The persistent dry conditions in the countries of the northern hemisphere have led the FAO to significantly reduce the forecast grain production for 2022. The estimated global cereal production in 2022 is estimated at 2,774 million tons, down from a forecast of 17.2 million tons previously published in July. A decrease of 1.4% (38.9 million tons) is now expected compared to the same period last year.
This decline mainly affects feed grains, with global production estimated at 1,483 million tons, 17.9 million tons less than in July and 1.8 percent (26.8 million tons) below the 2021 level. Much of this expected reduction is due to a decline in production in the European Union, where the hot and dry weather conditions that have persisted since late spring are expected to lead to a 16 percent crop loss compared to the average of the last five years. Forecasts for corn production in the United States are also slightly lowered, mainly due to adverse weather conditions in the Midwest, which resulted in a less than favorable type of crop.
The rainfall deficit has also had a negative impact on the barley and millet harvest in the European Union and the United States, which determines an overall decrease in global production forecasts for these cereals. This decline in forecast volumes significantly exceeds the revision of corn production forecasts, based on the more favorable crop types in Argentina and Ukraine, where production will nevertheless be 38 percent lower compared to the previous year.
The forecast for global wheat production in 2022, on the other hand, was increased by 6.7 million tons this month and now stands at 777 million tons, slightly lower than in 2021. This increase in the forecast is mainly due to favorable weather conditions in Canada and the United States (which led to a more favorable type of harvest and increased the likelihood of recovery in 2022) as well as in the Russian Federation, where the largest gross production in history is expected, as the types of spring wheat harvest were boosted by sustained favorable weather conditions. According to recently published official estimates, gross production in China is expected to be higher than previously anticipated.
The continuing rainfall deficits in wheat countries are having a negative impact on wheat production, the forecast for which was again lowered slightly this month. Compared to the July forecast, the FAO has lowered the expected production in 2022 by 6.0 million tons to 514.5 million tons, which is 2.1 percent below the record level of 2021, but still above average. This revision mainly reflects the impact of uneven rainfall distribution in South Asia. This is particularly acute in India and Bangladesh, where the planting campaign is still ongoing, increasing the likelihood that the initial losses will be recouped when weather conditions return to normal in the coming weeks.
Based on official estimates of the crop impact of an acute shortage of production resources on the main crop, the production forecast for Sri Lanka has also been lowered. Combined with some adjustment to the decline in production forecasts in the European Union, the United States and Vietnam, this exceeds the expected increase in production in Brazil and some West African countries.
Compared to the July forecast, the FAO’s global cereal consumption forecast for the 2022-2023 season has been lowered by 5.1 million tons to 2 792 million tons, which is 0.1 percent (2.8 million tons) below the 2021-2022 season level. The main reason for this month’s lower forecast is the decrease in expectations for feed grains, which has been adjusted by 6.6 million tons compared to the July forecast, mainly reflecting lower consumption of barley feed (especially in the European Union, Morocco and Saudi Arabia) and sorghum (especially in China and the United States) than previously expected.
Following this downward revision, feed consumption for the 2022-2023 season is now estimated 0.2 percent below the 2021-2022 season level (2.7 million tons), mainly due to forecasts for a decline in feed consumption, particularly in the United States, Morocco, Mexico and the European Union, due to an expected year-on-year decline in production.
The forecast for wheat consumption for the 2022-2023 season, on the other hand, was increased by 2.2 million tons compared to July, as the expected increase in production is currently expected at a level close to the 2021-2022 season of 773 million tons, currently it is assumed that the annual increase in food consumption will offset the expected decline in wheat consumption per feed. The FAO lowered the forecast for rice consumption for the 2022-2023 season by 800,000 tons, which is expected to remain at a level close to the previous year’s record of 522.2 million tons, as the continued high demand for cereals for food purposes will offset the likely decline in other types of rice end-use, particularly for animal feed.
