World grain stocks remain stable – FAO

FAO has maintained its forecast for world cereal production in 2023 at 2 819 million tonnes, still representing a 0.9 percent (26 million tonnes) increase compared to the previous year’s outturn.

Global wheat production in 2023 is forecast at 785.1 million tonnes, virtually unchanged from last month and 2.2 percent (18 million tonnes) lower than last year’s level. Downward revisions were made to production forecasts for the European Union and Kazakhstan, where prolonged periods of unfavourable weather late in the season led to lower yields relative to earlier prospects. These cuts have offset increases in production forecasts for Iraq and the United States of America, reflecting higher yield estimates. Global coarse grain production is pegged at 1 510 million tonnes in 2023, unchanged month on month and remaining 2.7 percent (38.8 million tonnes) above last year’s outturn. There are, however, several notable changes at country level. The major revision this month relates to China, where larger-than-previously anticipated plantings added 4 million tonnes to the harvest forecast. Production forecasts for most West African countries were also lifted in line with recently released official data. These upward revisions countered sizeable cuts to maize and sorghum production forecasts for the United States of America, amid persisting unfavourable weather, and the European Union, where maize yield prospects have diminished on account of dry conditions in eastern parts.

Turning to 2024, winter wheat plantings are underway across the northern hemisphere and area growth is expected to be limited, reflecting softer crop prices this year. In the United States of America, drought conditions have partially dissipated in key producing states, and with above-average rainfall forecast for the next months, weather conditions appear to be more favourable for early stages of the 2024 crop; plantings have progressed at an average pace as of October. In the European Union, comparatively dry and warm conditions are favouring sowing of the winter wheat crop, with plantings already nearing completion in northern countries. In Ukraine, the continuing effects of the war, including constrained access to fields and low farm-gate prices, along with less-than-ideal weather conditions, are seen engendering a reduction in the wheat area. In India, driven by continuing strong domestic prices, wheat sowings are forecast to exceed last year’s level, whilst adequate water availability for irrigation should support favourable yield prospects. In Pakistan, the wheat area is forecast well above the last five-year average amid record-high domestic prices, while good supplies of quality seeds, fertilizers and herbicides augur well for yields. In China, wheat plantings could increase slightly this year, based on expectations of an upturn in domestic demand for wheat.

Sowing of the 2024 coarse grain crops is underway in the southern hemisphere countries. In Brazil, early indications point to a pullback in maize plantings of around 5 percent, as cost-price ratios are favouring soybeans. In Argentina, early outlooks point to a marginal year-on-year decline in the maize area in 2024, amid reduced rains in the first season that are hampering the planting. In South Africa, early expectations point to a small uptick in 2024 maize plantings, whilst the El Niño event, generally associated with drier and hotter-than-average weather, poses a downside risk to yields in South Africa and neighboring countries.

FAO’s forecast of world rice production in 2023/24 now stands at 523.9 million tonnes, up 0.8 percent from the 2022/23 estimate and 850 000 tonnes higher than previously reported. The upward revision primarily reflects an upgrade to India’s production forecast, following revisions to the 2022/23 output estimates for the country. This adjustment overshadowed various other revisions, in particular a further downgrade to Indonesian output prospects given a more pronounced than previously anticipated cut in the country’s off-season plantings.

World cereal utilization in 2023/24 is forecast to reach 2 810 million tonnes, up 6.7 million tonnes since the October report and 1.0 percent higher than in 2022/23. The forecast for total wheat utilization in 2023/24 has been scaled up 6.3 million tonnes this month, mostly attributed to an anticipated increase in the feed use of wheat in China, raising the global forecast to 789 million tonnes, surpassing the 2022/23 level by 1.4 percent. Despite a 1-million-tonne downward revision this month, largely on lower maize utilization in Indonesia on account of reduced production prospects, global utilization of coarse grains is still set to expand in 2023/24 by 1.2 percent to 1 499 million tonnes. Regarding rice, largely reflecting upgrades to domestic uses in India, the forecast for world rice utilization in 2023/24 has been raised by 1.5 million tonnes since October to 522.0 million tonnes. Nevertheless, the revised level continues to suggest that world rice total use could stagnate at the 2022/23 somewhat reduced level, as forecast cuts in the feed uses largely offset an increase in the food use component.

The forecast for world cereal stocks by the close of seasons in 2024 has been lowered by 2.9 million tonnes since October, to 881 million tonnes, but still points to a 2.6 percent increase above opening levels. Based on the latest stock and utilization forecasts, the 2023/24 world cereals stocks-to-use ratio stands at 30.7 percent, marginally above the 30.5 percent in 2022/23, which is a comfortable supply situation from a historical perspective. The latest downward revision to stocks largely stems from a cut (4.2 million tonnes) in the global wheat inventory forecast, resting on lower stocks anticipated in China on greater feed consumption, in Kazakhstan on reduced production prospects, and in Türkiye on stronger exports. Following this month’s downward revision, global wheat stocks are now expected to remain close to their opening levels, at 315 million tonnes. The forecast for global coarse grain inventories has been lifted this month by 1.0 million tonnes to 367 million tonnes, up 5.9 percent from their opening levels. The upward revision mostly reflects larger expected maize stocks in China, on account of higher maize production prospects. World rice reserves at the close of 2023/24 marketing seasons are forecast to recover by 1.5 percent year-on-year to a peak of 198.9 million tonnes. However, much of this increase is envisaged to take place in India, where another accumulation, coupled with carry-out recoveries in Pakistan and the United States of America, could overshadow stock drawdowns in all other major rice exporters. Aggregate inventories held by importers are instead seen recovering only modestly from the 2022/23 reduced level, as increases would chiefly concern China, Indonesia and the Philippines, outweighing cuts in the combined reserves held by all other importers.

FAO’s forecast for global trade in cereals in 2023/24 has been raised by 3.0 million tonnes since October to 469 million tonnes, so still seen heading for a 1.6 percent contraction from 2022/23. Stronger import demand than previously expected from the European Union for both maize and wheat boosted the global coarse grain and wheat trade outlooks since last month. On the export side, larger-than-earlier anticipated maize sales from Argentina and Paraguay also underpinned this month’s upward revision to the global coarse grain trade forecast. For wheat, the upward revision this month was also supported by larger shipments seen for Türkiye. However, despite these upward revisions, both global coarse grain and wheat trade are forecast to contract in 2023/24, by 2.8 percent and 1.8 percent, respectively, from their 2022/23 levels. International trade in rice in 2024 (January-December) is seen in the order of 52.8 million tonnes, little changed from the October forecast and close to the 2023 reduced level, as lower foreseen purchases, namely from Indonesia and various Eastern African countries, could offset likely import increases by few Far Eastern importers, the European Union and various Latin American countries.

For more analysis of recent developments in agricultural markets see the November 2023 issue of Food Outlook, planned to be published on 9 November.

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Tags: wheat, stocks, FAO, crop forecast, corn, grain, barley