Analytical Reports

Food Outlook (Biannual Report on Global Food Markets)

Early prospects point to a likely 1.0-percent increase in global cereal production in 2023 to reach 2 813 million tonnes (including rice in milled equivalent). Among the major cereals, the bulk of the increase rests on a foreseen rise in maize production, with increases also anticipated for rice and sorghum. Partially offsetting these increases, wheat and barley outputs are predicted to fall below their 2022 levels.

FAO’s first forecast puts world cereal utilization in 2023/24 at around 2 803 million tonnes, up 0.9 percent from the estimated 2022/23 level; the increase stems almost entirely from a predicted growth in utilization of coarse grains. Higher feed use, largely of maize, is the dominant driver behind the expected increase, followed by growth in food consumption, especially of wheat and rice. Industrial use is foreseen to rise only marginally with expanded use anticipated for maize, rice, and barley.

Based on FAO’s initial forecasts for global cereal production in 2023 and utilization in 2023/24, global cereal stocks could rise by 1.7 percent above their opening levels, reaching a record 873 million tonnes. Among the major cereals, the increase in maize inventories is expected to be the largest, followed by those of rice and barley. By contrast, stocks of wheat and sorghum will likely fall below their opening levels. With the current forecasts for utilization and stocks, the world cereal stocks-to-use ratio would decline fractionally, from 30.6 percent in 2022/23 to 30.4 percent in 2023/24.

Pegged at 472 million tonnes, world trade in cereals is forecast to remain near the 2022/23 level. An expected decline in global wheat trade is foreseen to offset predicted increases in the world trade of coarse grains and rice. In May 2023, the FAO Cereal Price Index averaged 129.7 points, down 43.9 points (25.3 percent) from last year’s record value, reflecting sharp declines in the world prices of wheat and coarse grains; rice prices, however, have increased above their previous year values. Although the FAO Cereal Price Index dropped below its May 2022 record level, in May 2023 it was still 8.8 points (7.1 percent) above its last five-year average value for the same month.

Following a season of record-high world production, stocks and trade in 2022/23, global wheat markets are expected to tighten slightly in 2023/24 but should remain adequately supplied. Total wheat output in 2023 is pegged at 777 million tonnes, representing a 3.0 percent fall from the all-time high reached in 2022. The bulk of the foreseen decline is expected to occur in the Russian Federation and Australia, following record-high outputs in both countries in 2022, while smaller declines are anticipated in several other leading producers, including Ukraine and Kazakhstan.

Global total wheat utilization in 2023/24 is predicted to remain nearly stable at 780 million tonnes, up just 0.1 percent from 2022/23 and marginally below the 10-year trend. A 0.7 percent rise in the food consumption of wheat is foreseen, balancing expected reductions of 1.3 percent in feed utilization and 1.4 percent in other uses of wheat.

Based on preliminary forecasts for 2023 production and 2023/24 utilization, world wheat stocks are set to fall by 0.7 percent from their record opening levels to 308 million tonnes by the close of the seasons in 2024. Most of the expected drawdown will be concentrated in the Russian Federation, with smaller drops foreseen in the United States of America (United States) and Kazakhstan. By contrast, stocks in China and India are expected to increase, partly offsetting the declines.

World trade in wheat (including wheat flour in wheat equivalent) in 2023/24 (July/June) will likely fall by 3.0 percent to 194 million tonnes. This anticipated decline is underpinned by smaller wheat purchases by China and the European Union, where imports are boosted to high levels in 2022/23 due to large flows from Ukraine. On the export side, expected declines in sales by Australia and Ukraine are foreseen to outweigh anticipated increases in shipments from Argentina and the European Union.

International wheat export prices have generally faced downward pressure since mid-2022, as supply prospects improved, uncertainty regarding Ukraine’s exports eased with the implementation of the Black Sea Grain Initiative, and importers diversified their sources. Heading into 2023/24 with ample anticipated global supplies, world wheat prices will start the 2023/24 season at lower levels, with prices in May down 35 percent from May 2022 but 4 percent above their five-year average value for the same month.

