Miller Magazine Issue: 126 June 2020

46 47 NEWS NEWS MILLER / JUNE 2020 MILLER / JUNE 2020 stands at 433 million tonnes, up 2.2 percent (9.4 million tonnes) from 2019/20 and setting a new record, boosted by expected expansions in trade of all major cereals. The FAO Cereal Price Index averaged 162.2 points in May, down 1.6 points (1.0 percent) from April and very close to its level in the corresponding month last year. WHEAT Global production of wheat in 2020 is forecast to fall slightly below the previous year’s good out-turn. The la- test prospects largely pertain to expectations of produc- tion downturns in the European Union (EU), Ukraine and the United States of America (USA) more than offsetting increases in Australia, Canada, the Russian Federation and several countries in Asia. While the dampening impact of the COVID-19 pandemic on demand could push up global inventories despite a decline in producti- on, the prospect of a modest increase in world trade in 2020/21, amid tighter export availabilities among major exporters, is expected to provide support to internatio- nal wheat prices, especially during the second half of the marketing season. Total wheat utilization in 2020/21 is likely to remain close to the 2019/20 estimated level, as projected growth in food consumption is expected to almost offset a fore- seen fall in feed utilization and a contraction in industrial use. However, at the current projected level, total whe- at utilization would be 1.2 percent below the 10-year trend, marking the first time that global utilization falls below the trend in six years. Notwithstanding uncerta- inties regarding the impact on food consumption of the COVID-19 pandemic, feed use of wheat is expected to decline due to ample supplies of coarse grains, in particu- lar maize, which is likely to erode wheat’s price competi- tiveness in feed rations. By the close of crop seasons in 2021, world wheat stocks are forecast to increase slightly above their alre- ady high opening levels, but would still stay below the 2017/18 record. The bulk of the anticipated year-on-ye- ar expansion is set to occur in China (mainland), where expectations of a large production and a slower growth in domestic utilization could raise the country’s wheat in- ventories to an all-time high. By contrast, ending stocks in major exporting countries are likely to remain close to their opening levels, except for the USA, where they could decline to a six-year low. Consequently, while the world wheat stocks-to-use ratio in 2020/21 may register a small rise, the ratio of major wheat exporters’ closing stocks to their total disappearance is likely to drop to an eight-year low. Modest growth in wheat trade foreseen in 2020/21 World wheat trade (including wheat flour in wheat equivalent) in 2020/21 (July/June) is likely to reach a re- cord level of 177.5 million tonnes, up 1.4 percent (2.4 million tonnes) from 2019/20. Larger imports into Euro- pe, in part reflecting the inclusion of trade flows between the EU-27 and the UK from 2020/21, account for most of the apparent growth in world wheat trade. Stronger im- port demand by several countries in Asia and North Africa are also seen to contribute to the expansion. With con- cerns over possible extension of wheat export restrictions mostly receded, the early outlook for 2020/21 assumes no new COVID-related hurdles affecting trade flows. COARSE GRAINS Following a significant demand slowdown caused by COVID-19 in early 2020, total utilization of coarse grains is forecast to regain momentum in 2020/21, but would still remain below global production for a second conse- cutive season, leading to higher stock levels and keeping international prices under downward pressure. FAO’s first forecast for world coarse grains production in 2020 is pegged at a record 1.513 million tonnes, an increase of 65 million tonnes (4.5 percent) from 2019, almost exclusively due to higher maize production. Fore- cast to reach an all-time high, global maize production is boosted by expected record harvests in the United States of America (USA), Canada, and Ukraine, and near-record harvests in Argentina and Brazil. By contrast, world pro- duction of barley is likely to decline, largely on reduced output in the Russian Federation. Ample supplies and price advantages, particularly relative to wheat, are expected to boost global trade in coarse grains in 2020/21 above the 2019/20 level. Increased maize and sorghum import demand from Chi- na (mainland) is anticipated to be an important driver behind the expected expansion in global trade, while foreseen greater barley imports by Saudi Arabia and the Islamic Republic of Iran would also add support. On the export side, bigger shipments of both maize and sorg- hum are forecast from the USA while increases in barley exports are expected from Australia. FAO’s first forecast for world trade of coarse grains in 2020/21 (July/June) is pegged at just under 208 million tonnes, up 4.2 million tonnes (2.0 percent) from 2019/20, reflecting expectations of larger shipments of all major coarse grains (maize, barley and sorghum). RICE World rice production is set to recover in 2020, boos- ting rice utilization and keeping carry-overs at their third highest level on record. While economic constraints and firm prices may curb trade growth in 2020, a more robust trade expansion is projected for 2021. After El Niño-influenced weather patterns negatively affected the outcome of the 2019 season, the return to more normal growing conditions could facilitate a 1.6 percent annual expansion in world rice production in 2020 to a new high of 508.7 million tonnes. Anticipated increases in Asia are seen to sustain much of the forecast growth, although a strong output recovery is also set to take place in the United States of America (USA), with further production inroads anticipated for Africa. Howe- ver, prospects are more subdued for other regions, on a combination of tight producer margins and insufficient supplies of water for irrigation. Stagnating African imports and scattered Asian demand may limit the increase in global rice trade in 2020 to 800 000 tonnes, resulting in world rice flows of 44.9 milli- on tonnes. World trade in rice is tentatively forecast to expand more vigorously in 2021, as ample exportable availabilities and more attractive prices rekindle African demand, while sustaining continued import growth in all other regions except Asia. World rice utilization is forecast to expand by 1.6 per- cent in 2020/21 to a fresh peak of 510.0 million tonnes. This level would surpass anticipated production, requ- iring reserves to be drawn down by some 0.8 percent over the season. Still, at 182.0 million tonnes, global stockpiles at the close of 2020/21 marketing years are forecast to stand at their third highest level on re- cord, thanks to still large stockpiles in China (mainland) and continued carry-over expansions in the major rice exporting countries. International prices of rice have risen steadily since the start of the year, resulting in the May 2020 value of the FAO All Rice Price Index exceeding its December 2019 level by 12.7 percent. Indica prices underpinned much of this increase, reacting to weather-related supply constra- ints in some exporting countries, which were exacerbated between March and April by spikes in domestic demand, the imposition of temporary export restrictions, and logis- tical constraints.