Cereal Supply and Demand. Cereals Trade

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.

Favourable weather boosts world cereal production and stocks

Release date: 11/09/2014

The FAO forecast for global cereal production in 2014 has been raised by 14 million tonnes since July to 2 512 million tonnes (including rice in milled terms). At this level, world cereal production would be only 0.5 percent (13 million tonnes) short of last year’s record harvest. The recent upward revision mainly concerned wheat, the production of which is expected to reach 716.5 million tonnes, nearly unchanged from the record harvest in 2013. The upgrading of the wheat production forecast this month ensues from larger than earlier-anticipated crops in China, the Russian Federation, Ukraine, and the United States.  Compared to 2013, wheat production is estimated to have increased significantly in Argentina, Brazil, China, the EU, India, and the Russian Federation, offsetting  reductions in Australia, the United States and, especially,  Canada, where the latest official forecast points to a decline of almost  10 million tonnes (26 percent).  The outlook for coarse grains in 2014 also improved since July, with global production forecasts raised by 0.6 percent (nearly 8 million tonnes), reflecting better prospects for maize in the EU and the United States. At 1 295 million tonnes, the latest forecast for global coarse grains production suggests a small reduction of 1.1 percent (14.8 million tonnes) compared to the 2013 record. Unlike for wheat and coarse grains, the rice production outlook  worsened compared to July, by about 3 million tonnes, as an erratic rainfall pattern and concerns over el Nino impacting crops early next year marred prospects in China, India, Indonesia, the Philippines and Sri Lanka. Nonetheless, at 500.4 million tonnes, global rice production (in milled rice equivalent ) is forecast to surpass the 2013 outcome by 0.4 percent, sustained by gains in Bangladesh, Brazil, China, Madagascar, Myanmar and Viet Nam.

Total cereal utilization in 2014/15 is likely to grow by 2 percent (50 million tonnes) from the previous season to 2 465 million tonnes. The expansion reflects growing feed use, on prospects for ample cereal supplies and falling prices. Total feed use is forecast to reach 875 million tonnes, 3 percent more than in 2013/14.  Coarse grains would account for most of the anticipated increase, led by higher use of maize for feed in Brazil, China, the EU and the United States. Total food consumption of cereals is forecast at 1 107 million tonnes in 2014/15, up 1.2 percent (around 13 million tonnes) from the previous season. The anticipated increase would be in tandem with the population growth, thus resulting in a stable per caput consumption at the global level.

World cereals stocks by the close of the seasons in 2015 are expected to reach 616 million tonnes, 12 million tonnes higher than the previous forecast and now over 6 percent (37 million tonnes) larger than the estimated opening levels. This month’s upward revision reflects adjustments to the ending stocks of wheat and coarse grains, largely  in line with this month’s improved production forecasts. Record crops for two consecutive years (2013 and 2014) are expected to boost the size of global cereal inventories to their highest level in 15 years. Based on the latest forecast, the world cereal stock-to-use ratio would reach 24.7 percent in 2014/15, up from 23.5 percent in 2013/14 and well above the low of 18.4 percent registered in 2007/08. World stocks of coarse grains are forecast to expand the most, by 11 percent to 248 million tonnes, largely driven by record maize outputs in China and the Unites States. Wheat inventories are also likely to expand significantly, by 8 percent to 188 million tonnes, reflecting higher production in Asia and the CIS in particular.   As for rice, the downgrade of the 2014 global production prospects warranted a 3.6 million tonne cut of world inventories forecast to 179.4 million tonnes in 2015. If confirmed, the latest forecast would imply a 1.7 million tonne contraction compared to 2014, after more than ten years of steady stock accumulation.

World cereal trade is likely to contract by about 6 percent (22 million tonnes) in 2014/15, to 332 million tonnes, unchanged from the previous forecast. World wheat trade is projected to reach 148 million tonnes, a 6 percent (9 million tonnes) contraction from 2013/14 (July/June). The sharp decline reflects reduced import demand, in particular by China, which harvested another record crop, and several countries in sub-Saharan Africa. This season’s anticipated decline in world import demand will result in lower exports from most wheat suppliers, especially the EU and the United States. Total coarse grain trade is forecast to reach 144.5 million tonnes in 2014/15 (July/June), down 8.6 percent (13.5 million tonnes) from the previous season. Falling imports in the EU would account for most of the decline but smaller purchases are also expected from China and Egypt. Based on the prospect of a reduction in world trade, coarse grain exports from the United States are anticipated to decline most, although significantly smaller shipments are also likely from Brazil and Ukraine. Based on the latest forecasts, international rice trade in calendar 2015 is poised to expand by about 1 percent to a new record of 39.7 million tonnes, slightly more than anticipated in July. The year-to-year increase would mainly be fuelled by larger imports by countries in the Near East and Africa. While the expansion of trade may offer an opportunity for Thailand, the United States and Viet Nam to step up exports, rising domestic requirements are expected to curb substantially shipments by India.