FAO raises its forecast for global cereal production

20 July 20224 min reading

FAO’s (The Food and Agriculture Organization of the United Nations) forecast for global cereal production in 2022 was raised by 7 million tonnes in July from the previous month and is now pegged at 2 792 million tonnes, according to the new Cereal Supply and Demand Brief. This is still 0.6 percent short of the world output in 2021.

The month-on-month increase predominantly rests on a 6.4-million-tonne upward revision made to the coarse grain production forecast, with the world output seen reaching 1 501 million tonnes in 2022, only 0.5 percent below the 2021 outturn. Prospects were bolstered this month by reports indicating large maize plantings in China (mainland) and India. Furthermore, although still pointing to a likely 30-percent decline from the past five-year average, Ukraine’s maize production prospects were also lifted with official data indicating larger-than-previously anticipated maize sowings. These increases more than outweigh moderate cutbacks to maize production forecasts for Mexico and several Far East Asian countries, as well as a more sizeable cut to the forecast for the European Union, where plantings are lower than originally predicted and drier-than-normal weather has dampened yield prospects. The forecast for world wheat production in 2022 has been lowered only fractionally in July to 770.3 million tonnes, remaining 1.0 percent lower year-on-year. The marginally diminished outlook results from cuts to production forecasts for the European Union, where persisting dryness has impaired yield prospects, and to a lesser degree for Argentina and Iraq. These downgrades more than outweigh improved harvest expectations in Canada and Australia, where conducive weather at planting time and remunerative prices are encouraging area expansions. Additionally, continued beneficial weather in the Russian Federation has lifted yield prospects of the winter crop and further reinforced the country’s good production prospects in 2022.

As for rice, FAO has raised its 2022 production forecast for India based on a higher officially reported outcome of the 2021 Kharif harvest in the country. This revision more than compensates for a yield-based reduction made for Viet Nam, alongside some other more minor downgrades. As a result, world rice production in 2022 is now seen in the order of 520.5 million tonnes (milled basis), down just 0.4 percent from the 2021 record harvest. The forecast for world cereal utilization in 2022/23 has also been lifted, up 9.2 million tonnes to 2 797 million tonnes, but is still 1.7 million tonnes (0.1 percent) below the 2021/22 level, mostly reflecting expectations of lower feed use.

At 854 million tonnes, FAO’s forecast of world cereal stocks at the close of seasons in 2023 is up 7.6 million tonnes from the previous month but still points to a year-on-year contraction of 0.6 percent (5.0 million tonnes). At this level, the global cereal stock-to-use ratio would fall from 30.7 percent in 2021/22 to 29.8 percent in 2022/23.

FAO’s latest forecast for world trade in cereals in 2022/23 stands at 468 million tonnes, up 4.8 million tonnes from last month but representing the lowest level in three seasons and a decrease of 11.4 million tonnes (2.4 percent) from the 2021/22 volume. Accounting for the bulk of the decline, trade in coarse grains is forecast to contract by 4.1 percent (9.5 million tonnes) in 2022/23 (July/June) from the 2021/22 estimated level, largely driven by war-related disruptions of maize and barley exports from Ukraine. Although larger expected maize shipments from Brazil and higher demand from the European Union have boosted global maize trade prospects since the previous report, FAO’s forecast for global maize trade in 2022/23 stands 3.0 percent lower than the 2021/22 level. Increased exports from Brazil in 2022/23 are seen falling short of compensating for smaller shipments expected from the other major maize exporters, including Ukraine, as its main ports remain blocked by the ongoing war, and Argentina and the United States of America, on account of smaller harvests. At 191 million tonnes, world wheat trade in 2022/23 is also forecast to contract by 1.3 percent from 2021/22, largely resulting from a fall in exports from Ukraine and anticipated smaller purchases by several countries in Asia. Ukraine’s reduced export prospects, combined with smaller sales forecasts for Australia and Argentina based on reduced export availabilities, are seen outweighing expected increases in exports from Canada, the European Union and the Russian Federation. International trade in rice in 2022 (January-December) is pegged at 53.4 million tonnes, up 3.7 percent from the 2021 peak and 0.4 million tonnes more than previously anticipated in early June.

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