World cereal supply and demand forecasts for the 2016/17 season have been adjusted since July, following increases to production forecasts, according to the Food Agriculture Organisation (FAO).
Based on the latest updates, the FAO expects global cereal supply and demand situation in 2016/17 to be even more comfortable than predicted at the start of the season.
Cereal Production
The FAO’s current forecast for 2016 world cereal production stands at nearly 2,566m tonnes, 22m tonnes (0.9%) above the July forecast and 40m tonnes (1.6%) higher than in 2015.
Good weather in the US is expected to boost yields of maize, with an upward revision of 18m tonnes, accounting for a large proportion of the expected increase in world cereal production, the FAO says.
The outlook for wheat also improved by 1.2%, putting this year’s world production forecast above the 2015 record, at 741m tonnes.
A cutback in the EU wheat crop forecast, mostly due to wet-weather damage in France, has been offset by large revisions for wheat production in Australia, Canada, India, the Russian Federation, Ukraine and the US.
Cereal Utilisation
Despite significant increases to expected production figures, the FAO forecast for world cereal utilization in 2016/17 has remained nearly unchanged from the previous report, at close to 2,555m tonnes.
However, maize utilization is set to grow in the US, where a record 2016 maize crop and lower domestic prices could drive animal feed use of maize up by nearly 9% (12m tonnes) year-on-year.
An abundance of low quality wheat supplies is seen to boost global feed use of wheat to 145m tonnes, up 5.8% from 2015/16.
Total wheat used for human consumption is projected at 499m tonnes, about 1% higher than in 2015/16, according to the forecast.
Stocks
The UN food organisation’s forecast for global cereal stocks by the end of the 2017 season has been scaled up by 28m tonnes (4.5%) since July to nearly 664m tonnes.
As a result, the 2016/17 world cereal stocks-to-use ratio, a leading global food security indicator, is now projected to reach 25.3%, 1% above the July figure and well above the historic low of 20.5% registered in 2007/08.
Inventories
World wheat inventories are forecast to reach 233m tonnes, 16m tonnes higher than the last forecast, an increase of 7.5%.
The forecast for world coarse grain stocks has also been lifted significantly, by around 11m tonnes (4.4%), to around 265m tonnes, the FAO says.
Maize production has contributed to the increase in coarse grain stocks, with the maize production in the US forecast to rise by 18m tonnes, 41% over the previous season’s level.
World Trade
The FAO forecast for world trade in cereals in 2016/17 has been raised by nearly 9m tonnes, up 2.4%, this month to around 383m tonnes.
On the export side, the Russian Federation is expected to emerge as the world’s biggest wheat exporter for the first time, reaching record highs of 29.5m tonnes.
By contrast, this year’s reduced harvest is expected to cut shipments from the EU by 24%, previously the world’s leading exporter, to a 4-year low of 25.5m tonnes, the FAO says.
Lower prices and ample supplies are anticipated to promote larger trade in coarse grains and wheat, according to the FAO forecast.
The overall trade volume is expected to remain below the previous season’s level, the FAO says, thus fuelling competition among the leading exporters.
