Analytical Reports

Global cereal trade seen down in 2022/23; world wheat production forecast to decline in 2023

FAO’s latest forecast for world cereal production in 2022 has been raised by 7.7 million tonnes since the previous month, now pegged at 2 785 million tonnes, but it is still 1.0 percent lower year-on-year. An upward revision to wheat production in Kazakhstan, where official data indicated higher-than-previously-foreseen yields, pushed the global wheat outturn above 800 million tonnes for the first time on record. The forecast for world coarse grains production has also been lifted, reflecting a larger-than-previously-expected harvest in India based on official data that reported higher yields and area, but is still 2.8 percent below last season’s level. FAO’s forecast for world rice production in 2022/23 has also been raised somewhat to 516.7 million tonnes (milled basis). This level would be 1.8 percent below the 2021/22 estimate, which was also revised up to an all-time high of 526.0 million tonnes. Much of this upgrade mirrors historical revisions to output figures for Myanmar. However, Myanmar is still seen ending the 2022/23 season with a pronounced output reduction largely due to constraints posed by surges in input costs. Elsewhere, official assessments in Colombia, Ghana and Peru also indicate better harvest results during the ongoing season than previously envisaged, which outweigh a small downward revision to output prospects for the Philippines.

At 2 780 million tonnes, the forecast for the 2022/23 world cereal utilization has been raised by 1.2 million tonnes since the previous month, but it still points to a 0.7-percent decline from the 2021/22 level. This month’s upward revision stems mostly from a 1.4-million-tonne increase in the global wheat utilization forecast, now pegged at 782 million tonnes, up 1.0 percent from 2021/22. Higher utilization in India, following the release of stocks by the government, and stronger feed use of wheat in the European Union, are the main drivers behind this month’s increase. Reflecting downgrades to feed use of maize and sorghum, FAO’s forecast for total utilization of coarse grains for 2022/23 has been lowered by 0.9 million tonnes this month to 1 478 million tonnes, representing a 1.8-percent decline from 2021/22. By contrast, a 0.7-million tonne upgrade to the world rice utilization forecast since April has further bolstered expectations that global rice use in 2022/23 would remain close to the 2021/22 all-time high, at around 520.6 million tonnes.

FAO’s forecast for world cereal stocks by the close of seasons in 2023 stands at 855 million tonnes, up 4.9 million tonnes since the previous forecast but still 0.2 percent below their opening levels. Based on the latest forecasts, the 2022/23 global cereal stocks-to-use ratio would stand at 29.8 percent, down slightly from 30.8 percent in 2021/22, but it still indicates a relatively comfortable supply level globally. Upward revisions to Kazakhstan’s wheat inventories on account of higher production have offset downward revisions to wheat stocks in the Russian Federation, keeping the global wheat stocks forecast nearly unchanged this month at 310 million tonnes, up 5.2 percent from opening levels. By contrast, world coarse grain inventories are still forecast to fall by 3.8 percent below opening levels, down to 351 million tonnes, despite a 4.5-million-tonne upward revision made this month. Higher estimates of both maize stocks and barley stocks were behind this month’s upward revision, including mainly larger maize stocks in India (on account of higher production), the European Union (on account of higher imports) and the Republic of Korea (on account of historical balance revisions) and higher barley stocks in China (on account of higher imports). FAO’s forecast of world rice stocks at the close of the 2022/23 marketing years is pegged at 194.4 million tonnes, down 1.3 percent from their record opening level and only little changed from April expectations. Importing countries are anticipated to account for all of this forecast stocks drawdown, while among exporters, build-ups in Thailand and, especially, India could help compensate for expected drawdowns in most other rice exporting countries.

World trade in cereals in 2022/23 is forecast at 472 million tonnes, up 2.6 million tonnes from last month’s forecast but still 2.2 percent below the 2021/22 record level. Pegged at a record 200 million tonnes, the forecast for global wheat trade in 2022/23 (July/June) points to a 2.3 percent rise above the 2021/22 level. The forecast was lifted marginally this month, attributed predominately to larger-than-anticipated sales by the Russian Federation, which has maintained a robust export pace in recent months owing to large exportable supplies and competitive prices, while higher import levels were mainly underpinned by strong continued purchases by the European Union and a pickup in imports by China (both mostly to meet domestic feed demand). These upward revisions outweigh downgrades for anticipated exports from India, and imports by Bangladesh (linked to smaller exports from India) and Egypt. FAO’s forecast for global trade in coarse grains in 2022/23 (July/June) has been raised by 1.3 million tonnes, mostly on expectations of higher maize trade driven by continued demand from the European Union and an upward revision for Ukraine’s maize export forecast. However, global coarse grains trade in 2022/23 is still forecast to decline by 5.5 percent from 2021/22, with contractions anticipated for all major coarse grains. International trade in rice in 2023 (January-December) is now seen in the order of 53.6 million tonnes, down 4.4 percent from the 2022 peak. This level is 0.5 million tonnes higher than the April forecast, largely due to expectations that lingering strong demand for domestic consumption in the Philippines and for domestic use and re-export in Viet Nam will keep imports by both countries at comparatively high levels.

Production outlook for 2023 crops
FAO’s latest forecast for world wheat production in 2023 has remained virtually unchanged from the previous figure released in April. Forecast at 785 million tonnes, the world outturn in 2023 is set to be the second largest on record. In Europe, substantial rainfall across most countries in April boosted soil moisture levels and raised yield prospects of the 2023 wheat crop. As a result, the production forecast for the European Union was lifted slightly to 139.5 million tonnes, but overall production prospects are still being contained by the effects of rainfall deficits in Spain and Portugal. In the Russian Federation, crop conditions remain broadly favourable owing to well-distributed rainfall. However, based on the expected cutback in total wheat sowings, production remains pegged at about 83 million tonnes in 2023, down from the record in 2022. In Ukraine, despite some weather improvements that were conducive for wheat crops, the broad effects of the war, now in its second year, have led to a substantial reduction in the wheat area, and 2023 production is foreseen to be well below the five-year average. In the United Kingdom of Great Britain and Northern Ireland, wheat crop conditions were reportedly favourable and factoring in a larger year-on-year area, another bumper output is foreseen in 2023. In the United States of America, the effects of the widespread rainfall shortages have engendered inferior crop conditions compared to average levels, raising the risk of higher abandonment rates and lower yields. Production is still currently pegged at 51 million tonnes, primarily underpinned by a surge in plantings. In India, notwithstanding the adverse impacts of heatwaves and storms that caused some localized crop losses, the wheat harvest is forecast to exceed the five-year average, principally resting on near-record plantings. Production prospects have been downgraded marginally in Pakistan, as constrained access to inputs could curb yields, although the harvest is still pegged above the five-year average. In Near East Asian countries, the forecast for 2023 wheat production in Türkiye was lowered moderately, reflecting earthquake damages to agricultural infrastructure and equipment, which is anticipated to result in a smaller area harvested. In North Africa, drought conditions have curtailed wheat yield potentials in Algeria, Tunisia and Morocco, and below-average harvests are forecast in 2023.

In the southern hemisphere, prolonged dry conditions and heatwaves in Argentina have eroded maize yield prospects of the late planted crops, and the country’s total production in 2023 is forecast to drop to a below-average level. In Brazil, the maize outlook is favourable, resting on an all-time high area and generally conducive weather, with production expected at a record high in 2023. In South Africa, continued conducive weather conditions have bolstered yield expectations, and production is officially forecast to be the second highest on record.