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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 2017: 02 February, 02 March, 06 April, 04 May, 08 June, 06 July, 07 September, 05 October, 02 November, 07 December.

Cereal supply prospects remain favourable

Release date:05/10/2017

The latest indications for the current season point to record cereal production in 2017 at the world level with total inventories hitting a new peak.

Global cereal production hitting a new high in 2017

  • The forecast of world cereal production in 2017 has been raised slightly since last month to 2 612 million tonnes, 6.8 million tonnes (0.3 percent) above the 2016 record. This month’s upward adjustment mostly stems from improved production prospects for coarse grains and wheat, more than offsetting a cut in rice production.
  • Global wheat production in 2017 is now forecast at 750.1 million tonnes, up 1.4 million tonnes (0.2 percent) from the output foreseen in September. The increase is mostly on account of a larger production in the EU and an upturn in prospects in the Russian Federation, where continued beneficial weather further boosted prospects for the spring wheat yield. This increase more than outweighed a cut in Australia’s output to a more average level following last year’s record harvest. Looking forward, planting of the 2018 winter wheat crop has started in the northern hemisphere. Dry weather in some key growing regions has slowed planting progress, while in Europe expectations of higher earnings for alternative crops could affect winter wheat plantings.
  • The forecast of world coarse grains output stands at 1 361 million tonnes, 2.5 million tonnes (0.2 percent) above the previous month’s expectation. This increase largely reflects improved production prospects for maize in China and the United States, more than offsetting a cut to the Russian Federation’s maize output due to dry conditions that dampened yield expectations. The forecast for global barley production has also been raised this month, driven by higher outputs in the Black Sea region.  In the southern hemisphere, sowing of the new season’s crop began in Argentina and Brazil.
  • FAO’s forecast of global rice production in 2017 has been downscaled by 2.7 million tonnes to 500.7 million tonnes, which is only marginally changed from the 2016 record outcome. Most of this month’s downward production adjustments concerned countries in the Far East, in particular India, with a combination of floods and drought now expected to prevent output in the sub-region from expanding this season.

Global cereal utilization in 2017/18 lowered but still above the 2016/17 level

  • The FAO forecast of global cereal utilization has been lowered from the previous month by 2.3 million tonnes (0.1 percent) to 2 589 million tonnes; still 26 million tonnes (1.0 percent) higher than in 2016/17. The month-on-month reduction largely stems from a cut in the forecasts of maize and rice utilization, which more than offset a foreseen increase in wheat consumption.
  • World wheat utilization in 2017/18 is set to reach an all-time high level of 734 million tonnes, up 0.5 percent (3.4 million tonnes) from the previous month and now 0.3 percent above the 2016/17 estimated level. The increase from last month mostly reflects higher forecasts for industrial use, whereas the expansion from 2016/17 is largely attributed to a 1.1 percent projected growth in the food consumption of wheat.
  • Total utilization of coarse grains in 2017/18 is currently pegged at 1 352 million tonnes, down 0.2 percent (2.0 million tonnes) from last month but still 1.4 percent (19 million tonnes) above the 2016/17 level. The decrease from September reflects some reductions in the forecasts of feed use of maize in Egypt, the Russian Federation and the United States. The strong overall expansion from the previous season remains largely driven by a continued brisk feed demand from the livestock sector.
  • FAO has lowered its forecast of world rice utilization in 2017/18 by 3.6 million tonnes since September, consistent with the lower prospects for global production and following revisions to historical estimates for various countries. Still, at a revised level of 502.9 million tonnes, global rice use is seen expanding by 1.0 percent year-on-year.

The forecast for world cereal inventories raised further

  • World cereal stocks by the close of seasons in 2018 are now forecast at a new all-time high of 720.5 million tonnes, some 0.2 percent (1.3 million tonnes) above the September forecast and 2.6 percent (18 million tonnes) higher than their opening level. At this level, the stocks-to-use ratio of cereals in 2017/18 would hover around 27.0 percent, which would be similar to the ratio for 2016/17 and well above the historical low of 20 percent registered exactly a decade ago (2007/08).
  • Global wheat stocks (ending in 2018) are currently pegged at a record level of around 261 million tonnes, changed only little since last month but 6 percent (15 million tonnes) higher than their opening level. The sharp increase from the previous season largely reflects significant build-ups in China (+19 million tonnes) and in the Russian Federation (+6.8 million tonnes). The increase in global wheat inventories would boost the stocks-to-use ratio of wheat to 34.6 percent, up sharply from 2016/17 and the highest in over three decades.
  • The forecast of coarse grain inventories (ending in 2018) has been raised this month to almost 290 million tonnes, up 1.3 percent (3.7 million tonnes) from September, putting ending stocks at 0.8 percent cent (2.4 million tonnes) higher than their opening levels. This would raise the stocks-to-use ratio of coarse grains to 20.8 percent, down slightly from the estimated above-average level in 2016/17. The adjustment since last month largely reflects upward revisions to the size of maize carryovers in Japan, following historical revisions of the country’s supply and demand balance of maize. However, the bulk of the projected increase in the level of global stocks of coarse grains in 2017/18 reflects a rise in maize inventories of Brazil and South Africa, as well as a jump in stocks of barley in the Russian Federation.
  • Despite a 1.7 million tonne downward revision since September, world rice inventories at the close of 2017/18 seasons continue to be forecast to expand by 0.5 percent to 169.5 million tonnes. Continued accumulations in China are expected to sustain this modest increase, which should keep the global stocks-to-use ratio little varied at 33.2 percent in 2017/18.

Global trade in 2017/18 at a near record level

  • World cereal trade in 2017/18 is pegged at almost 403 million tonnes, down marginally from the previous forecast in September but still 0.4 percent (1.5 million tonnes) above the 2016/17 all-time high.
  • World trade in wheat in 2017/18 (July/June) is now forecast at nearly 175 million tonnes, nearly at par with the 2016/17 record volume as import demand is seen to remain steady in nearly all regions with the exception of Africa, where total imports could decline slightly mainly on reduced purchases by Algeria and Morocco. However, export supplies are expected to be more than adequate to meet global demand, especially in view of this year’s bumper crop in the Russian Federation, which is likely to place the country as the world’s largest exporter of wheat in 2017/18.
  • Global trade in coarse grains in 2017/18 (July/June) is currently forecast to reach nearly 183 million tonnes, down slightly from the previous month but still 1.2 percent (2 million tonnes) higher than in 2016/17. Much of this expansion would be accounted for by higher world maize trade, which is seen increasing by some 3.3 percent to 143 million tonnes, largely underpinned by much larger maize imports by China, the EU and the Islamic Republic of Iran. Argentina and Brazil are likely to become the main beneficiaries of the projected expansion in world coarse grains trade in 2017/18.
  • Following small upward revisions to export forecasts for China and Myanmar, world trade in rice in 2018 is now pegged at 45.2 million tonnes, up 1 percent year-on-year and the second highest on record.


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.