Nations: World cereal supplies set to hit all-time high, says FAO
Published in SUNS #8614 dated 5 February 2018
Geneva, 2 Feb (Kanaga Raja) - World cereal supplies are expected to
rise to an all-time high of nearly 3,331 million tonnes in the 2017/18
season, the Food and Agriculture Organisation of the United Nations
(FAO) has said in its latest forecast.
According to its Cereal Supply and Demand Brief released on 1 February,
FAO said based on the current supply and demand forecasts for the
2017/18 marketing season, "global markets of all major cereals
remain well balanced, supported by record inventory levels and evidenced
by above-average stocks-to-use ratios."
According to FAO, the stocks-to-use ratio is expected to rise to its
highest level in 16 years.
FAO said its estimate for global cereal production in 2017 now stands
at a record high 2,640 million tonnes, 1.3 percent above the 2016
This estimate has been raised by 13.5 million tonnes since December,
marking a second consecutive substantial upward revision.
FAO has forecast world production of coarse grains in 2017 at 1,381
million tonnes, up 2.6 percent, or 35 million tonnes, from the previous
This latest estimate is some 9 million tonnes higher than was reported
Most of the revision was accounted for by larger maize production
levels in China, thanks to higher yields than earlier anticipated,
and in the European Union, where the maize harvest in Romania proved
better than previously expected.
Maize production has also been revised upwards in Mexico, following
increases in yield and acreage.
FAO has also raised its forecasts for global wheat production in 2017,
by 2.8 million tonnes. World wheat production now stands at only 3.7
million tonnes below the record harvest in 2016.
Higher production estimates for Canada and the Russian Federation
accounted for the bulk of this month's increase, said FAO.
FAO has also raised by 1 million tonnes to 501.9 million tonnes, its
estimate for world rice production in 2017.
"The improved prospect mostly reflects an upward revision in
China (Mainland), which has more than offset lower production estimates
for Viet Nam and some other countries."
The latest estimate puts the global production of rice in 2017 at
nearly 1.2 million tonnes above the record level reached in 2016.
FAO has forecast world cereal utilization in the 2017/18 season at
nearly 2,603 million tonnes, up 35.7 million tonnes (1.4 percent)
from 2016/17 and also 3 million tonnes above the December forecast.
The increase from December mostly reflects upward adjustments made
to the feed-use of coarse grains (mostly in China, the EU, Mexico
and the Russian Federation), more than offsetting a significant downward
revision to the non-food use of wheat (mainly in the EU and the Russian
Global wheat utilization in 2017/18 is forecast to reach around 734
million tonnes, down 6 million tonnes from December and only 1.5 million
tonnes (0.2 percent) above the 2016/17 estimated level.
FAO said the increase from the previous season is now smaller than
was anticipated earlier, primarily because of lower demand for feed
wheat in view of ample supplies of cheaper coarse grains in global
Food use of wheat, however, is still projected to increase by 1.1
percent, to almost 504 million tonnes.
In contrast, FAO has raised its forecast for total utilization of
coarse grains in 2017/18 to 1,365 million tonnes, 8.5 million tonnes
higher than in December. This was mostly on upward revisions to the
feed use of maize and barley.
At this level, world utilization of coarse grains would be some 28
million tonnes (2.1 percent) above the 2016/17 estimated level, with
feed use reaching an all-time high of 764 million tonnes, up 1.8 percent
from the 2016/17 estimated level. The largest increases are projected
for China, Brazil, the EU and Mexico.
FAO has forecast global rice utilization to sustain an annual 1.2
percent growth and reach 503.7 million tonnes in 2017/18, some 700,000
tonnes higher than the December forecast.
"The expansion is foreseen to be mostly driven by a steady increase
of food use, while other end-uses are projected to remain largely
stable compared with last year's levels."
FAO has projected world cereal stocks to rise by almost 36 million
tonnes (5 percent) from their already record high opening levels to
739 million tonnes.
This is 12.8 million tonnes above the December forecast, leading to
the world stocks-to-use ratio of cereals remaining comfortable at
27.7 percent, up slightly from 2016/17 and the highest since 2001/02.
According to FAO, this month's higher forecast for world cereal reserves
largely reflects an upward revision (12.8 million tonnes) to global
wheat stocks (ending in 2018), which are now forecast to hit an all-time
high of 270 million tonnes, as much as 21 million tonnes (8.7 percent)
above their already high opening levels.
"The bulk of the increase is foreseen to result from stock buildups
in the EU and the Russian Federation."
