DUSHANBE, May 6, 2016, Asia-Plus — FAO’s current forecast for world cereal production in 2016 stands at nearly 2 526 million tons, virtually unchanged from 2015 and fractionally above the volume predicted in April.
The monthly revision resulted almost entirely from improved prospects for wheat production, now anticipated to hover around 717 million tons in 2016, that is 4 million tons higher than foreseen last month, but still 2.2 percent (16 million tons) below the 2015 record.
The month-on-month upward revision of global wheat production mainly reflects an improved outlook in Europe, where favorable winter weather bolstered yield expectations in the EU, the Russian Federation and Ukraine. Increases in these countries more than outweighed an anticipated reduction in India, where the wheat crop has been hit by dry conditions earlier in the season and by heavy rains during the ongoing harvest. At nearly 1 314 million tons, the production forecast for global coarse grains in 2016 is almost unchanged from last month, implying a 1 percent (11.2 million tons) increase from 2015.
World cereal utilization in 2016/17 is forecast at 2 549 million tons, up marginally from last month and only 1.1 percent (27 million tons) above the estimate for 2015/16, marking the second year in succession of below-trend growth. A lower pace of growth in the utilization of cereals as feed is the primary reason behind the slowdown. Total wheat utilization is currently forecast at 724 million tons, almost unchanged from the 2015/16 level, with food use expanding by 1.0 percent while feed use is seen contracting by 1.8 percent. World utilization of coarse grains is projected at nearly 1 322 million tons, about 1.5 percent higher than in 2015/16. On the other hand, total use of barley is anticipated to drop by 2.7 percent (to 140 million tons), largely driven by a 3.4 percent contraction in its feed use.
Based on current forecasts for production in 2016 and utilization in 2016/17, world cereal stocks are expected to fall to around 615 million tons by the close of crop seasons ending in 2017, down 3.3 percent (21 million tons) from the anticipated level in 2016. This month’s forecast is 4 million tons higher than FAO’s first projection for 2016/17, published last month, reflecting the more buoyant prospects for global grain production. Despite the year-on-year anticipated decline in world reserves, the ratio of global cereal stock-to-utilization would fall only marginally, from 24.9 percent in the current season to 23.4 percent in 2016/17.
The forecast for world trade in cereals in 2016/17 has been raised by 2 million tons since last month to 367 million tons, driven by upward revisions to wheat and maize volumes. At this new level, global cereals trade in 2016/17 would fall short of the 2015/16 estimate by nearly 7 million tons, or 1.8 percent.
Global wheat trade in 2016/17 (July/June) is currently forecast at 154 million tons, up marginally (0.7 percent) from 2015/16, with much of the increase reflecting larger purchases by Morocco, following this year’s production shortfall. Elsewhere, most countries are expected to import quantities similar to those of 2015/16 with some importing even less, most notably the Islamic Republic of Iran.
Meanwhile, the FAO Cereal Price Index averaged nearly 150 points in April, up 2.2 points (1.5 percent) from March, but still down 10.4 percent year-on-year. Maize quotations increased the most, influenced by weaker US dollar and spill over from soaring prices in the vegetable oils complex. However, favorable weather conditions and expected large supplies in the new season limited gains in wheat markets. On the other hand, rice prices were marginally down.
