FAO: Record global cereal production forecast boosts stock-to-use ratio to a twenty-year high July 2, 2020
FAO’s forecast for world cereal production in 2020 has been revised upward by 9.3 million tonnes this month and now stands at almost 2 790 million tonnes, with the global output set to surpass the record-high reached in 2019 by as much 3.0 percent (81.3 million tonnes). Global wheat production is pegged at 761.5 million tonnes, up 3.2 million tonnes from the previous month and now at par with last year’s above-average outturn. The bulk of the monthly increase reflects an upward revision to Australia’s wheat production forecast (+5.5 million tonnes), mostly resting on improved yield prospects underpinned by earlier widespread rainfall and favourable weather forecasts for the remainder of the season. This, combined with a larger than initially foreseen wheat acreage, is expected to lead to a more pronounced production rebound in 2020, which would mark a significant turnaround compared to the previous two years of drought-reduced harvests. Wheat production forecasts have also been raised for India (+2.2 million tonnes), based on recent official data pointing to a larger sown area and higher yields, and for the Russian Federation, where conducive weather boosted yield expectations, resulting in higher production prospects (+2.0 million tonnes). These increases more than offset a cutback to the European Union (EU) wheat production forecast (-5.5 million tonnes) and the UK (-1.5 million tonnes) on reduced yield expectations. The forecast of world coarse grains production in 2020 has also been raised to 1 519 million tonnes, up 5.7 million tonnes from the preceding month and 5.0 percent (73.0 million) from 2019. Larger outputs of barley in Australia, the EU and Turkey are mainly behind the monthly upturn. By a lesser extent, the forecast of world maize production has also been lifted since the previous month, reflecting modest increases in the EU, where recent rains following several weeks of dry weather benefited crops especially in southern France and northern Italy. Likewise, Brazil’s maize output has been increased, now slightly exceeding the previous year’s outturn and marking an all-time high. FAO’s global rice production forecast for 2020 is now pegged at 509.2 million tonnes, up 1.7 percent from 2019 and 400 000 tonnes above June’s expectations. The slight upward revision primarily reflects improved prospects for South American countries, where conducive weather raised yield expectations to all time-highs, promoting a partial output recovery from last year’s reduced harvest.
The forecast for world cereal utilization in 2020/21 has also been lifted, to 2 735 million tonnes, just over 43 million tonnes (1.6 percent) above the 2019/20 level. The upward revision this month stems mostly from an increase in the coarse grains utilization forecast of nearly 3.0 million tonnes, driven by an upturn in feed and industrial uses compared to earlier expectations. Now forecast at an all-time high of 1 471 million tonnes, total coarse grains utilization in 2020/21 is seen up 2.7 percent (38 million tonnes) from the 2019/20 level, with the USA accounting for almost 40 percent (14.4 million tonnes) of the projected year-on-year increase and China over 20 percent (9.0 million tonnes). World rice utilization is also predicted to reach a fresh peak of 510.4 million tonnes in 2020/21, up 1.6 percent from 2019/20 based on expanding food use. By contrast, the 2020/21 global wheat utilization forecast is pointing to a slight (0.4 percent) decline from the 2019/20 level, largely on expected loss of feed market share to coarse grains as well as lower industrial use.
FAO’s forecast of world cereal stocks by the close of seasons in 2021 has been raised by 2 million tonnes from the previous month to 929 million tonnes, representing a robust year-on-year expansion of 52.3 million tonnes (6.0 percent). At this level, the global cereal stock-to-use ratio in 2020/21 would reach a twenty-year high of 33.0 percent, highlighting the comfortable supply prospects in the new season. Larger wheat supplies owing to improved production prospects in several countries have led to a further upward revision to 2020/21 wheat inventories, raising the 2020/21 forecast to nearly 284 million tonnes, up almost 9 million tonnes (3.2 percent) from the opening levels but still below the record level registered in 2017/18. Most of the year-on-year expansion is expected in China where stocks are projected to reach a new record of 138 million tones, almost 11 million tonnes higher than their opening level and more than offsetting foreseen declines in the EU and the United States of America (USA). In comparison to wheat, coarse grains inventories are forecast to expand even more significantly in 2020/21, rising by nearly 45 million tonnes (10.8 percent), with large increases expected for both maize and barley stocks. The bulk of the anticipated expansion in maize inventories is concentrated in the USA, while buildups of barley are expected in Australia and the EU. World rice stocks at the close of 2020/21 are forecast at 182.2 million tonnes, down 0.7 percent from their opening levels and only little changed from previous expectations. Much of the forecast drawdown is expected in China, where a large 2020 crop is nonetheless seen keeping inventories at abundant levels. This, combined with expected reductions in Bangladesh and Indonesia, will likely more than offset a third consecutive annual increase in stockpiles held by the major rice exporters.
FAO’s latest forecast for world trade in cereals in 2020/21 stands at 435.0 million tonnes, representing an increase of 9.0 million tonnes (2.1 percent) from the 2019/20 volume and a new record high. At almost 209 million tonnes, trade in coarse grains in 2020/21 (July/June) is forecast to increase by 2.4 percent from the 2019/20 estimated level, supported by expectations of stronger import demand for sorghum by China. World wheat trade in 2020/21 is forecast at an all-time high of 178.7 million tonnes, up 1.5 million tonnes (just under one percent) from 2019/20, based on anticipated larger export supplies, particularly on expectation of strong production recoveries in Australia and Canada, more than offsetting reduced export availabilities foreseen in the EU and Ukraine. A revival in African import demand is expected to drive up rice trade in 2021 (calendar year) to 47.6 million tonnes, up 6 percent from 2020 and marking a three-year high.