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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.

World cereal production forecast lowered but stocks remain unchanged from last month

Release date: 07/11/2019

FAO’s forecast for global cereal production in 2019 has been lowered by more than 2 million tonnes for the second consecutive month, reflecting reduced prospects for coarse grains and, to a lesser extent, wheat production. Despite this, the world cereal output is still set to surpass 2018’s outturn by nearly 47 million tonnes (1.8 percent).

The forecast for world coarse grain production in 2019 has been trimmed by 1.3 million tonnes since the previous month and now stands at 1 425 million tonnes, 1.2 percent (17.6 million tonnes) above the 2018 output. Most of the monthly decrease reflects cuts to the production forecast of barley in Australia, as persisting moisture deficits further reduced yield prospects, and maize in Mexico, where dry weather conditions during key crop development stages curbed yield expectations and led to higher incidences of crop losses. These declines outweighed upward revisions made to the barley production estimates in the European Union and Ukraine, underpinned by higher-than-previously anticipated yields.

FAO’s forecast for global wheat production in 2019 has also been lowered by nearly 1 million tonnes and is now pegged at 765 million tonnes, still up 4.5 percent from 2018 and a record level. The bulk of the month-on-month decrease stems from a downgrading of the wheat production forecast in Australia, amid persisting rainfall deficits and consequently lower yield prospects, and Kazakhstan, where official data pointed to a more significant impact of early-dry weather on crops in the main wheat-growing regions. These cutbacks more than offset upward revisions made to the production estimates in the EU and Ukraine, mostly driven by higher yields.

The latest forecast for global rice production (milled equivalent) stands at 513.4 million tonnes, similar to last month and marginally below the 2018 record level. Production prospects have been revised upwards in India, mirroring larger than previously anticipated area planted thanks to improved weather conditions following weather-related delays. Rice production forecasts have also been raised for Bangladesh and Viet Nam, where official estimates indicate better than previously anticipated output for already harvested crops. By contrast, production outlooks deteriorated in Thailand and Indonesia, as dry weather conditions are now estimated to have triggered more pronounced damages to crops than earlier predicted. In Japan, the slight month-on-month downward revision reflects new official data.

Looking ahead, planting of the 2020 wheat crop is underway in the Northern Hemisphere and the harvest will be from late spring next year. In the EU, low soil moisture levels have delayed sowings, particularly in eastern countries, and although the planting window extends until the end of the year, there is a critical need for rainfall. In the Russian Federation, buoyed by favourable weather conditions and underpinned by government policies to boost exports, the area sown to winter wheat is foreseen to surpass this year’s level. By contrast, dry weather conditions have continued to restrain planting activities in Ukraine, which could result in a contraction in the area sown to wheat in 2020. In Southern Hemisphere countries, while the 2020 wheat crops will be planted later in the year, coarse grain crops are now being sown. In South Africa, the largest maize producer on the Africa continent, attractive grain prices and a generally favourable weather outlook are expected to trigger an expansion in the area sown to maize, auguring well for a production recovery in 2020. In South America, rainfall shortages in September and October in Brazil and Argentina, the two major producing countries in the region, have impeded planting activities. Nonetheless, the sown area is still foreseen to remain unchanged from the high level of the previous year, partly driven by robust export demand.

The forecast for world cereal utilization in 2019/20 has also been lowered since last month, to 2 709 million tonnes, down 4.5 million tonnes from October, but still over 20 million tonnes higher than in 2018/19 and marking a record high. The forecast for total wheat utilization has been reduced by 2 million tonnes since the previous report to 759.5 million tonnes, also a record high and 1.5 percent above the 2018/19 estimated level. Global utilization of coarse grains in 2019/20 is predicted to remain close to the 2018/19 level, as an expected strong growth in barley utilization, increasing by almost 5 percent from 2018/19, is likely to be countered by declining sorghum consumption. World rice utilization in 2019/20 is now pegged at just under 516 million tonnes, down 500 000 tonnes since the previous month, primarily due to lower anticipated non-food uses in Indonesia and Japan. On the other hand, quantities destined to human consumption were raised slightly to some 418 million tonnes, a level sufficient to sustain a 0.6 percent annual increase in global per capita food intake of rice.

At 849.5 million tonnes, the forecast for world cereal stocks by the end of the 2020 seasons remains close to last month’s expectation and 13 million tonnes (1.5 percent) below their opening levels. However, the anticipated year-on-year decline would only result in a small drop in the global cereal stock-to-use ratio, from 31.8 percent in 2018/19 to 30.4 percent in 2019/20. Global wheat inventories are forecast to rise to 275 million tonnes, the second highest level on record. If realized, stocks would be up 1.9 percent from their opening levels, with most of the projected accumulation of world wheat stocks expected to occur in China. However, with consumption outweighing overall supplies for a second consecutive season, coarse grain inventories are forecast to fall again in 2019/20 (by 4 percent) to 394 million tonnes, the lowest level since 2015/16. China’s continued destocking and a significant stock drawdown in the United States, following a poor harvest, will likely result in a 25 million tonne (7 percent) contraction in global maize stocks. Following a 1.6 million tonne upward revision since October, global rice stocks at the close of 2019/20 are forecast at 181 million tonnes, barely 1.2 percent below their record opening level. Although rice inventory forecasts were adjusted for various countries this month, singularly, India accounted for much of the latest upward revision.

World trade in cereals in 2019/20 is forecast at 415 million tonnes, unchanged from last month and just 0.7 percent (around 3 million tonnes) higher than the 2018/19 reduced trade volume. Dampening the growth of cereal trade in 2019/20 a contraction in total trade of coarse grains is expected mainly because of a drop in maize trade, from 166 million tonnes in 2018/19 to just over 161 million tonnes in 2019/20. Most of this reduction reflects an anticipated sharp cut in imports by the EU due to more ample domestic feed supplies than in the previous season. Among other coarse grains, trade in barley is predicted to expand by almost 9 percent from the previous season, mostly because of stronger import demand in North Africa and Saudi Arabia. Now at 172 million tonnes, the forecast for global wheat trade in 2019/20 (July/June) is up from the 2018/19 reduced level. Larger imports by drought-affected Morocco and higher purchases by several counties in Asia account for most of the forecast expansion in world wheat trade. FAO’s forecast of world rice trade in 2020 (January-December) has changed little since October, pointing to a 3.1 percent year-on-year recovery to 48 million tonnes. More subdued output prospects lowered export expectations for Thailand to a seven-year low this month. However, this reduction was more than compensated by an anticipated increase in shipments from Pakistan.

For more detailed analysis of recent developments in agricultural markets see the November 2019 issue of Food Outlook at http://www.fao.org/giews/reports/food-outlook/en/

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.