Miller Magazine Issue: 118 October 2019

53 COVER STORY MILLER / OCTOBER 2019 an increase in the minimum producer price for maize, set by the government, could prompt an area expansion. In South Africa, higher year-on-year prices and tighter do- mestic supplies could instigate an increase in the sown area and result in a production rebound in 2020. World cereal utilization in 2019/20 is now forecast at 2 714 million tonnes, down 1.7 million tonnes from Septem- ber, but still 34 million tonnes (1.3 percent) higher than in 2018/19 and marking a record high. The forecast for to- tal wheat utilization has been raised by 1.5 million tonnes since the previous report to 761.5 million tonnes, which is also a record exceeding by 2.0 percent the 2018/19 estimated level. At nearly 518 million tonnes, food con- sumption accounts for most of the total utilization of wheat. However, driven by large supplies and attractive prices, the projected increase in world wheat utilization in 2019/20 is also boosted by an expected 3.6-percent rise in its feed use, which could reach an all-time high of 146 million tonnes. Total utilization of coarse grains in 2019/20 is forecast at 1 436 million tonnes, down mar- ginally from the September report but still a record high, up 1.0 percent (14 million tonnes) from 2018/19. While the bulk of the year-on-year increase in total utilization of coarse grains is due to stronger demand for maize, es- pecially for industrial use, the forecast for maize feed use in 2019/20 has been trimmed by around 5 million tonnes since the previous report, to just over 648 million tonnes. The revision largely stems from downward adjustments to feed use estimates in China and the EU. FAO’s new forecast for world rice utilization in 2019/20 is pegged at 516 million tonnes, down 2.3 million tonnes from Septem- ber due to less buoyant domestic use prospects for Asia. Nonetheless, at this level, global utilization of rice would still exceed the 2018/19 record high by 1.1 percent, driv- en by expanding food intake. The forecast for world cereal stocks by the close of the 2020 seasons has been raised by 2.4 million tonnes since the previous month to 850 million tonnes, but still down 17 million tonnes (2.0 percent) from their opening levels. This month’s higher forecast for ending stocks, combined with a lower forecast for utilization, results in a slightly higher stocks-to-use ratio for total cereals in 2019/20, now pro- jected at 30.4 percent, still down slightly from 31.9 per- cent in 2018/19. Among the major cereals, global wheat inventories are anticipated to register a 1.6 percent (4.2 million tonnes) increase from their record high opening level to total 273 million tonnes - the second highest on record. The increase is expected to be concentrated in Asia, in particular in China and, to a lesser extent, India, more than offsetting anticipated declines in several ma- jor exporting countries. By contrast, despite this month’s higher forecast of ending stocks in the United States, world maize inventories are still foreseen to register a sig- nificant decline in 2019/20, falling by as much as 7 per- cent (25 million tonnes) from their relatively high opening levels to a 4-year low of 337 million tonnes. This is most- ly because of a predicted sharp drop in maize stocks in China, making up almost 70 percent of the year-on-year projected decrease. Global rice stocks at the close of 2019/20 are pegged at 179 million tonnes, up 800 000 tonnes from previous expectations, but still 1.9 percent below the 2018/19 all-time high of 183 million tonnes. This month’s adjustments mostly stem from upward revi- sions to carry-overs in India, where record-breaking local procurement during the 2018/19 season is likely to result in larger than previously anticipated public inventories. These increases outweighed reductions to stock fore- casts mainly for China and the United States. FAO’s latest forecast for world trade in cereals in 2019/20 remains at around 415 million tonnes, un- changed from last month and 0.7 percent (almost 3 mil- lion tonnes) above the 2018/19 level, with expectations of higher wheat, rice and barley trade just marginally offset- ting lower maize and sorghum trade. World wheat exports in 2019/20 (July/June) are set to rebound by 3.4 percent (5.7 million tonnes) to reach 173.5 million tonnes, most- ly because of stronger import demand in Morocco and Asian countries. To meet this increase, several countries are forecast to raise their sales in 2019/20, in particular Argentina, the EU and Ukraine. On the other hand, ship- ments from Kazakhstan and the Russian Federation will most likely decrease, largely because of tighter domestic supplies than in the previous year, although the Russian Federation would remain the world’s largest wheat export- er also in 2019/20. Following an 800 000 tonne downward revision since September, world rice trade in 2020 (January-December) is now forecast to amount to 48 million tonnes, up 3.5 percent from the 2019 level, with much of the expect- ed recovery imputable to strong African import demand. For coarse grains, however, even with this month’s small upward revision, trade in 2019/20 (July/June) is foreseen heading to an annual decline of 2.2 percent (4.4 million tonnes), with expected lower maize imports by the EU, China and Canada accounting for most of the decline. To- tal maize trade in 2019/20 is pegged at around 161 million tonnes; while down by over 4 million tonnes from the peak registered in 2018/19, it would still be the second highest on record. From the maize exporters’ perspective, ship- ments from the United States and Ukraine are foreseen to fall sharply, while sales from Argentina and Brazil could attain near-record, if not record, levels.