World production of coarse grains in 2023 is forecast to rise by 3.0 percent from the 2022 reduced level, reaching 1 513 million tonnes, with most of the increase resting on an anticipated higher production of maize and a foreseen smaller increase for sorghum. Much of the expected growth is concentrated in the United States of America, Brazil and the European Union.

World trade in coarse grains in 2023/24 is predicted to reach 221 million tonnes, up 1.4 percent from the estimated level for 2022/23, driven by expectations of a growth in sorghum trade and a smaller rise in maize trade. The increase stems from anticipated larger imports of all major coarse grains by China (mainland) and an expected rebound in maize imports by several countries, mostly in Asia, from their reduced purchases last season. On the export side, expected rebounds in sales by the United States of America (United States) of both sorghum and maize are seen as predominantly boosting exports, while a foreseen smaller increase in maize shipments from Brazil should also contribute to expanding trade globally.

Higher supplies and lower prices are expected to support a 1.7 percent expansion in total utilization of coarse grains in 2023/24, led by a robust recovery in the feed use component, along with growth in industrial use and food consumption. Strong feed demand, largely for maize, in Brazil, China (mainland) and the United States of America (United States) are the main drivers behind the 2.6 percent forecast increase in total feed use of coarse grains, while higher use of maize in Brazil and the United States for ethanol is behind the 1.0 percent predicted rise in global industrial use.

The forecast for global inventories of coarse grains by the close of seasons in 2024 is pegged at 366 million tonnes, up 3.9 percent from 2022/23. An expected rise in maize inventories, largely in the United States, makes up the majority of the forecast increase, with a smaller increase anticipated for barley stocks. As a sign of generally improved supply prospects in 2023/24, the ratio of major exporters’ stock-to-disappearance (defined as domestic consumption plus exports) is predicted to increase from 13.0 percent in 2023/23 to 14.5 percent in 2023/24.

Reflecting the positive incentives provided by generally higher producer prices, easing fertilizer costs and continuing government assistance measures, global rice production is forecast to recover by 1.3 percent in 2023/24 to 523.5 million tonnes (milled basis). With the exception of Latin America and the Caribbean and Oceania, all regions are predicted to harvest more than they did in 2022/23, although, amid heightened weather uncertainties, output in Asia could remain below previous records.

Following three years of successive expansion, tighter exportable availabilities and higher overall import costs are predicted to depress international trade in rice by 4.3 percent in 2023 to 53.6 million tonnes. All regions, other than Latin America and the Caribbean, are anticipated to reduce their levels of purchases from 2022, although efforts to contain inflationary pressure could keep imports, particularly by Asia, at relatively abundant levels. On the export side, India is forecast to register the largest absolute export reduction. A sizeable export contraction is also envisaged for Pakistan, with Argentina, Brazil, the Russian Federation and the United States of America expected to export less as well.

Continued reductions in the use of rice for animal feed could contrast with another expansion in food use in 2023/24, resulting in total rice utilization stabilizing around 520.1 million tonnes. As this level would fall short of anticipated production during the season, world rice stocks at the close of 2023/24 marketing seasons could rise 1.8 percent above their opening level to 198.3 million tonnes. Exporting countries are envisaged to drive this expansion, although importers could also end with more on reserve.

After rising during much of 2022, international rice prices have remained on an upward trajectory in 2023, underpinned by strong demand from Asian buyers and production disruptions registered in 2022/23 in some suppliers. This has been reflected by the FAO All Rice Price Index, which, at a value of 127.8 points in May 2023, stood at its highest level since October 2011.

Global oilseed production is forecast to rebound in 2022/23, mainly driven by expected higher outputs of soybean and rapeseed, more than offsetting reduced production levels foreseen for sunflower seed and other oilseeds. Despite prospects of a significantly lower soybean crop in Argentina due to poor weather conditions, global soybean production is expected to recover owing to a bumper harvest in Brazil. World rapeseed production is estimated to reach a record high, linked to higher outputs across Australia, Canada and the European Union. By contrast, global sunflower seed production could decline, primarily due to a sharply lower crop in Ukraine.

