Small upward revision forecast in global cereal output in 2018


The UN food agency has forecast global cereal production in 2018 to reach 2 587 million tonnes, a small upward revision from July but a three-year low and 2.4 percent below last year’s record high level.

The latest Cereal Supply and Demand Brief released by the Food and Agriculture Organization (FAO) cut by a notable 14 million tonnes the world wheat production forecast for this year, which now stands at almost 722 million tonnes, the smallest crop since 2013. Dry and hot weather intensified yield reductions around Europe.

On the other hand, worldwide production of coarse grains was revised up by 15 million tonnes since July, with improved outlooks for maize in China, Ukraine and the United States of America, more than offsetting expected output reductions in the European Union and the Russian Federation. FAO now expects 2018 coarse grain output to be nearly 1 354 million tonnes, some 2.6 percent below the level of 2017.

World rice production, meanwhile, is expected to rise 1.3 percent from the previous year and reach a new record of almost 512 million tonnes in 2018, buoyed by larger output recoveries in Bangladesh and Viet Nam and stronger area rebounds in Sri Lanka and the United States.

FAO raised its forecast for world cereal utilization to 2 648 million tonnes, largely due to greater use of maize for feed and industrial use and the robust rice harvest.

Cereal stocks are also being reduced – especially in China, the European Union and the Russian Federation, and the global cereal stock-to-use ratio is expected to slide to 27.3 percent, a five-year low. Most of the projected decline in 2018/19 is the result of reductions foreseen in China, the EU and the Russian Federation.

This month’s downward revision in projected wheat production has prompted a significant revision to the forecast of wheat stocks, now pegged at 252 million tonnes, which would be down nearly 12 million tonnes from July and 21.4 million tonnes (7.8 percent) from their all-time high opening levels. At the current forecast level, the ratio of major wheat exporters’ closing stocks to their total disappearance (defined as domestic utilisation plus exports), which is considered a good measure of availability in global markets, would drop to a 6-year low of 15.3 percent, well below the 20.8 percent estimated for 2017/18.

The forecast for world trade in cereals over the 2018/2019 season has been revised up to nearly 414 million tonnes, about 1.5 percent below the previous year’s record high. At the current forecast level, world trade in cereals in 2018/19 would still be some 6.4 million tonnes (1.5 percent) below the previous season, which was a record.

Among the individual cereals, trade in wheat in the current marketing season is seen heading for a 1.8-percent contraction (3.2 million tonnes), while sorghum trade is likely to decline by 14.4 percent (1.1 million tonnes) and rice by 1.1 percent (518 000 tonnes).

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.

Leave a Reply

Your email address will not be published. Required fields are marked *