In light of this month’s revision to lower the 2022 grain production forecast, the forecast for global grain stocks for the end of the 2023 season has also been lowered by 9.3 million tons from the July figure to 845 million tons, down 2.1 percent (18.5 million tons) from the start of the season. Therefore, it is expected that the global ratio of grain stocks to their consumption could decrease slightly from 30.9 percent in the 2021-2022 season to 29.5 percent in the 2022-2023 season, which is the lowest level since the 2013-2014 season, but still remains relatively high in historical terms.
The main reason for the downward adjustment in global stocks was the expected decline in corn stocks in the European Union as a result of the deterioration in crop types since the previous report was published in July. Following this month’s downward adjustment of 8.3 million metric tons to the global feed grain stocks forecast, their volume is now 4.0 percent (14.7 million metric tons) below the start of the season and could be 355 million metric tons, with corn, barley and sorghum stocks expected to be reduced by 3.3, 7.7 and 10.4 percent, respectively. Global wheat stocks for the end of the 2023 season, projected at 299 million tons, are little changed from the July forecast and are now expected to increase slightly (by 0.7 percent or 2.0 million tons) compared to the start of the season.
However, China and the Russian Federation and, to a lesser extent, Canada and Ukraine are expected to see much of the anticipated year-on-year increase. In the European Union and India, on the other hand, a significant decline in stocks is expected, while in Australia, the United States of America and some countries in Asia, the Middle East and North Africa a smaller reduction in stocks is anticipated. The FAO’s revised forecast for world rice reserves at the end of the 2022-2023 season now stands at 190.9 million tons, which is 2.9 percent (5.8 million tons) below the revised absolute record volume for the 2021-2022 season and 800,000 tons less than the previous July forecast.
Much of this revision is due to a decrease in the forecast and an expected year-on-year decline in stocks in key exporting countries; however, total rice stocks in these countries are still expected to remain at an all-time high of 54.0 million tons due to estimated high harvests in 2022 and large stocks at the start of the season – particularly in India.
For the 2022 to 2023 season, the forecast global grain trade is 469.6 million tons, which is 2.0 million tons higher compared to the July forecast, but still 1.9% lower than the 2021 to 2022 season. The forecast for world wheat trade for the 2022 to 2023 season (July to June) remains almost unchanged compared to the July forecast and continues to indicate a 1.8% reduction in volume compared to the 2021 to 2022 season (July to June).
The expected increase in exports from Canada and the Russian Federation, driven by the increase in forecast production levels, is offset by the expected reduction in shipments from European Union countries as a result of less favorable harvests and from India, where export opportunities are constrained by the country’s efforts to curb rising domestic prices by restricting wheat exports.
Ukraine resumed shipments of grain from its Black Sea ports in August as part of the Black Sea Grain Initiative, but so far shipments are mainly corn, leaving the FAO’s forecast for wheat exports through Ukraine unchanged at 10.0 million tons. However, the increase in the forecast for corn production in Ukraine has allowed the FAO to increase the forecast for exports of this crop in the 2022-2023 season by 2.0 million tons to 17.0 million tons. Shipments to Argentina and Brazil are also expected to increase compared to previous forecasts, due to an approaching record-breaking and record-breaking harvest.
Based on this review and due to the expected increase in maize purchases by the European Union to compensate for the decline in production, the FAO has increased the forecast for global maize trade for the 2022 to 2023 season (July to June) by 3.4 million tons, which now corresponds to the forecast level for the 2021 to 2022 season of 181 million tons. Nevertheless, in the 2022 to 2023 sales year (July to June), global trade in feed grains will be reduced by 2.6% compared to the 2021 to 2022 season level to 223 million tons, as global trade in barley and sorghum is expected to decline.
In terms of the decline in barley trade, it is mainly due to the expected decrease in demand from China and Turkey as well as reduced supplies from Australia and Ukraine; in terms of sorghum, the decline is entirely the result of the projected reduction in export capacity in the United States and imports to China. It is assumed that the global rice trade volume may amount to 54.4 million tons in 2022 (January to December) and 55.0 million tons in 2023. India is expected to maintain its position as the largest rice exporter, shipping more than 20.0 million tons per year.
Source: FAO UN