World cereal production, utilization, and stocks forecasts lowered from last month – FAO

FAO’s forecast for world cereal production in 2022 has been lowered by 4.9 million tonnes since last month and is now pegged at 2 764 million tonnes, down 1.8 percent (50.8 million tonnes) year-on-year. Most of this month’s reduction relates to wheat, while there was also a small downward revision to the world production forecast for coarse grains. Incorporating a 3.4-million-tonne cutback this month, global wheat production is now forecast at 783.8 million tonnes in 2022, still 0.6 percent (4.5 million tonnes) above the 2021 outturn and an all-time high. The month-on-month downward revision almost entirely concerns the wheat crop in the United States of America (United States), reflecting downgrades to yields and harvested area. Elsewhere, with the harvesting of the 2022 wheat crop drawing to an end, production forecasts remained unchanged. Global coarse grain production forecast for 2022 was also trimmed by 1.3 million tonnes, and now stands at 1 467 million tonnes, 2.8 percent lower on a yearly basis, marking the first production downturn in four years. Most of this month’s reduction stems from cuts made to expected maize outputs in the United States and the European Union, where recent assessments indicated more substantial drought impacts than previously estimated. In Ukraine, with the maize harvest underway, the production forecast has been raised, underpinned by expectations of larger harvested area, as the country’s exports from the Black Sea ports has partially eased storage constraints. As for rice, production expectations have improved for Indonesia since October, following official indications of a somewhat larger expansion in area under paddy than previously anticipated by FAO. Combined with less downcast than previously envisaged results reported by Peru, this upward revision largely offset some cutbacks to output prospects, namely for Viet Nam and Nigeria. As a result, world rice production in 2022/23 is now forecast at 512.6 million tonnes (milled basis), 2.4 percent below the 2021 all-time peak, but still an overall average crop.

Planting of the 2023 winter wheat crop has begun in northern hemisphere countries and will start in 2023 in the countries south of the equator. High crop prices are expected to sustain large plantings in 2023; however, elevated production costs could potentially limit area expansions. In the United States, winter wheat plantings progressed at an average pace in October, despite prolonged drought conditions in parts of key wheat-producing states. In the European Union, sowings were completed in the northern countries in September and are progressing well in most other countries under conducive weather conditions, except for dryness in parts of Spain, Italy and Romania. In the Russian Federation, with the planting period nearing its end, the pace of winter wheat sowings was reported to be lower year-on-year as of mid-October, as heavy rainfall impeded sowing operations. In Ukraine, severe liquidity constraints due to the war is seen reducing wheat acreage, while also heavy rains have slowed the pace of plantings. In Asia, wheat sowings are foreseen to remain at above-average levels in China (mainland) and India, where remunerative minimum support prices are maintaining the attractiveness of wheat. Beneficial weather in both countries is supporting planting operations. As many areas remain flooded in Pakistan, the sowing of the rabi winter wheat crop, which normally takes place between October and December, could be severely impeded.

Sowing of the 2023 coarse grain crops is underway in southern hemisphere countries. In Brazil, official estimations indicate an increasing maize acreage in 2023. Assuming better weather conditions in the country after the dry periods of last year, an upturn in yields could also support a second bumper crop in 2023. In South Africa, provisional planting intentions point to a likely moderate contraction in the maize acreage from last year.

At 2 778 million tonnes, the forecast for world cereal utilization in 2022/23 points to a 0.7 percent decline from the 2021/22 level, down 5.4 million tonnes since last month almost entirely on lower global coarse grain utilization. This month’s 5.9-million-tonne downward revision to global coarse grain utilization is primarily attributed to expectations of a lower industrial use of maize (especially in China and the United States), as well as lower feed and industrial uses of barley. With these revisions, the global coarse grain utilization forecast for 2022/23 now stands at 1 485 million tonnes, down 1.2 percent from 2021/22, representing the first fall in over a decade. Meanwhile, global total wheat utilization is still forecast to rise marginally in 2022/23, by 0.3 percent, to 775 million tonnes, with growth in food consumption and other uses seen offsetting a likely fall in feed use. Global utilization of rice in 2022/23 is pegged at 518.3 million tonnes, little changed from October and down 0.7 percent year-on-year due to expected contractions in feed and industrial uses.

World cereal stocks are forecast to contract by 2.0 percent below opening levels by the end of seasons in 2023, to 841 million tonnes, down 7.3 million tonnes from last month’s forecast. Based on the latest stock and utilization forecasts, the world cereals stocks-to-use ratio is foreseen to decline from 30.9 percent in 2021/22 to 29.4 percent in 2022/23, but still indicates a relatively comfortable supply situation from a historical perspective. Global wheat stocks are still forecast to rise by 2.0 percent above their opening levels, despite a 3.1-million-tonne downward revision this month. This last downward revision mostly reflects expectations of lower inventories in Ukraine, India and the United States. Similarly, a downward revision to maize stocks in Ukraine, resulting from higher exports, as well as lower maize stocks in the United States, due to lower production prospects, are behind a 4.6-million-tonne cut to global coarse grain stocks this month. With these revisions, global stocks of coarse grains, now forecast at 347 million tonnes, are seen falling by 5.3 percent below their opening levels to reach their lowest level since 2013/14, largely attributed to an expected 5.5-percent contraction in global maize stocks. FAO’s forecast for world rice stocks at the end of the 2022/23 marketing years stands at 193.4 million tonnes, down 1.8 percent from their record opening levels, but still the third largest inventories on record. Most of the forecast year-to-year decline is expected to concern inventories held by rice exporters, although importers, most notably Colombia, the European Union, Senegal and Sri Lanka, are also seen drawing on their reserves.

Forecast at 469 million tonnes, world trade in cereals in 2022/23 is predicted to register a 2.2-percent contraction from the 2021/22 level, despite a 1.7 million tonne upward revision from last month. Based on a stronger shipment pace until late October under the Black Sea Grain Initiative, expected higher wheat export prospects for Ukraine have lifted the global wheat trade forecast for 2022/23 (July/June) by 1.9 million tonnes this month. Nevertheless, now pegged at 194 million tonnes, FAO’s global wheat trade forecast still points to a 1.0 percent decline from the 2021/22 level. Nearly unchanged this month at 223 million tonnes, global trade in coarse grains is also forecast to decline in 2022/23 (July/June) by 3.4 percent, mostly reflecting contractions in global barley and sorghum trade, while maize trade is seen falling only marginally. This month, an upward revision for Ukraine’s maize export forecast balanced foreseen smaller sales from the United States, the European Union and the Russian Federation, keeping the global maize 2022/23 (July/June) trade forecast near 180 million tonnes. After three successive years of expansion, international trade in rice could subside by 1.6 percent in 2023 (January-December) to 52.9 million tonnes. With the exception of the Americas and Oceania, most regions are expected to import less rice year-on-year. However, the largest retreat in absolute terms could concern imports by Asian countries.

For more analysis of recent developments in agricultural markets see the November 2022 issue of Food Outlook, planned to be published on 10 November.

The trade figures for grains included in this Brief were drawn prior to 29 October 2022. They do not take into consideration the new developments with regard to the Black Sea Grain Initiative. FAO will continue to monitor developments in the Black Sea region and provide an update of its grain trade outlook in the next issue of the Cereal Supply and Demand Brief.

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Tags: wheat, India, USA, Sri Lanka, Argentina, Ukraine, FAO, China, Colombia, corn, Senegal, grain, Brazil, EU