FAO sees world cereal production falling but supplies remaining ample in 2018/19

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The outlook for world cereal production has improved since last month, but the forecast production would still fall short of both last year’s record level and the anticipated consumption requirements in the 2018/19 marketing season, the FAO said in its latest monthly report.

Consequently, world cereal stocks are set to decline – a decrease mostly driven by maize, as wheat and rice reserves are likely to increase further, it added.

  • FAO forecasts world cereal production in 2018 at 2 610 million tonnes, 3.0 million tonnes higher than the preliminary projection made in May. However, at this level, global production would still be down 40.6 million tonnes (1.5 percent) on a yearly basis.
  • World wheat production is forecast at 754.1 million tonnes, following a 7.5 million tonne upward revision this month. The increase mostly relates to Argentina, as well as Canada and the United States, where improved weather conditions have boosted prospects for winter and spring outputs, respectively. Recent official estimates from India also point to a higher-than-previously expected output, further boosting the global production outlook.
  • For coarse grains, world production in 2018 has been revised downwards by 5.2 million tonnes and is now forecast at 1 345 million tonnes, 3.2 percent (44.3 million tonnes) down from the 2017 record high. This month’s downward revision mostly concerns forecasts for sorghum production, which have been lowered for the Sudan and the United States. Global maize production in 2018 has been lowered slightly, to 1 046 million tonnes with large downward revisions in China, reflecting area contractions as farmers shift to more profitable crops, and in Brazil, where a continuation of dry weather is foreseen to curb plantings and yields of the second season crop. These declines are expected to be nearly offset by improved yield prospects in the Russian Federation, Ukraine and the United States.
  • FAO’s May forecast of world rice production has been raised by 0.7 million tonnes to 511.3 million tonnes, 1.3 percent above the 2017 all-time high. The revision primarily reflects improved prospects for India, consistent with the higher official estimates for the country’s 2017 production. Nonetheless, expectations of smaller-than-previously-predicted yield declines have resulted in a slight increase in Brazil’s forecast production.

Global cereal utilisation to reach a new peak in 2018/19

  • World cereal utilization in 2018/19 is forecast at a record level of 2 646 million tonnes, 1.2 percent above the 2017/18 season. At this level, it would be around 0.5 percent below the 10-year trend. Increases in food, feed and industrial uses are behind the growth in total consumption of cereals.
  • Utilization of wheat is forecast to reach 743 tonnes in 2018/19, up almost 5 million tonnes on the previous season. Global food use of wheat is expected to increase in line with population growth, while total feed use is projected to expand faster than in 2017/18, increasing by about 1.3 percent despite large supplies of cheaper alternative coarse grains.
  • Total utilization of coarse grains in 2018/19 is now predicted to reach almost 1 394 million tonnes, over 21 million tonnes above the previous season’s level and 20 million tonnes above the May forecast. The sharp month-on-month increase reflects upward adjustments to the forecasts for industrial use of maize in China and the United States.
  • Global rice utilization is forecast to expand by 1.0 percent in 2018/19 to reach 509.3 million tonnes. Food use is predicted to account for 411.7 million tonnes of this volume, enabling world per capita food use of rice to remain stable at around 53.9 kilos.
Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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