Cereals

 

Overview of cereals

World prices of major grains will ease early the outlook period, boosting world trade. Stocks are projected to rise with rice inventories in Asia reaching record high levels.

 

Market situation

While world cereal production in 2014 may not exceed its 2013 record, large carryover stocks are expected to keep global supplies in the 2014 marketing year adequate relative to expected world demand. In Canada, reduced wheat plantings could result in a significant drop in production this year. By contrast, wheat production is anticipated to rise in 2014 in the United States and European Union, assuming good results from spring plantings. In Australia, wheat production could decline from last year’s above average level, mostly on expected drier conditions. In the major producing states of the Commonwealth of Independent States (CIS), wheat yields are expected to fall from the relatively high levels in 2013, which may result in lower production in Kazakhstan, the Russian Federation and Ukraine. Regarding coarse grains, production prospects are mixed in the Southern hemisphere. The outlook is generally favourable in South Africa and Argentina. However, the first maize crop in Brazil could be adversely affected by unfavourable weather conditions. World rice production in 2014 could modestly rise, as growth is likely to be dampened by falling world prices and fears of a recurring El Niño event. Production is seen rising in Brazil, Indonesia and Madagascar, while drought problems are anticipated to depress output in Australia, Peru, Sri Lanka and Tanzania.

In 2014, food consumption of cereals is forecast to keep up with the rise in world population, resulting in a stable per capita consumption level at the global level. The strongest growth in food consumption is expected in Asia, where wheat and rice are the main staples. Feed utilisation of cereals may decrease marginally in 2014, after a firm growth in 2013. In particular, feed use of wheat is likely to stagnate, and rice continues to be consumed primarily as food. Industrial use of coarse grains is projected to increase, but most of the rise is likely to reflect the continuing growth in the demand for other industrial uses, especially starch and starch derivatives in China, rather than any significant rise in biofuel use.

World cereal stocks in 2013 increased by 15%. As a result, the global cereal stocks-to-use ratio is expected to increase by 3 percentage points to almost 25% in 2014, its highest value since 2005. World cereal trade is also expected to increase in 2014, hitting a new record high for the second year in a row.

International prices of major cereals, namely wheat, rice and maize, are likely to remain mostly under downward pressure, resulting in average cereal prices falling slightly below their 2013 level in 2014.

 

Projection highlights

  • After a good harvest in 2013, favourable supply prospects in 2014 are projected to keep downward pressure on prices. Grains prices will ease both in nominal and real terms over the outlook period
  • Ample world rice supplies are expected with developing countries accounting for most of the increase. The slowdown of rice production and consumption growth contrasts with a rapid expansion of trade
  • World cereal utilisation will increase, driven by larger non-food use in developed and emerging economies and food in least developed countries
  • A considerable rebuilding of grains stocks and increase of global trade are expected, with record carryover rice stocks in Asian countries

 

Figure. Cereal prices fall over the medium term
Evolution of prices expressed in nominal (left) and real terms (right)

Source: OECD and FAO Secretariats

 

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