World meals/cakes outputs are forecast to increase, while consumption growth could remain subdued, reflecting protracted lacklustre demand from the livestock sector, primarily in China. With global oilmeal production forecast to exceed utilization, the carry-over stocks are set to recover from the previous season. Similarly, world oils/ fats production is seen expanding, facilitated by a steady increase in global palm oil output. The global utilization of vegetable oils is expected to grow after stagnating in the past two consecutive seasons, broadly tied to the expectations of rising food consumption, mainly in Asia, and higher uptakes from the biodiesel industry for both discretionary and obligatory blendings. Global oils/ fats carry-over inventories are expected to accumulate moderately, as global production is forecast to surpass consumption by a small margin. International trade is predicted to rebound for both oilmeals and vegetable oils due to revived import demand that coincides with improved global supplies.

As for the upcoming 2023/24 season, highly preliminary forecasts indicate a continued output increase across the oilcrops complex. As international prices for oilseeds linger above recent average levels, total planted areas will likely continue to expand, while yields could also increase, barring major weather issues. Assuming a continuation of modest growth in global utilization, anticipated world supplies should be sufficient to satisfy the projected demand for vegetable oils and oilmeals, and further restocking could thus be expected for these products.

FAO’s forecast for world sugar production in 2022/23 (October/September) is pegged at 177.5 million tonnes, up 1.9 million tonnes, or 1.1 percent, from the 2021/22 outturn. The foreseen increase is largely attributed to prospects of a significant recovery in production in Brazil, the world’s largest sugar producer and exporter. However, this forecast is below FAO’s preliminary expectations due to lower-than-earlier-anticipated outputs in China, the European Union, India, Mexico and Thailand.

Global sugar consumption is forecast to continue increasing for a third successive season in 2022/23, up 1.6 million tonnes, or 0.9 percent, from the previous season. Overall, the year-on-year growth is expected to mostly originate in Africa and Asia, driven by population and income growth. However, the increase in world sugar consumption forecast was limited by the projected deceleration in global economic growth in 2023 and high world sugar prices. The anticipated growth in world sugar intake, combined with the downward revision to the global production forecast, should reduce the world sugar production surplus to 1.4 million tonnes from the 4.9 million tonnes previously expected.

The forecast for the world sugar trade in 2022/23 stands at 60.7 million tonnes, which corresponds to a 1 percent drop from the estimated volume for 2021/22. The contraction is the result of an anticipated reduction in exportable supplies in the European Union, India and Mexico, more than offsetting foreseen larger shipments from Brazil. On the import side, slower global economic growth, coupled with high world sugar prices, is anticipated to curb global demand for sugar. In particular, in China, the largest international sugar buyer, imports are forecast to decline for the second consecutive season amid high world sugar prices and adequate domestic availabilities. By contrast, sugar imports by the European Union are set to increase sharply from last year on the back of high domestic prices and lower production.

International sugar prices have overall increased since November 2022, and in May 2023 they were at their highest level since October 2011. The price increases were mainly the result of tightening global supplies. Further upward pressure on prices was exerted by the slow start of the 2023 harvest in Brazil, caused by heavy rains. In addition, the Brazilian real has generally appreciated against the United States dollar since December 2022, affecting exports and contributing to higher world sugar prices.

World total meat production in 2023 is forecast to increase marginally to 364 million tonnes (carcass weight equivalent), principally driven by an anticipated increase in global poultry meat production, which is forecast to expand the most by volume, facilitated by increased demand from the food services sector and its general appeal as a relatively affordable meat type, despite widespread outbreaks of the highly pathogenic avian influenza virus and elevated feed prices. Global ovine meat production is also expected to increase in Asia and Oceania. By contrast, global pig meat production is expected to drop slightly, principally underpinned by a steep drop in output in Europe due to the continued impact of the African swine fever virus, weaker producer margins and somewhat lower domestic demand. Global bovine meat production is also forecast to fall marginally on lower cattle inventories, high feed costs, forage shortages and lower carcass weight in several leading producing regions, despite some increases elsewhere.

World trade in meat and meat products is forecast to reach 42 million tonnes (carcass weight equivalent) in 2023, only slightly above the 2022 level. This slight growth is underpinned by expectations of import expansions together with increased food services sales, particularly in China, following the end of the country’s restrictions related to the COVID-19 pandemic. However, rising availabilities from domestic sources and lower consumer purchasing power amid high food prices and economic downturns could lead to import declines in most meat importing countries, partially offsetting the foreseen increases. Much of the expected increased demand is likely to be supplied by Brazil and Australia, facilitated by the high availability of exportable supplies, disease-free status and competitive prices.

