4th July 2020 Daily Global Regional Local Rice E-Newsletter

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 2020: 6 February, 5 March, 2 April, 7 May, 4 June, 2 July, 3 September, 8 October, 5 November, 3 December.

Record global cereal production forecast boosts stock-to-use ratio to a twenty-year high

Release date: 02/07/2020

FAO’s forecast for world cereal production in 2020 has been revised upward by 9.3 million tonnes this month and now stands at almost 2 790 million tonnes, with the global output set to surpass the record-high reached in 2019 by as much 3.0 percent (81.3 million tonnes). Global wheat production is pegged at 761.5 million tonnes, up 3.2 million tonnes from the previous month and now at par with last year’s above-average outturn. The bulk of the monthly increase reflects an upward revision to Australia’s wheat production forecast (+5.5 million tonnes), mostly resting on improved yield prospects underpinned by earlier widespread rainfall and favourable weather forecasts for the remainder of the season. This, combined with a larger than initially foreseen wheat acreage, is expected to lead to a more pronounced production rebound in 2020, which would mark a significant turnaround compared to the previous two years of drought-reduced harvests. Wheat production forecasts have also been raised for India (+2.2 million tonnes), based on recent official data pointing to a larger sown area and higher yields, and for the Russian Federation, where conducive weather boosted yield expectations, resulting in higher production prospects (+2.0 million tonnes). These increases more than offset a cutback to the European Union (EU) wheat production forecast (-5.5 million tonnes) and the UK (-1.5 million tonnes) on reduced yield expectations. The forecast of world coarse grains production in 2020 has also been raised to 1 519 million tonnes, up 5.7 million tonnes from the preceding month and 5.0 percent (73.0 million) from 2019. Larger outputs of barley in Australia, the EU and Turkey are mainly behind the monthly upturn. By a lesser extent, the forecast of world maize production has also been lifted since the previous month, reflecting modest increases in the EU, where recent rains following several weeks of dry weather benefited crops especially in southern France and northern Italy. Likewise, Brazil’s maize output has been increased, now slightly exceeding the previous year’s outturn and marking an all-time high. FAO’s global rice production forecast for 2020 is now pegged at 509.2 million tonnes, up 1.7 percent from 2019 and 400 000 tonnes above June’s expectations. The slight upward revision primarily reflects improved prospects for South American countries, where conducive weather raised yield expectations to all time-highs, promoting a partial output recovery from last year’s reduced harvest.

The forecast for world cereal utilization in 2020/21 has also been lifted, to 2 735 million tonnes, just over 43 million tonnes (1.6 percent) above the 2019/20 level. The upward revision this month stems mostly from an increase in the coarse grains utilization forecast of nearly 3.0 million tonnes, driven by an upturn in feed and industrial uses compared to earlier expectations. Now forecast at an all-time high of 1 471 million tonnes, total coarse grains utilization in 2020/21 is seen up 2.7 percent (38 million tonnes) from the 2019/20 level, with the USA accounting for almost 40 percent (14.4 million tonnes) of the projected year-on-year increase and China over 20 percent (9.0 million tonnes). World rice utilization is also predicted to reach a fresh peak of 510.4 million tonnes in 2020/21, up 1.6 percent from 2019/20 based on expanding food use. By contrast, the 2020/21 global wheat utilization forecast is pointing to a slight (0.4 percent) decline from the 2019/20 level, largely on expected loss of feed market share to coarse grains as well as lower industrial use.

FAO’s forecast of world cereal stocks by the close of seasons in 2021 has been raised by 2 million tonnes from the previous month to 929 million tonnes, representing a robust year-on-year expansion of 52.3 million tonnes (6.0 percent). At this level, the global cereal stock-to-use ratio in 2020/21 would reach a twenty-year high of 33.0 percent, highlighting the comfortable supply prospects in the new season. Larger wheat supplies owing to improved production prospects in several countries have led to a further upward revision to 2020/21 wheat inventories, raising the 2020/21 forecast to nearly 284 million tonnes, up almost 9 million tonnes (3.2 percent) from the opening levels but still below the record level registered in 2017/18. Most of the year-on-year expansion is expected in China where stocks are projected to reach a new record of 138 million tones, almost 11 million tonnes higher than their opening level and more than offsetting foreseen declines in the EU and the United States of America (USA). In comparison to wheat, coarse grains inventories are forecast to expand even more significantly in 2020/21, rising by nearly 45 million tonnes (10.8 percent), with large increases expected for both maize and barley stocks. The bulk of the anticipated expansion in maize inventories is concentrated in the USA, while buildups of barley are expected in Australia and the EU. World rice stocks at the close of 2020/21 are forecast at 182.2 million tonnes, down 0.7 percent from their opening levels and only little changed from previous expectations. Much of the forecast drawdown is expected in China, where a large 2020 crop is nonetheless seen keeping inventories at abundant levels. This, combined with expected reductions in Bangladesh and Indonesia, will likely more than offset a third consecutive annual increase in stockpiles held by the major rice exporters.

FAO’s latest forecast for world trade in cereals in 2020/21 stands at 435.0 million tonnes, representing an increase of 9.0 million tonnes (2.1 percent) from the 2019/20 volume and a new record high. At almost 209 million tonnes, trade in coarse grains in 2020/21 (July/June) is forecast to increase by 2.4 percent from the 2019/20 estimated level, supported by expectations of stronger import demand for sorghum by China. World wheat trade in 2020/21 is forecast at an all-time high of 178.7 million tonnes, up 1.5 million tonnes (just under one percent) from 2019/20, based on anticipated larger export supplies, particularly on expectation of strong production recoveries in Australia and Canada, more than offsetting reduced export availabilities foreseen in the EU and Ukraine. A revival in African import demand is expected to drive up rice trade in 2021 (calendar year) to 47.6 million tonnes, up 6 percent from 2020 and marking a three-year high.

More detailed information can be found in the July issue of Crop Prospects and Food Situation.

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.

http://www.fao.org/worldfoodsituation/csdb/en/