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Ukrainian Grain & Oilseed Market

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Record cereal production and trade but stocks set to decline

04.11.2021 15:25 "Agro Perspectiva" (Kyiv) — Despite an expected record world cereal production in 2021, global cereal inventories are seen heading for a contraction in 2021/22. Following an upward revision this month on stronger-than-earlier-anticipated global trade of wheat and rice, world trade of cereals is now forecast to expand and reach a new record in 2021/22.

While FAO’s forecast for world cereal production in 2021 has been cut by 6.7 million tonnes since the previous report in October to 2 793 million tonnes, it still stands at 0.8 percent (21.5 million tonnes) higher than in 2020 and marks a new record high. Most of this month’s reduction stems from a cut to the global wheat production forecast, which is now pegged at 771 million tonnes, down 6.2 million tonnes from October and 0.8 percent lower than the previous year’s outturn. Cuts to this year’s production estimates in the Islamic Republic of Iran, Turkey and the United States of America underpin this month’s downward revision. By contrast, global coarse grains production has been lifted fractionally, to 1 505 million tonnes, up 1.5 percent from 2020. The forecast for world maize production has been revised upwards on better-than-previously expected yields in Brazil and India and improved prospects in several West African countries. These upward revisions in maize production more than offset a cut to the global barley production forecast, predominantly related to output reductions in the Islamic Republic of Iran and Turkey where persistent dryness curbed yields. While still pointing to a 0.9-percent increase from the 2020 record harvest, the 2021 global rice production forecast has been lowered by 1.5 million tonnes since October to 518.2 million tonnes (milled basis). The revision primarily reflects an area-based decrease for Indonesia, where output is now officially seen only partially recovering from the 2020 weather-affected outcome. This amendment, together with a yield-based reduction for Sri Lanka, more than offset improved production prospects for a few countries, including the Lao People’s Democratic Republic, Guinea and the Bolivarian Republic of Venezuela.

Planting of the 2022 winter wheat crop has begun in the northern hemisphere. Prevailing high wheat prices are seen encouraging large plantings, however, rising input costs could curb wheat area expansions in some countries. Planting conditions in the European Union have been mostly favourable, except in Romania where persistent dryness has delayed sowings. Planting is progressing at an average pace in the United States of America, but crop conditions are reportedly slightly less favourable year-on-year due to insufficient soil moisture. In the Russian Federation, delayed sowings in the main producing Volga and Central regions due to dryness could lower sown area compared to last year. In Ukraine, soil moisture levels are good, although early indications point to a likely small year-on-year decline in area planted.

South of the equator, countries are sowing the 2022 coarse grain crops. In South America, Brazilian maize production in 2022 is anticipated to rebound from its reduced level in 2021, reflecting an expected price-driven area expansion and favourable weather forecasts. Similarly in Argentina, the 2022 maize planted area is predicted to increase, however, a high probability of reduced rainfall in the coming months could adversely impact early crop development. In South Africa, provisional planting intentions point to a moderate decline in maize area from last year.

At 2 812 million tonnes, FAO’s world total cereal utilization forecast in 2021/22 is nearly unchanged from October and still heading for a 1.7 percent increase from the 2020/21 estimated level. Total wheat utilization in 2021/22 is expected to grow by 2.2 percent, reaching 779 million tonnes. Global food consumption of wheat is seen rising in tandem with population growth, resulting in a relatively stable per capita level. Despite high wheat prices, feed use of wheat is anticipated to register another strong growth in 2021/22, especially in the European Union, but also in China, India, the United Kingdom of Great Britain and Northern Ireland and the United States of America. Higher feed and industrial uses of maize account for the bulk of this month’s 1.2-million-tonne upward revision and the foreseen 1.6 percent year-on-year growth in total coarse grains utilization in 2021/22, now pegged at 1 514 million tonnes. A forecast 2.5 percent year-on-year rise in maize utilization is supported by anticipation of continued robust feed demand in Brazil and China, greater use of maize for feed in Canada, and higher maize-based ethanol production in Brazil and the United States of America. Sorghum utilization is also forecast to increase in 2021/22 on higher food consumption as well as feed use. By contrast, reduced production is expected to curb feed and industrial uses of barley. World rice utilization in 2021/22 was revised downward this month by 800 000-tonnes, though it is still seen growing by 1.6 percent year-on-year to a fresh peak of 518.8 million tonnes. Although feed and industrial uses of rice are predicted to continue increasing, food intake is envisaged to drive much of the yearly global use expansion, increasing at a slightly faster pace than population growth.

Despite a 1.7-million-tonne upward revision since October, world cereal stocks by the close of seasons in 2022 are forecast to fall 0.8 percent below their opening levels, to 819 million tonnes. The world cereals stocks-to-use ratio is forecast to decline slightly, from 29.4 percent in 2020/21 to 28.5 percent in 2021/22; still relatively high from a historical perspective. With overall utilization forecast to exceed world production, global wheat inventories are set to fall by 2.2 percent below their opening level to 282 million tonnes. The forecast drawdown is mostly concentrated among major exporters, in particular Canada, the Russian Federation and the United States pf America, on lower harvest prospects. Following an upward revision of 3.0 million tonnes from last month, global coarse grain inventories by the end of seasons in 2022 are expected to remain near their opening levels. An anticipated rise in maize stocks, mostly in China and the United States of America, is seen countering a predicted drawdown of barley inventories. World rice stocks at the close of 2021/22 marketing season are now seen in the order of 187.6 million tonnes, up 0.3 percent from their record opening levels and 900 000 tonnes more than previously anticipated. This level should be sufficient to meet the projected rise in world rice use, keeping global stock-to-use ratio at a comfortable level, close to 36 percent.

FAO’s forecast for global trade in cereals in 2021/22 (July/June) has been lifted by 4.9 million tonnes, which would result in a 0.3 percent increase from the 2020/21 level and a new record, at 478 million tonnes. World wheat trade is now forecast to expand by 1.8 percent in 2021/22 (July/June), reaching a new record level of 192 million tonnes, underpinned by larger imports anticipated for Afghanistan, Iraq, the Islamic Republic of Iran and Turkey to compensate for reduced domestic production, as well as for Egypt to replenish stocks. Among exporters, increased availability is seen boosting shipments from Argentina, Australia, the European Union and Ukraine, outweighing anticipated declines in sales by Canada, the Russian Federation and the United States of America, where supplies are forecast to be tighter than in the previous season. Largely unchanged this month, world trade in coarse grains in 2021/22 (July/June) is still seen heading for a 1.7 percent contraction from the 2020/21 record. The forecast decline in global maize trade would be mostly driven by expectations of smaller maize purchases by China and Viet Nam. On the export side, expected larger maize sales by Argentina and Ukraine are likely to only partially offset anticipated falls in shipments from Brazil and the United States of America, where export availabilities are seen to remain tight. Barley trade could also decline, primarily on lower demand from China and Morocco. Following a 1.1 million tonne upward revision, international rice trade is now predicted to reach 51.3 million tonnes in 2022 (January-December). This level would imply a 4.6-percent annual expansion, reflecting expectations of ample global exportable supplies and an acceleration in imports from all regions, except Asia.

Agro Perspectiva

< World food prices reach new peak since July 2011

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04.11.2021

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