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FAO Cereal Supply and Demand Brief

June 7th, 2013

Cereal production in 2012 slightly lower but strong growth expected in 2013

The FAO estimate for world cereal production in 2012 has been cut since April, by nearly 4 million tonnes, to about 2 306 million tonnes (including rice in milled terms), falling 2 percent short of the previous year’s record. This month’s downward revision reflects adjustments to wheat and rice while coarse grains remained virtually unchanged. Turning to the new 2013 season, latest indications keep pointing to a strong growth in world cereal production. FAO’s current forecast of global wheat  production in 2013 stands at 695 million tonnes, 5.4 percent up from last year’s harvest and just some 6 million tonnes short of the historical high in 2011. Much of the increase is expected to be concentrated in the EU and CIS countries, driven by increased plantings in response to attractive prices, but also by expectation of a return to normal yields in the Russian Federation and Ukraine after drought last year. The outlook is also positive in Asia, where bumper to record crops are expected in the main producing countries. By contrast, prospects have deteriorated in the United States where drought persists on more than half of the winter wheat area and production looks likely to decrease this year. FAO’s first forecast for world production of coarse grains in 2013 has been set at 1 266 million tonnes, 9.3 percent up from last year and a new record, well above the previous high of 1 167 million tonnes achieved in 2011. Of the total, maize is expected to account for about 960 million tonnes, some 10 percent up from 2012. Good crops already being harvested in some Southern Hemisphere producing countries but the bulk of the increase is anticipated in the United States, the world’s largest producer, where maize plantings are forecast to reach their highest level since 1936. Recovery from drought in the major CIS producing countries should also contribute significantly to the record production of coarse grains expected this year. Still tentatively, and assuming a return to a more normal weather pattern in Asia, FAO foresees rice production in the forthcoming 2013 season to rise to 497.7 million tonnes, 10.2 million tonnes more than in 2012, with particularly large increases expected in India and Indonesia.  (For more details on latest 2013 production prospects please refer to the GIEWS Update – Production Prospects for 2013 Cereal Crops).

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World cereal utilization to stagnate in 2012/13

The forecast for world cereal utilization in 2012/13 has been lowered by 3.4 million tonnes since the previous report to 2 332 million tonnes, mainly reflecting revisions to feed and residual estimates in the United States. At the current forecast level, total cereal utilization in 2012/13 would remain roughly unchanged at the 2011/12 level, constrained by rising grain prices and faltering ethanol demand.  World wheat utilization in 2012/13 is forecast to reach 685 million tonnes, slightly higher than anticipated last month but down 1.6 percent from the previous season. Most of the year-to-year decline would be on account of lower feed use of wheat in China and the EU, which would more than offset record use in the United States. Total utilization of coarse grains in 2012/13 is estimated at 1 169 million tonnes, down 0.4 percent from the previous forecast and now only 0.7 percent (7.7 million tonnes) above 2011/12. Out of the total, 647.5 million tonnes,  or 55 percent, are foreseen to be consumed as feed, 4.4 million tonnes less than previously forecast following a downward revision in the United States (as published by USDA on 10 April).  World rice consumption is predicted to grow by 1.8 percent to 477.6 million tonnes in 2012/13, same as forecast last month. Of these some 402.7 million tonnes are destined to food consumption, allowing for a small increase in per caput intake.

World cereal stocks revised up, but still indicate a drop from 2012

World cereal stocks by the close of seasons ending in 2013 are forecast at 505 million tonnes, up 1 percent (5 million tonnes) from the previous forecast, but some 3 percent (16 million tonnes) below their opening levels. The decline from 2012 would be only because of reduced wheat and coarse grains inventories since rice inventories are expected to increase. At the new forecast level, the world cereal stock-to-use ratio would fall to 21 percent in 2012/13, down from 22.4 percent in 2011/12.  World wheat inventories are currently forecast to reach 164 million tonnes, 2 million tonnes higher than anticipated last month, following upward revisions in Ukraine, but still signalling a contraction of 10 percent (19 million tonnes) from 2012.  At the current forecast level, the world wheat stock-to-use ratio would decrease to 23.7 percent, from 26.7 percent in 2011/12. World inventories of coarse grains are likely to reach 169 million tonnes, 2.5 percent (4.2 million tonnes) higher than expected in April, mainly reflecting upward adjustments to projected ending maize stocks in the United States. Notwithstanding this revision, coarse grain stocks would fall 4 percent (7.4 million tonnes) short of the previous season’s level, which would bring the global stock-to-use ratio for coarse grains to an historical low of 13.7 percent, slightly higher than earlier forecast. As for rice, world inventories in 2013 are now gauged at 171.8 million tonnes, 1.3 million tonnes lower than last predicted, following downward revisions in India, Thailand and Viet Nam, but some 10 million tonnes larger than in 2012.

Sharp fall in world cereal trade in 2012/13, involving all major cereals

At 304.4 million tonnes,  world cereal trade in 2012/13  would be almost 1 million tonnes larger than forecast last month, still implying a decline from 2011/12 of about 4 percent (13 million tonnes). The anticipated year-to-year contraction in world cereal trade would be the result of smaller shipments of wheat, coarse grains and rice, with a particularly sharp decline anticipated for wheat. World wheat trade (including wheat flour in wheat equivalent) is forecast to reach 139 million tonnes in 2012/13 (July/June), 1 million tonne less than predicted last month, and now as much as 5 percent below the 2011/12  estimate. Much of the yearly decline reflects expectations of smaller imports by Egypt and several countries in Asia, while this month’s downward adjustment was on account of lowering of forecast shipments to Bangladesh, EU, Kenya, Morocco and Viet Nam, more than offsetting higher forecasts for China and the Islamic Republic of Iran.  World trade in coarse grains is foreseen to reach 128 million tonnes, which is 1.5 million tonnes more than expected last month, but still some 3 percent below the estimated trade in 2011/12. While the bulk of the decline from the previous season reflects lower purchases by Mexico, Egypt and Saudi Arabia, this month’s upward adjustment to world trade stems from significantly higher import forecasts for China, the EU and the Islamic Republic of Iran which more than offset a lowering of forecasts for Mexico and the Republic of Korea. Trade in rice in calendar year 2013 is projected to hover around 37.4 million tonnes, slightly higher than the April forecast of 37.0 million tonnes. At the new forecast level, the volume of rice exchanged on world markets would be 3 percent smaller than the 2012 record, with India and Brazil accounting for much of the decline in world exports, while China, Indonesia, Nigeria and Senegal would be much behind the decline in imports.

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