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Global cereal production and trade forecast to fall to three-year lows

04.12.2022 17:09 "Agro Perspectiva" (Kyiv) FAOs forecast for world cereal production in 2022has been cut by 7.2million tonnes this month and is now pegged at 2756tonnes, 2.0percent (57million tonnes) lower year-on-year. By comparison, world cereal production grew by an average of 56million tonnes per year in the last three years. This months downgrade mainly concerns maize and, albeit by a smaller amount, wheat production.

Global coarse grain production in 2022is pegged at 1462million tonnes following an almost 5-million-tonne cut to the forecast and is now seen to decline by 3.1percent compared to the 2021outturn. The recent reduction principally reflects lower maize harvest prospects in Ukraine, where the impact of the war has made post-harvesting operations prohibitively expensive, compelling many farmers to leave planted areas unharvested. Latest official data also confirm a smaller-than-previously-predicted crop in Serbia, where drought has sharply curtailed yields. Conversely, small upward revisions are made to production estimates in Türkiye and Paraguay. Global wheat production in 2022has been lowered by 2.7million tonnes this month down to 781.2million tonnes, nevertheless, it remains a record high. The month-on-month cutback almost entirely concerns Argentina, where prolonged dry weather conditions are impairing yields, which have dragged down production prospects. Partly offsetting this decline, production estimates are raised for the United Kingdom of Great Britain and Northern Ireland and Kazakhstan, resting on higher-than-expected yields. Global rice production in 2022remains forecast to fall 2.4percent below the 2021all-time record to an overall volume of 512.8million tonnes (milled basis). This level is slightly higher than the November expectations, largely due to a better-than-earlier-anticipated outcome in Madagascar and historical output revisions, namely for the Democratic Republic of the Congo, Malaysia and the Bolivarian Republic of Venezuela.

Planting of the 2023winter wheat crop is ongoing in the northern hemisphere countries. Concerns over the affordability of inputs have raised uncertainty over global planting expectations, although the elevated crop prices could help to maintain an above-average area. In the United States of America, winter wheat plantings proceeded at a quick pace and were almost complete as of mid-November. Drought is currently affecting about three-quarters of the winter wheat area and the drier conditions are forecast to persist in the southern Great Plains until early next year, although some improvements are expected elsewhere. In the European Union, winter wheat sowings are ongoing under broadly conducive weather conditions, supporting crop emergence. However, increased precipitation is needed in some areas that experienced rainfall deficits earlier in the year, including parts of northern Italy. In Ukraine, a 40-percent decrease in wheat plantings from the five-year average is forecast, as the war continues to constrain access to fields and cause severe input shortages. In the Russian Federation, abundant rains that hindered land preparation and relatively lower domestic prices are expected to cause an area contraction, with winter wheat plantings forecast to decline from last year to a near-average level. In Asia, high domestic prices are seen supporting above-average wheat plantings in China (mainland) as well as in India, where the government raised the minimum support price of wheat. The effects of extensive flooding in Pakistan between June and August could result in a decrease in the wheat area, with plantings normally completed by December.

The 2023coarse grain crops are being sown in the southern hemisphere countries. In Brazil, official forecasts point to a record-high maize area, underpinned by remunerative domestic prices and generally beneficial weather at the start of the season. In South Africa, provisional planting intentions point to a likely moderate decline in the maize acreage from last year, but are expected to remain at an above-average level. Weather conditions in South Africa and neighbouring countries have so far been favourable, supporting early crop development.

World cereal utilization in 2022/23is forecast at 2777million tonnes, nearly unchanged from the previous month and pointing to a 0.7percent (21million tonnes) decline from 2021/22. The forecast for total utilization of coarse grains in 2022/23has been lowered marginally (1.2million tonnes) from the previous forecast in November to 1484million tonnes, marking a likely 1.3percent fall from the previous season. The foreseen decline is driven mostly by an expected contraction in the feed use especially of maize, but also of barley and sorghum, as well as industrial use of maize. The forecast for global wheat utilization in 2022/23is unchanged from last month at 775million tonnes, suggesting a fractional increase (0.2percent) from the 2021/22level, with a rise in the use of wheat for food predicted to counter an expected fall in feed use and, to a much lesser extent, in other uses. World rice utilization in 2022/23is now forecast at 519.0million tonnes, some 600000tonnes more than in November but still down 0.6percent from the 2021/22historical peak.

The forecast for world cereal stocks by the close of seasons in 2023has been scaled down by 1.1million tonnes since the previous month to 839million tonnes, representing a 2.2percent (18.5million tonnes) decline from the previous season and the lowest level in three years. At this level, the global cereal stock-to-use ratio would drop from 30.9percent in 2021/22to 29.3percent in 2022/23, marking the lowest level since 2013/14but still representing a relatively comfortable supply situation. Total coarse grain inventories are seen lower than earlier anticipated by 2.1million tonnes, primarily stemming from downward revisions made for maize inventories in Ukraine on account of a lower production estimate. This months revision brings the forecast for total coarse grain inventories down to 345million tonnes, representing a 6.1percent fall below opening levels, largely attributed to a 6.8percent forecast fall in the global stocks of maize. The forecast for world wheat inventories remains near the previous months forecast of 300million tonnes, representing a 2.4percent rise above opening levels. The bulk of the increase is anticipated to be concentrated in China (mainland) and the Russian Federation, outweighing anticipated drawdowns in several other countries, in particular India, the European Union, Ukraine and the United States of America. Following a 500000-tonne aggregate upward revision to forecasts of reserves held by rice importers, FAO now anticipates world rice stocks at the close of the 2022/23marketing years at 194.0million tonnes, down 1.6percent from the 2021/22peak, but still the second highest level on record.

World trade in cereals in 2022/23is forecast at 472million tonnes, up 2.7million tonnes from last month but still pointing to a likely 1.9-percent (9.2million tonnes) contraction from the 2021/22record level. Despite a 2.3-million-tonne upward revision this month, world trade in coarse grains in 2022/23(July/June) is still forecast to decline by 2.6percent from the 2021/22level, down to 225million tonnes. This months increase is the result of a 2.1-million-tonne upward adjustment to global maize trade, primarily reflecting a continued strong export pace from Brazil and higher import demand anticipated for the European Union to compensate for reduced domestic production. Forecast at 194million tonnes, world trade in wheat in 2022/23(July/June) is predicted to fall by 0.8percent from the 2021/22level. While the latest global forecast is close to last months, revisions have been made to the export forecasts of some countries. Expected shipments from Australia and the Russian Federation have been revised upwards mostly on account of good supplies and high import demand, while downward adjustments have been made for exports from Argentina, following a reduction to the domestic production estimate, and the European Union, based on higher competition. FAOs forecast for international trade in rice in 2023(January-December) remains pegged at 52.9million tonnes, down from a revised level of 54.5million tonnes for 2022, with the forecast 2.9percent annual reduction largely reflecting predicted reduced shipments by India, as well as by Brazil, Pakistan, Uruguay and the United States of America.

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