Early indications point to a likely decline in global wheat production this year

The global cereal supply and demand situation has remained broadly stable in 2017/18 as evidenced by comfortable cereal stocks-to-use ratios and continuing periods of relatively low international prices.

Cereal production at record level in 2017

• Harvesting of the 2017 cereal crops is mostly complete and FAO estimates global cereal production at 2 642 million tonnes, 2 million tonnes (less than 1 percent) higher than the previous month’s forecast. The bulk of the monthly change concerns coarse grains, with upward revisions made to production estimates in Australia, as well as several countries in East and West Africa. As for rice, improved crop prospects for Cambodia and upward revisions to historical estimates for Cameroon and Iran were partly outweighed by a reduction made to Venezuela’s output estimate. For the year, global rice production is seen in the order of 502.2 million tonnes, implying a marginal (0.3 percent) expansion from the 2016 all-time high.

• FAO’s first forecast for world wheat production in 2018 stands at 744 million tonnes, indicating a second successive decline, but the global output is still expected to remain above average. Most of the projected decline stems from forecast reductions in the EU and the Russian Federation, reflecting anticipated fall in yields from the highs of 2017. A likely recovery in Australia’s output is foreseen to prevent a larger production decrease at the global level. The production outlook for the 2018 coarse grain crops in the southern hemisphere also points to a likely decrease, mostly on account of a contraction in plantings and unfavourable weather in South America and Southern Africa.

Faster feed use boosts global cereal utilization

• FAO’s forecast of global cereal utilization in 2017/18 has been increased from last month by 5 million tonnes (0.2 percent) to 2 608 million tonnes, making it 38 million tonnes (1.5 percent) higher than in 2016/17. The month-on-month upward adjustment largely reflects faster growth in the use of maize for feed in Asian countries, which more than offsets a small decrease in wheat consumption.

• World rice utilization is still expected to expand by 1 percent in 2017/18, to 503.6 million tonnes. A 6.1 million tonne increase in food use would account for all of this growth, being sufficient to keep global per capita intake largely steady at 54 kilos per person..

World trade to contract slightly in 2017/18

• International trade in all cereals in 2017/18 is forecast to approach 405 million tonnes, slightly up on the previous month’s forecast, but still almost 1 million tonnes (0.2 percent) below the 2016/17 level. The upward revision is mostly due to an increase in global maize trade, more than offsetting lower wheat shipments to India, Japan and Viet Nam.

• World trade in rice is forecast at 46.0 million tonnes in 2018, down 3 percent year-on-year, but still the second highest volume on record. The forecast annual contraction primarily mirrors expectations that smaller purchases by Bangladesh, Senegal and Sri Lanka would more than offset larger deliveries to Indonesia, Nigeria and the Philippines.

FAO’s forecast for world wheat inventories raised further

• FAO’s forecast for world cereal stocks by the close of seasons in 2018 has been increased by 14 million tonnes (1.9 percent) from February, mostly reflecting a significant upward revision to coarse grains’ inventories in several countries in Europe and Africa. At 753 million tonnes, the revised forecast makes total cereals’ ending stocks at 4.6 percent (33 million tonnes) higher than their opening levels. Global wheat stocks are forecast to hit a new peak, at 272.7 million tonnes, 9.2 percent above the previous season, while world inventories of coarse grains are also forecast to climb to a record, at 309.8 million tonnes, up nearly 4 percent from their opening levels.

• Global rice inventories at the close of 2017/18 seasons are forecast at 170.4 million tonnes, up 1.7 million tonnes from 2016/17 and fractionally above February expectations. China (Mainland) is anticipated to account for much of this annual expansion, although inventories are also seen up in Bangladesh and Brazil, more than compensating for cuts expected in the Republic of Korea, Thailand and the United States.