Analytical Reports

Cereal supply and demand overview

Global cereal stocks falling in 2022/23; early prospects point to a decline in wheat production in 2023
FAO’s latest forecast for world cereal production in 2022 has been revised upward by 9 million tonnes in March 2023 since the previous month and now stands at 2 774 million tonnes, still 1.3 percent lower year-on-year.1 The bulk of the upward revision concerns rice and, to a lesser extent, coarse grains that largely reflect the incorporation of recently released official figures.
Regarding rice, February 2023 assessments by Indian officials report a more contained impact of uneven monsoon rains on the main crop output, which coupled with a pronounced increase in secondary crop plantings, just concluded, overturned expectations of an Indian production decline this season. Output was also upgraded for several other countries, most notably Sri Lanka and Thailand.
By contrast, official reports in the United Republic of Tanzania suggest that poor rains resulted in a greater output reduction than previously envisaged, while provincial authorities in Pakistan’s Punjab indicate a lower area realization, adding to the output losses endured by the country as a result of severe floods, particularly in Sindh.
Put together, these changes raised FAO’s forecast of global rice production in 2022 by 4.9 million tonnes to 517 million tonnes (milled basis), which while being 1.5 percent below the 2021 all-time high would still constitute an above-average harvest.

At 2 780 million tonnes, the forecast for global cereal utilization in 2022/23 is nearly unchanged compared to figures in February 2023 and still pointing to a decline of 0.6 percent below the 2021/22 level. Following a 1.4-million-tonne downward revision this month, total global utilization of coarse grains is forecast to fall in 2022/23 by 1.5 percent below the 2021/22 level stemming from anticipated contractions in the utilization of all major coarse grains (maize, barley and sorghum). By contrast, FAO’s forecast of global rice utilization in 2022/23 has been raised by 0.5 million tonnes to 520 million tonnes, but still falls marginally below the 2021/22 all-time high. The upward revision largely mirrors expectations that ample supplies and a strong pace of domestic public procurement may encourage Indian officials to continue releasing supplies from public stocks for ethanol production, thus boosting non-food uses in the country.
FAO’s forecast of global wheat utilization was also revised upwards since the previous report by 1.8 million tonnes, mostly reflecting greater feed use of wheat in the European Union, where substitution from maize to wheat for feed is expected due to tighter domestic maize supply and higher wheat supply levels. This upward revision brings the total wheat utilization forecast for 2022/23 to 779 million tonnes in 2022/23, up 0.8 percent above the 2021/22 level.

Global cereal stocks ending in 2023 are forecast to decline by 1.2 percent from their opening levels, reaching 844 million tonnes, driven by expected drawdowns of global coarse grain and rice stocks that outweigh a rise in wheat stocks. Based on the latest forecasts, the world cereal stocks-to-use ratio in 2022/23 would stand at 29.5 percent, down from 30.7 percent in 2021/22, but still indicating an overall comfortable supply level.
A sharp downward revision to Brazil’s maize stock estimate following their strong export pace has led to a 3.2-million-tonne cut in the global maize stocks forecast this month. This downward revision further lowers the global coarse grain stocks forecast to 344 million tonnes, pointing to a decline of 5.5 percent below their opening levels almost exclusively attributed to an 8.3 percent fall in global maize stocks. Largely reflecting higher carryover forecasts for India, FAO’s forecast of world rice stocks at the close of the 2022/23 marketing year has been raised by 1.9 million tonnes to 194 million tonnes. The revised forecast puts global stockpiles at 0.8 percent below their 2021/22 record high and at their second highest level on record, as drawdowns in rice importing countries look set to be partly offset by a further increase in carryovers by exporters.
At 306 million tonnes, FAO’s global wheat inventory forecast for 2022/23 remains near last month’s forecast and points to a rise of 4.1 percent above opening levels, with most of that increase concentrated in China (mainland) and the Russian Federation.

