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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 2018: 1 February, 1 March, 5 April, 3 May, 7 June, 5 July, 6 September, 4 October, 1 November, 6 December.

World cereal supplies in 2017/18 surge to all-time high

Release date: 01/02/2017

Following this month’s further upward revision to the forecast for the 2017 global cereal production, world cereal supplies in the 2017/18 season are expected to rise to an all-time high of nearly 3 331 million tonnes. While global cereal utilization in 2017/18 is also heading for an increase (1.2 percent) from the previous season, world cereal inventories are projected to climb steadily for the fifth consecutive season, rising to a record high level of almost 726 million tonnes. The resulting stock-to-use ratio is forecast to be the highest since 2001/02..

 FAO cereal production forecast for 2017 raised sharply

• FAO’s latest estimate for 2017 world cereal production is significantly higher than the one published in December. Based on the current supply and demand forecasts for the 2017/18 marketing season, global markets of all major cereals remain well balanced, supported by record inventory levels and evidenced by above-average stocks-to use ratios.

Global cereal production in 2017 even higher than earlier anticipated

• FAO’s estimate for global cereal production in 2017 now stands at a record high 2 640 million tonnes, 1.3 percent above the 2016 estimate. The estimate has been raised by 13.5 million tonnes since December, marking a second consecutive substantial upward revision.

• World production of coarse grains in 2017 is now pegged at 1 381 million tonnes, up 35 million tonnes (2.6 percent) from 2016. The latest estimate is some 9 million tonnes higher than it was reported in December with most of the revision reflecting larger maize production levels in China, thanks to higher yields than earlier anticipated, and in the EU, where the maize harvest in Romania proved better than previously expected. Additionally, maize production has been revised upwards in Mexico, following increases in yield and acreage.

• Global 2017 wheat production has also been adjusted upwards, by 2.8 million tonnes. At this level, world wheat production stands at only 3.7 million tonnes below the 2016 record harvest. The bulk of this month’s increase was driven by higher production estimates for Canada and the Russian Federation

• The FAO estimate for world rice production in 2017 has been raised by 1 million tonnes to 501.9 million tonnes. The improved prospect mostly reflects an upward revision in China (Mainland), which has more than offset lower production estimates for Viet Nam and some other countries. The latest estimate puts the 2017 global production of rice at nearly 1.2 million tonnes above the record level reached in 2016.

World cereal utilization to expand faster than-earlier anticipated

• World cereal utilization in 2017/18 is currently forecast at nearly 2 603 million tonnes, up 35.7 million tonnes (1.4 percent) from 2016/17 and also 3 million tonnes above the December forecast. The increase from December mostly reflects upward adjustments made to the feed use of coarse grains (mostly in China, EU, Mexico and the Russian Federation), more than offsetting a significant downward revision to the non-food use of wheat (mainly in the EU and the Russian Federation). 

• Global wheat utilization in 2017/18 is forecast to reach around 734 million tonnes, down 6 million tonnes from December and only 1.5 million tonnes (0.2 percent) above the 2016/17 estimated level. The increase from the previous season is now smaller than it was anticipated earlier, primarily because of lower demand for feed wheat in view of ample supplies of cheaper coarse grains in global markets. Food use of wheat, however, is still projected to increase by 1.1 percent, to almost 504 million tonnes.

• By contrast, the FAO forecast for total utilization of coarse grains in 2017/18 has been raised to 1 365 million tonnes, 8.5 million higher than in December, mostly on upward revisions to the feed use of maize and barley. At this level, world utilization of coarse grains would be some 28 million tonnes (2.1 percent) above the 2016/17 estimated level, with feed use reaching an all-time high of 764 million tonnes, up 1.8 percent from the 2016/17 estimated level, with the largest increases projected for China, Brazil, EU and Mexico.

• Global rice utilization is forecast to sustain an annual 1.2 percent growth and reach 503.7 million tonnes in 2017/18, some 700 thousand tonnes higher than the December forecast. The expansion is foreseen to be mostly driven by a steady increase of food use, while other end-uses are projected to remain largely stable compared with last year’s levels.

Record global cereal stocks

• World cereal stocks are projected to rise by almost 36 million tonnes (5 percent) from their already record high opening levels to 739 million tonnes. This is 12.8 million tonnes above the December forecast, leading to the world stocks-to-use ratio of cereals remaining comfortable at 27.7 percent, up slightly from 2016/17 and the highest since 2001/02.

• This month’s higher forecast for world cereal reserves largely reflects an upward revision (12.8 million tonnes) to global wheat stocks (ending in 2018), which are now forecast to hit an all-time high of 270 million tonnes, as much as 21 million tonnes (8.7 percent) above their already high opening levels. The bulk of the increase is foreseen to result from stock buildups in the EU and the Russian Federation. 

• FAO’s forecast for total coarse grain inventories (ending in 2018) changed little since December, with an increase in maize stocks (3 million tonnes) mostly in Brazil and China offset by a decrease in barley stocks (4.6 million tonnes) mainly in Azerbaijan and the Russian Federation. While maize inventories are set to reach a new record of 248 million tonnes, up 12.5 million tonnes (5.3 percent) from their opening levels, world barley stocks are heading towards a decline of 1 million tonnes, to 26.4 million tonnes.

• The forecast of world rice stocks (ending in 2018) varied little since December and has been maintained at 170 million tonnes, 1.6 million tonnes higher than their opening levels. The downward revisions, mostly in Viet Nam and Bangladesh, were largely offset by higher projected carry-overs in China (Mainland).

Global cereal trade in 2017/18 close to the 2016/17 record

• International trade in all cereals is forecast to approach 404 million tonnes in 2017/18, only 1.8 million tonnes (0.4 percent) below the previous season’s record volume. Trade in all the major cereals, except for maize, is seen to contract. 

• World wheat trade in 2017/18 (July/June) is pegged at 175 million tonnes, down 2 million tonnes (1.4 percent) from 2016/17 and 500 000 lower than the December forecast. The decline from the previous season reflects expectations of smaller purchases by China, India, Morocco and Thailand, more than offsetting higher imports by to Egypt, Indonesia and South Africa.

• Global trade in coarse grains in 2017/18 (July/June) has been raised by 1 million tonnes since December to 183 million tonnes and is now much closer to the record volume of 184 million tonnes in 2015/16. The increase reflects expectations of larger trade in barley driven mostly by stronger import demand in China and Iran. World trade in maize is set to increase by 3.2 million tonnes (2.3 percent) in 2017/18 to a record level of 143 million tonnes, unchanged from December. The projected trade expansion in 2017/18 reflects higher import demand forecasts for several countries, in particular China, Egypt, Mexico and Saudi Arabia. 

• World trade in rice in 2018 is projected at 46 million tonnes, marginally below the December forecast and 1 million tonnes lower than the revised estimate for 2017. The revision since December mainly reflects expectations of reductions in exports by India, the United States and Thailand, outweighing a larger export forecast for Myanmar.

Summary Tables

 

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.