Markets Feed and Nutrition Herd Management

Significant Tightening of Global Grain Supply - Demand Balance Forecast

GLOBAL - Continued deterioration of cereal crop prospects over the past two months, due to unfavourable weather conditions in a number of major producing regions, has led to a sharp cut in FAO’s world production forecast since the previous report in July.

13 September 2012

3 minute read

Based on the latest indications, global cereal production would not be sufficient to cover fully the expected utilization in the 2012/13 marketing season, pointing to a larger drawdown of global cereal stocks than earlier anticipated. Among the major cereals, maize and wheat were the most affected by the worsening of weather conditions.

FAO’s latest forecast for world cereal production in 2012 stands at 2,295 million tonnes, down 52 million tonnes, or 2.2 per cent, from the record in 2011. This forecast is significantly (about four per cent) below the estimate reported in FAO’s previous report in July, largely reflecting the worsening of maize production prospects in the United States because of the widespread and severe drought.

World production of coarse grains (i.e. maize, barley, sorghum, millet, rye and oats) is projected at 1,148 million tonnes, down 17 million tonnes (or 1.5 per cent) from 2011. The anticipated fall mainly reflects a smaller maize crop, which is expected to decline to 864 million tonnes in 2012, 20 million tonnes less than in 2011. According to the latest report from the United States Department of Agriculture, published on 10 August, this year’s maize crop in the United States could fall to 274 million tonnes, down 56 million tonnes (17 per cent) from the July forecast and 40 million tonnes (13 per cent) below the previous year.

The FAO’s forecast for world wheat production has also been downgraded since July. Global wheat production is anticipated to reach 663 million tonnes in 2012, down 15 million tonnes (two per cent) from the previous forecast, which would be 36 million tonnes (five per cent ) below 2011.

Most of the decline from last year (as well as from the previous report) reflects the negative effects of drought on CIS yields and production.

Wheat output in the Russian Federation is forecast to decline by 29 per cent to 40 million tonnes compared to 2011 and below the 41.5 million tonnes registered in 2010. Production also looks set to fall sharply in Kazakhstan and Ukraine, by 47 per cent and 37 per cent respectively. By contrast, a number of other key producers may harvest larger crops. In the United States, wheat production is to increase by 13.5 per cent to an above-average level of 61.7 million tonnes. In Canada, wheat output is expected to be above-average and six per cent higher than in 2011.

This year’s harvest in India is pointing to a record of almost 94 million tonnes (up eight per cent from the previous year’s record).

Likewise, in China, wheat output may reach a new high of 118 million tonnes. In the EU, the latest projections point to only a small reduction from 2011.