FAO experts have sharply reduced forecasts of grain consumption and stocks in 2022/23
The average value of the FAO Food Price Index fell for the fifth month in a row. In August, it decreased compared to July by 1.9% or 2.7 points to 138 points, although it is 7.9% or 10.1 points higher than the same indicator last year.
Thus, the average value of the FAO Cereal Price Index in August decreased compared to July by 1.4% or 2 points to 145.2 points, which is 11.4% or 14.8 points higher than in August 2021 . World wheat prices are falling for the third month in a row, and in August they decreased by 5.1% (although they still exceeded last year's level by 10.6%) on forecasts of an increase in the harvest in the USA, Canada and the Russian Federation, a seasonal increase in offers from the Northern Hemisphere, where collection and resumption of exports from Ukrainian Black Sea ports after a 5-month break continues. At the same time, world feed prices increased by 0.2% and are 12.4% higher than last year. World corn prices rose by 1.5% due to drought-induced harvest cuts in the EU and the US, but increased exports from Ukraine limited growth. World prices for barley and sorghum fell by 3.8% and 3.4%, respectively, while rice remained unchanged.
The average FAO Vegetable Oil Price Index fell 3.3% or 5.5p to 163.3p in August as major oils other than soybean fell significantly.
Due to dry weather in the Northern Hemisphere, FAO experts reduced the forecast of world grain production in 2022 by 17.2 million tons to 2,774 million tons compared to July estimates, which would be 1.4% or 38.9 million tons less than last year. In particular, the forecast for fodder production was reduced by 17.9 million tons to 1,483 million tons, which would be 1.8% or 26.8 million tons less than the 2021/22 MR indicator. Due to the drought in the EU, the corn harvest will be 16% lower than the 5-year average. Also, unfavorable weather will reduce the harvest of corn, barley and sorghum in the USA and Europe.
The forecast of world wheat production has been increased by 6.7 million tons to 777 million tons, which will be slightly inferior to the 2021 harvest. This is facilitated by good weather in Canada and the USA and a record harvest in the Russian Federation. China may harvest a larger than previously expected crop, while the EU's forecast has been cut due to heat.
The forecast of world rice production has been reduced by 6 million tons to 514.5 million tons, which will be 2.1% less than the record level of 2021, but will exceed the annual average. The increase in production in Brazil and some African countries does not compensate for its reduction due to uneven rainfall in India and Bangladesh, shortage of production resources in Sri Lanka, bad weather in the EU, USA, and Vietnam.
The forecast of world grain consumption in the 2022/23 FY has been reduced by 5.1 million tons to 2,792 million tons, which will be 0.1% or 2.8 million tons less than the level of the 2021/22 FY. In particular, feed consumption was reduced by 6.6 million tons, which would be 0.2% or 2.7 million tons lower than the level of 2021/22 MR. The forecast for wheat consumption was increased by 2.2 million tons, and rice consumption was reduced by 800,000 tons to 522.2 million tons.
Due to the reduction in production, the forecast of world final grain stocks in 2022/23 MR has been reduced by 9.3 million tons to 845 million tons, which will be 2.1% or 18.5 million tons less than the level at the beginning of the season. The stock-to-consumption ratio will decline from 30.9% in FY 2021/22 to 29.5% in FY 2022/23, the lowest level since FY 2013/14. The estimate of fodder reserves was reduced by 8.3 million tons to 355 million tons, which would be 4% or 14.7 million tons lower than the initial level. In particular, stocks of corn, barley, and sorghum will decrease by 3.3%, 7.75%, and 10.4%, respectively. The estimate of wheat stocks was left at 299 million tons, which will exceed the initial level by 0.7% or 2 million tons. Stocks will grow the most in China and the Russian Federation, less so in Canada and Ukraine. The forecast of the final stocks of rice was reduced by 800 thousand tons to 190.9 million tons, which will be 2.9% or 5.8 million tons less than the record level of 2021/22 MR.
The estimate of world grain trade was increased by 2 million tons to 469.6 million tons, which is 1.9% lower than in 2021/22 MR. The wheat trade forecast was almost unchanged, but it will be 1.8% lower than the 2021/22 FY. The increase in exports from Canada and the Russian Federation compensates for their decrease for the EU and India. For Ukraine, the wheat export estimate was left at the level of 10 million tons, since mainly corn is shipped through the grain corridors, the export forecast of which was increased by 2 million tons to 17 million tons. The forecast for world trade in corn was increased by 3.4 million tons to 181 million tons, which will correspond level 2021/22 MR. At the same time, the estimate of feed trade was reduced to 223 million tons (-2.6% from 2021/22 MY), in particular for barley and sorghum. The volume of world trade in rice will be 54.4 million tons in 2022, 55 million tons in 2023, and India will remain the main exporter, supplying more than 20 million tons of rice to the market annually.
