The FAO cereal price index showed a strong monthly increase of 7.1%, driven by international maize prices, which rose by 11.2% and are now 42.3% above its January 2020 level, reflecting an increasingly limited global supply in the face of large Chinese purchases and lower-than-expected estimates for US production and stocks, as well as the temporary suspension of maize export records to Argentina.
Wheat prices rose 6.8%, driven by strong global demand and low sales expectations in the Russian Federation, when its wheat export taxes doubled in March 2021. Strong wheat demand Asian and African buyers supported prices high levels of rice.
In terms of production, the new FAO estimates for 2020 indicate a peak in wheat and rice production. Given cereal production in 2021, the early outlook indicates a modest modest increase in winter wheat crops in the northern hemisphere, encouraged by area growth in the United States, the Russian Federation, France and India. Maize production in the southern hemisphere is expected to decline somewhat in Argentina and Brazil from their all-time highs, but to remain above average. Production prospects in South Africa and neighboring countries are favorable.
At the same time, this month’s forecasts indicate higher world trade volumes and a sharp decline in world grain reserves.
Globally, cereal use in 2020/21 is currently forecast at 2 761 million tonnes, up 52 million tonnes from the previous season. Growth is driven by the vigorous use of coarse grains for animal feed in China. According to forecasts, the global use of wheat and rice will increase this year by 0.7% and 1.8%, respectively.
World grain reserves are expected to contract by 2.2% to 801 million tonnes, the lowest level in five years. This would reduce the grain reserve utilization ratio to 28.3%, the lowest level in seven years. The new figures reflect a sharp downward adjustment in China’s corn stocks.
Global trade in cereals is currently forecast at 465.2 million tonnes in 2020/21, a considerable expansion of 5.7% from the peak reached in the previous season. Higher estimates reflect China’s large purchases of corn, especially from the United States. Forecasts indicate that international trade in rice will continue to grow, at 7.9%, reflecting strong growth in India’s exports.
The new FAO forecasts include the results of a 2013/14 review of China’s supply and demand balance. Unexpected large-scale purchases of maize in the country in recent weeks indicate a much higher demand for feed and lower than anticipated domestic supplies, which is likely related to the rapid recovery of pig production following the outbreak of African swine fever.