Since reaching an all-time high in June 2022, international meat prices have trended downward in the second half of last year, reflecting increased exportable availabilities in some leading exporting countries amid lower import demand for spot supplies. However, the FAO Meat Price Index rebounded from February 2023, mainly driven by pig and bovine meat prices amid supply limitations and, more recently, rising poultry meat prices due to high demand.

World milk production in 2023 is forecast to reach 944 million tonnes, an increase of 0.9 percent from 2022. If confirmed, this would constitute a second consecutive year of slow growth, as foreseen significant year-on-year volume reductions in milk output in South America, Africa, Europe and Oceania are likely to counter the limited expansions expected in Asia, North America and Central America and the Caribbean. Rising milk yields and cattle numbers in India and Pakistan, together with high output in large-scale dairy farms in China, are likely to drive Asia’s milk output expansion. Similarly, increasing yields and dairy cow numbers could lift milk output in North America, despite lower milk producer margins and a potential increase in cattle slaughter amid attractive premiums for slaughter-ready cows. Mexico will likely drive the milk output expansion in Central America and the Caribbean, where improved management systems and technology continue to drive production growth. Much of the output decline anticipated in 2023 is attributable to lower producer margins, the potential impact of extreme weather events and other challenging production conditions, especially labour shortages.

World total trade in dairy products is forecast at 85 million tonnes (in milk equivalents) in 2023, nearly stagnant at the last year’s level, as higher import demand in Central America, North Africa, the Middle East and South East Asia is likely to be counterbalanced by likely import downturns in China, the European Union and Malaysia, among others. Rising supplies from national sources and high stocks, especially of whole milk powder, underpin much of the anticipated import contraction in China. In many developing countries, challenging economic conditions, currency depreciations and the limited availability of foreign exchange could constrain import purchases. These contractions are expected to be partially offset by likely higher imports by several countries, especially Algeria, Mexico, Australia and Indonesia, driven by growing demand from the food processing industry, which exceeds national supplies.

The FAO Dairy Price Index averaged 118.7 in May, down 21 percent from June 2022, when it reached its highest value in eight years. The decline principally reflects lacklustre global import demand, especially for spot supplies, notwithstanding generally tight supplies from leading global exporters.

The global fisheries and aquaculture sector is expected to face a muted demand outlook across most major commodity groups in 2023. Consumer spending power in major markets has been eroded considerably in the past year as a result of inflation, while economic uncertainties have weakened growth. Global production of aquatic animals increased by an estimated 1.2 percent in 2022 and is expected to grow by an additional 0.6 percent in 2023 as lower catches are offset by increased aquaculture production.

Of the major wild-caught species, reduced tuna catches have caused raw material prices to rise. Prices for cephalopods, which had been low, have recently surged, with supplies of octopus and squid expected to tighten in 2023. Reduced groundfish quotas have pushed prices up this year. Landings of small pelagic species for human consumption are expected to decrease, with reduced quotas for mackerel and herring.

There is a growing expectation among meteorologists that an El Niño climatic phenomenon will start in August. Such an event could directly impact a number of key stocks, mainly in South America, including the Peruvian anchoveta, the main source of fishmeal and fish oil. Catches of anchoveta were poor in 2022 and, with the majority of the 2023 anchoveta quota yet to be set, there is considerable uncertainty in the market. Fish oil, in particular, is in very tight supply, with prices now more than double the levels seen in June 2022. Any further reduction in the supply of fishmeal and fish oil would lead to an extremely tight market, placing additional pressure on aquaculture input prices.

In the second half of 2023, a strong positive outlook is predicted for the main aquaculture species. As of this writing, shrimp prices are low, due to increased farmed shrimp production led by enormous growth in Ecuadorian production over the past couple of years. Pangasius is growing ever more popular as one of the most affordable fish on the market, with harvests increasing greatly in 2022. In the farmed Atlantic salmon sector, prices are surging again due to robust demand and limits on the rate of global supply expansion.

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