Commodities Buzz: FAO Expects World Cereal Production To Drop 1.5% From Previous Year

In its latest Cereal Supply and Demand Brief, the FAO increased its forecast for the world cereal production in 2018 to 2610 million tonnes, which if confirmed would represent a 1.5 percent annual drop from the high level of the previous year. FAO pegs this years world wheat production at 754.1 million tonnes, up from the previous months forecast on account of improved outlooks in several major producing countries, while predicting the production of coarse grains to stand at 1 345 million tonnes, down 3.2 percent from last years record high due in part to farmers shifting to more profitable crops and to dry weather in some countries.

Worldwide rice output is expected to rise 1.3 percent from the 2017 level to set a new record of 511.3 million tonnes, with the increase primarily reflecting improved prospects for India. The new FAO report offers the latest forecasts regarding cereal utilization and also trade – which is expected to reach a record high in the coming year.

The forecast for global cereal stocks at the close of seasons ending in 2019 was raised by 5 percent since the last report in May to 772 million tonnes, with most of the revision reflecting an upward adjustment to the historical estimates of Chinas maize stockpiles. However, despite the month-on-month increase, world cereal stocks would still be down 5.4 percent from their opening level.