The Cereal Supply and Demand Brief provides an up-to-date perspective of the world cereal market. The monthly brief is supplemented by a detailed assessment of cereal production as well as supply and demand conditions by country/region in the quarterly Crop Prospects and Food Situation . More in-depth analyses of world markets for cereals, as well as other major food commodities, are published biannually in Food Outlook.

Cereal supplies to remain ample in 2020/21 despite this month’s cut in global production forecast

Release date: 03/09/2020

FAO lowered its forecast for world cereal production in 2020 by 25.0 million tonnes (0.9 percent) compared to the previous forecast in July. Notwithstanding this downturn in prospects, the expected global cereal output still stands at 2 765 million tonnes, an all-time high and 58 million tonnes above the 2019 outturn.

This month’s production cutback results from a reduction in the world coarse grains forecast, now pegged at 1 496 million tonnes, down 23.5 million tonnes from the previous report in July. The bulk of the decline relates to a 26.3 million tonne downward revision to the maize production forecast in the United States of America (USA), where plantings, albeit still up year-on-year, are lower than earlier expectations and recent storm damage in the Midwest caused crop losses and impaired yield prospects. Overall, however, yields are still expected to recover from the previous year’s low level and the country’s output is forecast at 380 million tonnes, 10 percent higher than in 2019. Production forecasts were also lowered in the European Union (EU) and Ukraine, due to adverse weather that diminished yield prospects, and in Indonesia, where the historical production estimates as well as the 2020 forecast were revised downwards in line with recently released official statistics. These reductions more than offset upward revisions to the maize production forecasts in Argentina and Brazil, with both countries expecting record-high harvests. The forecast for global barley production in 2020 has been trimmed by 1.2 million tonnes, driven by lower yield prospects in the EU, and now stands at 154.2 million tonnes. By contrast, world sorghum production is now expected to reach nearly 60 million tonnes, 6 percent higher than the previous year, following increased forecasts for India, Mexico and the USA. Global wheat production has been reduced by 1.4 million tonnes since July, which puts this year’s output at 760.1 million tonnes, marginally below the good outturn of 2019. The recent decrease is mostly the result of cuts to production forecasts in Argentina, the EU and the USA by 1.3 million, 4.0 million, and 1.1 million tonnes, respectively, which outweighed upward revisions for Brazil, Canada, the Russian Federation, and Ukraine. Small area-based increases to July forecasts of rice production in Colombia, the Philippines and the USA compensated for more downbeat expectations of output in the Lao People’s Democratic Republic and Viet Nam. As a result, global rice production in 2020 is still projected at an all-time high of 509 million tonnes (milled basis), up 1.7 percent from the 2019 reduced level.

The forecast for world cereal utilization in 2020/21 has been increased by 11.0 million tonnes since July, now amounting to 2 746 million tonnes, up 63.1 million tonnes (2.4 percent) from the 2019/20 level. The projected growth and upward revision this month mostly reflect a foreseen increase in total utilization of coarse grains, revised up by 8.4 million tonnes since July and now surpassing the 2019/20 level by 51.5 million tonnes (3.6 percent). An anticipated increase in feed use of coarse grains, especially maize, up 31.4 million tonnes (3.8 percent) from 2019/20 levels, is the biggest driver of the expected annual growth. However, the recovery of industrial use from last year’s slump, now seen increasing by 16.4 million tonnes (4.2 percent), as ethanol demand regains ground, also contributes to the anticipated expansion. The forecast for total wheat utilization in 2020/21 has also been lifted since July, albeit marginally (by 2.0 million tonnes), to 756 million tonnes, representing an increase of 3.0 million tonnes from the 2019/20 level. Higher food consumption is the main driver behind this increase, while the feed demand for wheat is likely to remain suppressed and its industrial use to stagnate. World rice utilization in 2020/21 is pegged at 511 million tonnes, up 600 000 tonnes from July expectations and 1.7 percent above the 2019/20 level. Although non-food uses of rice are anticipated to recover over the season, the predicted expansion is forecast to be driven by food intake, rising at a faster rate than the population growth aided by large supplies and food assistance programmes.

The forecast for world cereal stocks by the close of the 2021 seasons has been cut by 33.4 million tonnes since July, dropping to 895.5 million tonnes, but still up 14.6 million tonnes (1.7 percent) above their opening levels and representing an all-time high. This month’s downward revision of the global cereal stocks and the lifting of world cereal utilization forecast results in the 2020/21 world cereal stocks-to-use ratio dropping to 31.8 percent, down slightly from July and the lowest in four years, but still relatively high from a historical perspective. The bulk of the downward adjustment to global stocks is the result of an expected 24.0 million tonne reduction in maize inventories in the USA, triggered by reduced production prospects since the previous report in July. This cut in maize stocks lowers the forecast for total global coarse grain stocks to 432.1 million tonnes, down 30.9 million tonnes since July but still 10.8 million tonnes (2.6 percent) above their opening levels. Despite a slight downward revision (by 1.6 million tonnes), global wheat inventories at the close of 2021 seasons are also still predicted to increase by 5.7 million tonnes (2.0 percent) above their opening levels and reach 282.2 million tonnes, the second highest on record. However, most of the forecast increase stems from an expected 11.0 million tonne rise in China’s wheat inventories from the previous season. By contrast, following a 1.0 million tonne downgrade since July, world rice stocks are now seen falling 1.0 percent below their opening levels to 181 million tonnes, which is still the third highest volume on record. This latest revision primarily reflects lower anticipated reserves in importers, particularly China, which is also envisaged to account for much of the forecast annual stock drawdown. Conversely, 2020/21 carry-outs in the major rice exporters were raised further and are now predicted to reach a seven-year high.

FAO’s forecast for world trade in cereals in 2020/21 is pegged at 441.4 million tonnes, up 7.1 million tonnes from the July forecast and 6.3 million tonnes (1.6 percent) above the 2019/20 level. The forecast for world wheat trade in 2020/21 (July/June) has been raised to 181.5 million tonnes, up 2.9 million tonnes from July and marginally (0.3 percent) above the 2019/20 record level. The more robust wheat import demand in 2020/21 will likely be met by larger shipments from Australia and the Russian Federation, offsetting an anticipated cut in exports by the EU. The forecast for world trade in coarse grains in 2020/21 (July/June) has also been lifted since the previous report in July, by 3.9 million tonnes; it now points to a likely trade expansion of nearly 4.0 million tonnes (1.9 percent) from the 2019/20 level and marking a new record. Higher world trade of maize than earlier anticipated is responsible for most of this month’s upward adjustment, reflecting strong import demand, especially in Asia, amid large supplies in major exporters. Despite a 400 000 tonne downward revision from July, ample exportable supplies and rekindling African demand are expected to sustain a 6 percent annual expansion in international rice trade in (calendar) 2021 to 47 million tonnes.

Summary Tables

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1/ Production data refer to the calendar year of the first year shown. Rice production is expressed in milled terms.

2/ Production plus opening stocks.

3/ Trade data refer to exports based on a July/June marketing season for wheat and coarse grains and on a January/December marketing season for rice (second year shown).

4/ May not equal the difference between supply and utilization due to differences in individual country marketing years.

5/ Major wheat exporters are Argentina, Australia, Canada, the EU, Kazakhstan, Russian Federation, Ukraine and the United States; major coarse grain exporters are Argentina, Australia, Brazil, Canada, the EU, Russian Federation, Ukraine and the United States; major rice exporters are India, Pakistan, Thailand, the United States, and Viet Nam. Disappearance is defined as domestic utilization plus exports for any given season.