FAO noted that while maize inventories are set to reach a new record
of 248 million tonnes, up 12.5 million tonnes (5.3 percent) from their
opening levels, world barley stocks are heading towards a decline
of 1 million tonnes, to 26.4 million tonnes.
The forecast of world rice stocks (ending in 2018) varied little since
December and has been maintained at 170 million tonnes, 1.6 million
tonnes higher than their opening levels.
FAO has forecast international trade in all cereals to approach 404
million tonnes in the 2017/18 season, only 1.8 million tonnes (0.4
percent) below the previous season's record volume. Trade in all the
major cereals, except for maize, is seen to contract.
World wheat trade in 2017/18 (July/June) is pegged at 175 million
tonnes, down 2 million tonnes (1.4 percent) from 2016/17 and 500,000
tonnes lower than the December forecast.
"The decline from the previous season reflects expectations of
smaller purchases by China, India, Morocco and Thailand, more than
offsetting higher imports by Egypt, Indonesia and South Africa,"
Global trade in coarse grains in 2017/18 (July/June) has been raised
by 1 million tonnes since December to 183 million tonnes and is now
much closer to the record volume of 184 million tonnes in 2015/16.
The increase reflects expectations of larger trade in barley driven
mostly by stronger import demand in China and Iran.
World trade in maize is set to increase by 3.2 million tonnes (2.3
percent) in 2017/18 to a record level of 143 million tonnes, unchanged
The projected trade expansion in 2017/18 reflects higher import demand
forecasts for several countries, in particular China, Egypt, Mexico
and Saudi Arabia.
FAO has projected world trade in rice in 2018 at 46 million tonnes,
marginally below the December forecast and 1 million tonnes lower
than the revised estimate for 2017.
"The revision since December mainly reflects expectations of
reductions in exports by India, the United States and Thailand, outweighing
a larger export forecast for Myanmar."
PRICES OF KEY FOOD COMMODITIES
Meanwhile, FAO's Food Price Index, also released on 1 February, averaged
169.5 points in January 2018, nearly unchanged from December 2017.
However, it was almost 3 percent below the corresponding period last
The FAO Food Price Index is a trade-weighted index that tracks the
monthly change in international prices of a basket of key food commodities.
FAO said while firmer prices were registered for cereals and vegetable
oils in January, dairy and sugar values were generally weaker and
meat quotations remained steady.
The FAO Cereal Price Index averaged 156.2 points in January, a rise
of almost 2.5 percent (4 points) from December and 6.3 percent from
January 2017. The index tracks wheat, rice and course grains including
Despite large supplies, wheat and maize prices received some support
from a weaker US dollar as well as concerns over weather.
International rice values continued to firm up in January, sustained
mainly by renewed Asian demand, said FAO.
The FAO Vegetable Oil Price Index averaged 163.1 points in January,
virtually unchanged from December.
FAO reported that moderate rises in palm oil values were outweighed
by weakening prices for other oils, notably sunflower and rapeseed
"International palm oil quotations strengthened as global import
demand picked up just when seasonal production declines were looming
in Southeast Asia," it said.
In contrast, rapeseed oil prices were pressured by both excess supplies
in the EU and larger than expected availabilities in North America
and Australia, while those of sunflower oil were affected by sluggish
global import demand.
The FAO Dairy Price Index averaged 179.9 points in January, down 2.4
percent (4.5 points) from December 2017.
The month saw a decline in international price quotations for butter
and cheese while that of milk powders increased.
According to FAO, one factor that heavily influenced global dairy
prices, including the fall in prices of butter and cheese, was the
abundant milk supplies in the northern hemisphere and Australia.
However, the possibility for seasonal milk production in New Zealand
to be lower than expected lent support to Whole Milk Powder (WMP)
prices. Strong import demand also mostly led to an increase in Skim
Milk Powder (SMP) values.
The FAO Meat Price Index averaged 170.6 points in January, almost
unchanged from its slightly revised value for December 2017.
International price quotations for poultry and pigmeat continued to
slide due to higher export availabilities amid weak import demand,
"Prices of bovine meat were up marginally, reflecting lower quantities
offered for sale from Oceania, while those of ovine meat [lamb and
mutton] rose supported by strong international demand, especially
from Asia and the Middle East."
Meanwhile, the FAO Sugar Price Index averaged almost 201 points in
January, down 1.6 percent (3.2 points) from December and as much as
30.4 percent below the corresponding month last year.
FAO said international sugar quotations remained under downward pressure
mostly because of strong production outcomes in major producing countries
and, hence, ample export availabilities.