FAO sees 20.6m tonnes contraction in global grain reserve in 2018-19

The UN food agency, Food and Agriculture Organization (FAO), in its first forecasts for 2018-19 has estimated a 20.6 million tonnes contraction in world grain reserve.

This means inventories of cereals including wheat, coarse grains and rice would drop by 20.6 million tonnes over the next season to 756.0m tonnes.

The fall which marks the first in six years could drag supplies to unusually tight levels, the United Nations said, revealing that cereal prices had hit their highest in three years.

The decline would be the first since 2012-13 and end a spree, which has added more than 200m tonnes to global inventories.

After the 2018-19 drop, the world stocks-to-use ratio, which in comparing inventories with demand gauges tightness in supplies, would at 27.2 percent remain above average, the FAO said, if falling below this season’s 16-year high of 28.8 percent.

However, the proportion of inventories held in exporting countries, that is stocks which being available to the world market are more important to prices, will show a weaker profile with a stocks-to-use ratio of 16.8 percent.

The weakest reading was for coarse grains, at a 14.0 percent ratio of exporters’ stocks-to-use, although the organisation also singled out for comment shrinkage in wheat stocks next season.

“Excluding year-on-year changes in China’s wheat stocks, global wheat inventories are seen to decline for the seventh consecutive year. Overall, therefore, while the global wheat stocks-to-use ratio is expected to drop only marginally in 2018-19, the major exporters’ stocks–to-disappearance ratio, which excludes China, is forecast to decline more significantly, from 20.9 percent in 2017-18 to 19.2 percent in 2018-19,” the FAO said.