According to the first forecast by FAO of the demand for cereals and cereals in the world in the 2017-2018 season, the situation in the markets will remain relatively calm, despite a slight decline in production in the world. Given the expected relatively low growth in consumption and the next rich harvest, world cereal stocks will also remain close to record levels.
The volume of cereal production in the world in 2017 will slightly decrease
It is expected that in 2017 the world’s cereal production will reach 2597 million tons, which is only 0.3 percent (9.0 million tons) below the record level of 2016, but still above the average for the last five years. Given that the sowing campaign of a number of major crops is still ahead, much will depend both on the weather conditions in the coming months, and on the farmers themselves, whose plans for sowing depend on market conditions.
Almost all of the reduction in cereal production compared to the previous year will account for wheat: the volume of its production will be, as expected,
740 million tons, which is 2.7 percent (20.3 million tons) less than in 2016. In Australia, Canada and the United States, the projected decrease in production is mainly due to a reduction in acreage under the impact of lower prices. A decrease in the harvest is also expected in Kazakhstan, the Russian Federation and Ukraine, while the EU and Morocco are forecasting a significant increase in production. At the same time, the total production of fodder grain in 2017, according to preliminary estimates, could reach a new record level of 1353 million tons, or 0.5 percent (6.4 million tons) higher than the level of the previous year.
Consumption of cereals in the world in the 2017-2018 season will continue to expand at a slower pace
After a relatively rapid growth in the 2016-2017 season, which was 2.2 percent, world cereal consumption in the 2017-2018 season is expected to increase only 0.8 percent to 2597 million tons. According to forecasts, food consumption of cereals will continue Gradually increase and in the season 2017-2018 will reach 1118 million tons – thus the average volume of cereal consumption in the world will remain at a stable level of about 149 kg per capita. Total grain consumption for feed can reach 927 million tons, which is only 0.6 percent higher than the forecast level of the 2016-2017 season and indicates a significant decrease in consumption growth rates, especially in comparison with the 3.0 percent growth that was originally expected in Season 2016-2017 years. Reduction in the production of coarse grains in the United States and in some of the major supplier countries of the CIS may lead to a further decline in the growth rate of consumption; In addition, the demand for feed is also likely to affect unfavorable prospects for economic development. The growth in industrial cereal consumption in the 2017-2018 season may also slow down in comparison with the indicators of the 2016-2017 season, mainly in the light of the slowdown in the rate of increase in ethanol production.
The total consumption of forage grains in the 2017-2018 season could reach a record level of 1,356 million tons, which is 1.3 percent higher than in the 2016-2017 season, mainly due to a slight increase in maize consumption for feed and industrial purposes. At the same time, wheat consumption in the season 2017-2018 is projected at 735 million tons, which is slightly lower (by 0.4 percent) than in the 2016-2017 season. The main reason for the decline is related to a decrease in the use of wheat for food purposes due to the presence of a significant supply of cheaper feed grain from a number of major suppliers.
The world’s cereal reserves in the 2017-2018 season may drop slightly compared to the record level of the 2016-2017 season
Despite the expected slight increase in consumption, good crop yields in 2017 make it possible to say with a high degree of probability that there will be no significant reduction in stocks compared to the record level of the current season. In particular, according to the first forecast of FAO, the world’s cereal reserves at the end of the 2017-2018 season will be 680 million tons, which is only 2.0 million tons lower compared to the level of the previous season. If this forecast is justified, then the ratio of the world reserves and world consumption in the season 2017-2017 will be 25.4 percent, which is slightly lower than the expected in the season 2016-2017, 26.2 percent, but well above the minimum level of 20.5 Percent, fixed in the season of 2007-2008.
Some decrease in cereal reserves in the world, predicted in the season of 2017-2018, is mainly due to a possible decrease in forage grain reserves by 8 million tons to 262 million tons. Most corn reserves will drop by 4 percent compared to last year’s values to 207 Million tons, thus reaching a minimum level in four years. The expected significant increase in production in the EU and South America will not be able to compensate for the decline in reserves in China and the United States.
At the same time, wheat stocks at the end of the 2018 agricultural year are expected to continue to increase for the fifth year in a row and reach 246.6 million tons, which is 2.5 percent higher than in 2017. The projected increase is mainly due to a significant increase in reserves in China, as well as the growth in the volume of rolling stocks of wheat in India.
Grain trade in the world in the season of 2017-2018 may decline
According to the first forecast prepared by FAO, the volume of grain trade in the world in the 2017-2018 season will be about 386 million tons, which is 1.7 percent (6.7 million tons) lower than expected in the 2016-2017 season, mainly in Communication with a decrease in the supply of wheat and basic forage grains.
The volume of wheat trade in the world in the new season may decrease by 2.3 percent (4 million tons) to 169 million tons due to a reduction in imports by China and India, as well as a number of countries in North Africa, where a high harvest is expected compared to the level of the previous year. In addition, a significant reduction in wheat supplies from Australia and the United States is expected compared to the level of the 2016-2017 season; While sales of wheat by Argentina and the EU can grow. Supplies from other leading exporters are likely to remain at levels close to the 2016-2017 season.
Forecast for trade in fodder grain and rice in the new season is only general, as the season is only beginning and in most major producing countries there are still several months left before the sowing season. Nevertheless, taking into account the preliminary species for the harvest of 2017, the volume of world trade in fodder grain in the season 2017-2018 could reach almost 173 million tons, which is 2 percent (3.5 million tons) lower than forecasted for the 2016-2017 season.