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The outlook for world cereal production has improved since last month. However, 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. Consequently, world cereal stocks are set to decline – a decrease mostly driven by maize, as wheat and rice reserves are likely to increase further.

World cereal production forecast lifted since last month but still below last year’s record

• 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 utilization 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.

Trade in 2018/19 to reach a new high

• World trade in cereals in 2018/19 is forecast at 409.6 million tonnes, up 0.5 percent (2 million tonnes) from 2017/18 and hitting a new record. The new forecast is 3.4 million tonnes higher than FAO’s first trade forecast for 2018/19 published in May.

• Global trade in coarse grains in 2018/19 (July/June) is now pegged at 187.2 million tonnes, up 0.9 percent from 2017/18, with maize trade expected to rise to 147 million tonnes, 1.1 percent higher than in 2017/18 and 3.4 million tonnes up from the previous month’s forecast. A combination of generally stronger import demand in Asia and continued large export availabilities is behind the year-on-year expansion in world maize trade.

• World wheat trade in 2018/19 (July/June) is forecast at 175 million tonnes, close to the estimated volume for 2017/18 and around 1 million tonnes up from last month. Overall, smaller imports by African countries are expected to nearly offset larger purchases by Asian countries, whereas on the export side, larger sales by the EU, the Russian Federation and the US are likely to more than offset anticipated declines in exports from Argentina and Ukraine.

• World trade in rice in calendar year 2018 is expected to fall only marginally short of the 2017 record high, to total 47.8 million tonnes. Among exporters, an expected bumper harvest may enable India in 2018 to ship its second highest volume on record, despite prospects of subsiding demand from some of its key South Asian markets.

Global cereal stocks raised sharply on historical revisions to maize inventories in China

• FAO's forecast for world cereal stocks at the close of seasons ending in 2019 now stands at 772 million tonnes, up nearly 37 million tonnes from the previous report in May, but still 44.5 million tonnes (5.4 percent) below their opening levels. At this level, the ratio of global cereal carryovers at the end of the 2018/19 season to trend utilization in 2019/20 would stand at 28.5 percent, down slightly from the 2017/18 season but still a relatively high ratio, suggesting a continuation of ample cereal supply prospects also in the 2018/19 season.

• The large revision since the previous report issued in May mainly reflects upward adjustments to the estimates of China’s maize inventories, subsequent to some lowering of the country’s industrial use of maize in earlier years. The cumulative effect of these adjustments was an increase of almost 63 million tonnes in the size of maize stocks of China in 2018/19, which now stand at 122 million tonnes. Despite this, the revised forecast still points to a notable (24 million tonnes) year-on-year decrease in maize stocks held in China, reflecting the anticipated drop in the country’s maize production this year and rising domestic demand. Globally, total stocks of coarse grains are projected to decline for the first time in five-years to 315 million tonnes, resulting in the world stock-to-use ratio dropping from 26.4 percent in 2017/18 to 22 percent in 2018/19.

• Global wheat stocks for crop years ending in 2019 are currently pegged at a record 283 million tonnes, almost 6 million tonnes larger than their already high opening level. The new forecast is also 4.4 million tonnes above the May forecast, and this is mostly on account of larger ending stocks expected in Argentina, the EU and India. However, excluding year-on-year accumulation of inventories in China, world wheat stocks would decline by almost 6 million tonnes from their opening level.

• Following a 0.8 million tonne upward revision since May, global rice reserves at the close of 2018/19 are now expected to surpass their opening level by 1.4 percent, to reach 173.8 million tonnes. China and India are envisaged to drive this accumulation, although carryovers are also seen edging up in Indonesia and the United States, while Bangladesh, Brazil and Egypt may draw on their reserves.

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