Smaller maize inventories in China behind expected decline in global cereal stocks in 2018/19

At 735.5 million tonnes, FAO’s first forecast for world cereal stocks at the close of seasons ending in 2019 points to global inventories falling 20.6 million tonnes (2.7 percent) below their opening levels.

An expected reduction in maize inventories in China would account for most of this fall, resulting in the world cereal stock-to-use ratio dropping from a 16-year high of 28.8 percent in 2017/18 to 27.2 percent in 2018/19, the U.N. food agency said, adding that at this level, the ratio would remain above average and exceed the historical low of 20.4 percent registered in 2007/08.

It said in its latest monthly report that wheat inventories could increase by 2.2 million tonnes (0.8 percent) in 2018/19 to nearly 279 million tonnes, as a projected further build-up in China would exceed drawdowns in a number of major wheat exporters, namely the EU and the United States.

“However, excluding year-on-year changes in China’s wheat stocks, global wheat inventories are seen to decline for the seventh consecutive year. Overall, therefore, while the global wheat stocks-to-use ratio is expected to drop only marginally in 2018/19, the major exporters’ stocks–to-disappearance ratio5/ (which excludes China) is forecast to decline more significantly, from 20.9 percent in 2017/18 to 19.2 percent in 2018/19.”

According to the FAO, early indications suggest a modest tightening in world coarse grain supplies in the new season.

“Global stocks are seen declining for the first time in five-years to 283.5 million tonnes and the world stock-to-use ratio dropping from 22.5 percent in 2017/18 to 19.8 percent in 2018/19,” it said.

However, most of the predicted decline would concern maize inventories in China, which are forecast to shrink sharply (by at least 15 million tonnes) given the government’s recent policy measures to lower the state reserves. Among world suppliers, anticipated reductions would namely concern maize carryovers in Argentina and Brazil, which could lead to a minor decline in the major exporters’ stocks-to-disappearance ratio to 14 percent.

By contrast, the report pointed out, preliminary prospects point to global rice production exceeding utilisation in the forthcoming season.

“As a result, global rice reserves at the close of 2018/19 seasons could be headed towards their third successive increase, reaching 173 million tonnes. This level would stand 1.2 percent above 2017/18 expectations, being sufficient to keep the world stock-to-use ratio at a comfortable 33.5 percent,” it said.

Prashant has worked in the publishing industry for 17 years. His keen interest in commodities developed while working for organisations such as like Thomson Reuters, Wolters Kluwer & McGraw-Hill eventually brought him here. In his free time, Prashant consults with businesses in the digital space.

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