3.8 million tonnes, to 582.3 million tonnes. This would represent a 15.6 percent (79 million tonnes) expansion from 2013 and the highest level since 2001. Maize and rice are responsible for this month’s upward revision in carryover stocks, with increases for maize in China and Ukraine and for rice in India, Nigeria and the Philippines accounting for most of the adjustment. Boosted by a record production in 2013, total cereal inventories rebounded sharply from the 2013 dip, with coarse grains, wheat and rice all contributing. As a result, the global cereal stocks-to-use ratio is set to increase by 3 percentage points to 23.9 percent, its highest value since 2003. Wheat stocks in 2014 are forecast at 180 million tonnes, up 14 percent (22 million tonnes) compared to 2013, sustained by higher inventories in Canada, China and the Russian Federation, more than offsetting a significant decline in the United States, due to a fall in its production and growing exports. World stocks of coarse grains could reach 222 million tonnes by the end of seasons in 2014, a 30 percent (51 million tonnes) rise, with Canada, China, Ukraine and the United States responsible for most of the expansion.  With production again surpassing utilization, world rice inventories are anticipated to increase by 3.2 percent (5.6 million tonnes) in 2014 to 180.5 million tonnes.  Much of the gain would concentrate in China, Thailand, Viet Nam, while Myanmar is anticipate to end the season with sharply reduced inventories.

The forecast for world cereal trade in 2013/14 has been raised by 4.5 million tonnes to 330 million tonnes, reflecting upward revisions of imports to several destinations: including China, the EU and Egypt for coarse grains; China, Islamic Republic of Iran, Turkey and Saudi Arabia for wheat; and Bangladesh, Nigeria and Senegal for rice. As a result, world cereal trade in 2013/14 would be 6.6 percent, or 20.5 million tonnes, bigger than in 2012/13 and hit a record. The expansion comes after the significant contraction registered in the previous season. Among the major cereals, wheat trade in 2013/14 (July/June) is forecast to increase by about 6 percent (8 million tonnes) to 148 million tonnes, exceeding the previous record, set in 2011/12. Mainland China is anticipated to be the main driver, with its imports surging by almost 200 percent to 8.5 million tonnes. Algeria, Egypt and Saudi Arabia are also anticipated to increase purchases, more than offsetting declining inflows to the EU, the Republic of Korea and Morocco. World trade in coarse grains in 2013/14 (July/June) is forecast to rise by nearly 8 percent (10 million tonnes). Again, a 63 percent (4.2 million tonnes) increase of imports by Mainland China are expected to fuel this growth, but those by Saudi Arabia (mostly barley and maize), Egypt (mostly maize), and Mexico (maize and sorghum) are also expected to contribute. By contrast, maize imports by the United States are expected to fall from the exceptionally large intake in 2012/13.  World rice trade in 2014 is forecast to increase by 5.5 percent (2 million tonnes) to an all-time high of 39.3 million tonnes. Lower world prices and/or the need to reconstitute reserves are anticipated to foster larger purchases by Bangladesh, China, Indonesia, Nigeria and the Philippines, while the Republic of Korea and the Islamic Republic of Iran may reduce their rice purchases.

Ample exportable supplies and lower international prices have boosted cereal exports this season. For wheat, shipments from the EU could rise by 30 percent (6 million tonnes), from the Russian Federation by 40 percent (4 million tonnes) and from Ukraine by 38 percent (2.6 million tonnes). For coarse grains, maize shipments from the United States are forecast to rebound by at least 60 percent (12 million tonnes), while exports from Ukraine are anticipated to increase by 33 percent (4.5 million tonnes). In spite of the prevailing geopolitical tensions, Ukraine is set to become the fourth largest exporter of maize after the United States, Brazil and Argentina. As for rice, much of the anticipated growth in world exports is foreseen to stem from Thailand, where falling market prices, following the relaxation of the pledging programme, are restoring much of the competitive edge the country has lost since late 2011.  Among the other major rice exporters, Cambodia, Pakistan, the United States and Viet Nam may also step up their deliveries, while larger domestic requirements may curtail India’s exports by about 1 million tonnes. Nonetheless, India is still anticipated to retain its number one position among rice exporters.

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.