FAO/GIEWS - Food Outlook, April 1998

CARRYOVER STOCKS

World cereal stocks by the close of the seasons ending in 1998 are forecast to increase for the second consecutive year to about 302 million tonnes, some 10 million tonnes, or 3 percent, above their opening levels and about 7 million tonnes more than reported in February. The bulk of this year’s increase in world cereal stocks is expected in wheat, while inventories of coarse grains and rice are forecast to decline. At the current forecast level, the ratio of global cereal carryovers to trend utilization in 1998/99 would reach 15.9 percent, a further modest improvement from the previous year, but still below the 17-18 percent range which the FAO Secretariat considers the minimum necessary to safeguard world food security. All of the expected recovery in world cereals stocks would be among the developed countries, while those held by the developing countries are expected to fall well below their opening levels.

World stocks of wheat for crop years ending in 1998 are forecast at 126 million tonnes, up slightly from the forecast in February, and 13 million tonnes, or 12 percent, above the previous year. This recovery in global wheat stocks would be mainly on account of larger inventories held by the major wheat exporting countries, which usually provide the main buffer against variations in world output. Among the major exporters, the largest increase is expected in the United States, and that mainly because of reduced demand for feed wheat from the livestock sector given this year’s more abundant domestic maize supply. The forecast for end-of-season stocks in the EC has been raised this month to just over 12 million tonnes, mainly due to a slower pace of exports. At this level, total wheat carryovers in the EC would be 1 million tonnes above their opening levels. The increase in wheat stocks in the EC also represents a significant rise in intervention stocks which are estimated to treble to 1.5 million tonnes, i.e. up 1 million tonnes from the beginning of the current marketing season. In Australia, following this month’s upward revision to wheat production estimates, the season’s carryovers are now expected to be slightly larger than anticipated in February and above last year’s by about 400 000 tonnes. Wheat stocks in Canada are likely to remain below their opening levels mainly because of smaller production in 1997.

Among most other countries, especially China and India, the CIS and several countries in eastern Europe, wheat carryovers into the next season are likely to exceed their opening levels mainly because of bumper wheat crops harvested in 1997. The only notable exceptions are several countries in Africa, particularly in the northern subregion, where this year’s stocks are forecast to be smaller because of drought-reduced production in 1997. Little change is anticipated in the size of wheat stocks in Latin America and the Caribbean.

Global coarse grain inventories for crop years ending in 1998 are currently forecast at around 122 million tonnes, and at this level, ending stocks would be close to their opening volumes. Forecasts of coarse grain stocks have been raised in recent months following indications of lower domestic utilization in several major exporting countries than was earlier anticipated. Additionally, import demand has weakened in Asia while supply prospects have improved in most southern hemisphere countries, with the exception of those in the southern Africa. Aggregate coarse grain stocks held by the major exporters are now forecast at 62 million tonnes, up 12 million tonnes from last year and nearly 6 million tonnes from the previous forecast. The largest increase is expected in the EC, where total coarse grain stocks are forecast to approach 26 million tonnes, up nearly 10 million tonnes from last year. Most of this increase would be on account of larger barley stocks, particularly for intervention, due to higher production and reduced exports. End-of-season stocks in the United States are also likely to exceed their opening levels mainly because of reduced export demand.

Most of the increase in coarse grain stocks held by major exporters is likely to be compensated by sharply reduced carryovers in several other countries, including China. After a record crop in 1996, China’s maize production in 1997 fell, but in tandem with a considerable expansion in exports triggered a draw down in stocks. Elsewhere, barley inventories are expected to be reduced in Algeria, Morocco and Tunisia, while maize stocks are anticipated to decrease in South Africa, Uganda and Zambia, as a result of smaller crops in these countries in 1997/98.

FAO's forecast for global rice stocks at the end of the marketing seasons in 1998 is 54 million tonnes, little changed from the previous report and 2.4 million tonnes lower than their opening levels. All of the decline would be concentrated in the developing countries, especially in Asia and South America, where the El Niño-related weather problems have led to production shortfalls in 1997 and to planting delays for the 1998 main season crops. In addition, harvesting of the 1998 paddy crop in some South American countries is reported to be hampered by El Niño-related floods and this could further reduce output and, therefore, ending stocks in 1998. Of the Asian countries, Indonesia is anticipated to have the biggest stock decline reflecting the reduction in its 1997 production and a similar shortfall forecast for the 1998 season. Lower stocks are also expected in India due to a projected increase in rice exports. By contrast, stocks in Japan are likely to increase to their highest level in the last ten years.