World trade in cereals in 2022/23 is forecast to fall by 1.8 percent below the 2021/22 level to 473 million tonnes, nearly unchanged from the previous forecast in February 2023. Pegged at 223 million tonnes, FAO’s coarse grains trade forecast for 2022/23 (July/June) still points to a decline of 3.3 percent from the 2021/22 level, driven by the expected declines in global barley and sorghum trade, while global maize trade is seen remaining near its 2021/22 level.
International trade in rice in 2023 (January–December) is forecast at 53 million tonnes, marginally changed from February and 5.6 percent below the 2022 peak. Import expectations changed little from last month, while on the export side, shipment forecasts were raised for India and cut for Pakistan and Thailand. Despite lingering uncertainties surrounding the duration of India’s ban on broken rice exports, which could cause its overall shipments to contract if protracted, exportable supplies of other qualities of rice in India look set to remain ample. This could keep India's overall exports abundant in 2023, likely displacing some shipments by Pakistan and Thailand. By contrast to coarse grains and rice, world wheat trade in 2022/23 (July/June) is set to increase by 1.1 percent above the 2021/22 level to 198 million tonnes.

Early production outlook for 2023 crops
For 2023, FAO’s preliminary forecast for world wheat production points to a year-on-year decline, but at 784 million tonnes the global outturn would still be the second highest on record.
In North America, incentivized by high prices, farmers in the United States of America increased their 2023 winter wheat sowings to the largest level since 2015. Although dry weather is still a concern in the Central Plains, forecasts of dissipating drought conditions in parts support expectations for an increase in total wheat production from the reduced 2022 outturn to 51 million tonnes in 2023, which would be the biggest output in three years.
In Canada, official projections point to an above-average sown area in 2023, as farmers are expected to react positively to the high grain prices. Assuming normal weather conditions, Canada’s wheat production is forecast to reach 35 million tonnes.
In Europe, provisional prospects point to an overall fall in wheat production.
In the Russian Federation, reflecting drier-than-average weather conditions in southern regions and a cutback in winter plantings, amid softer domestic prices, wheat production is forecast to decline from the record level in 2022.
In Ukraine, severe financial constraints, infrastructure damage and obstructed access to fields in parts of the country have resulted in an estimated 40 percent year-on-year reduction in the 2023 winter wheat area, and a well below-average wheat output is anticipated in 2023.
Wheat plantings in the European Union are seen to remain broadly unchanged in 2023 and with generally conducive weather auguring well for yields, total production is forecast at 136.5 million tonnes, on par with the previous year’s good output.
A moderate upturn in wheat plantings is forecast in the United Kingdom of Great Britain and Northern Ireland, but with yields anticipated to retreat from the highs of 2022, production is seen falling to about 14.4 million tonnes in 2023.
In Asia, mixed conditions were present at the start of the year.
In India, government support programmes encouraged farmers to maintain a near-record wheat area, whilst in Pakistan, an average wheat acreage is estimated, as receded floodwaters and government support facilitated access to land and seeds. Weather conditions have been favourable in both countries and, as a result, 2023 wheat harvests are forecast to surpass their five-year averages.
In Near East Asian countries, after uneven rains during the first months of the season, sustained rainfall is needed during the remainder of the season to shore up 2023 production prospects.
In North Africa, rainfall deficits have negatively affected crops in Morocco, Algeria and Tunisia, denting wheat production prospects in 2023, which follows reduced outputs in the previous year.
In Southern Hemisphere countries, the production outlook for the 2023 coarse grain crops, with harvesting operations underway, is generally favourable.
Underpinned by robust export demand, total maize plantings are foreseen to increase to a record level in Brazil, and buoyed by generally beneficial weather conditions, total production is provisionally forecast at an all-time high of 123.7 million tonnes in 2023.
In Argentina, early season rainfall shortages adversely affected maize crops, but an uptick in rainfall quantities at the start of 2023 led to a partial recovery in crop conditions for the later-sown crops.
In South Africa, a modest cutback in maize plantings is expected to drive a year-on-year production decrease in 2023, but with conducive weather supporting good yield prospects, production is nevertheless anticipated to exceed the five-year average.

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