Recently, the Food and Agriculture Organization of the United Nations released its latest report on grain supply and demand. Despite a 4 million ton decrease in global grain production in 2023 compared to July's forecast, it will still increase by 0.9% year-on-year, reaching 2.815 billion tons, which is equivalent to the highest record level set in 2021.
The report shows that global grain production is currently showing an overall upward trend. The total global production of coarse grains is expected to increase by 2.7%, thanks to higher yields from Brazil and Ukraine, with corn production reaching 1.215 billion tons. Affected by irregular rainfall and irrigation water shortages since July, global rice production is expected to slightly decrease, but still increase by 1.1% year-on-year.
The sluggish outlook for global wheat production has to some extent affected this upward trend. Due to the continuous drought weather, wheat production forecasts for Canada and the European Union have been lowered. However, according to the latest data analysis by the Food and Agriculture Organization, the increase in spring wheat planting area in the United States, India, and Ukraine this year has partially offset the downward trend. The report shows that global wheat production is currently expected to reach 781.1 million tons, a year-on-year decrease of 2.6%, but it is still the second highest production level on record.
The report shows that the global grain utilization forecast has increased by 0.8% year-on-year, reaching 2.807 billion tons. Among them, India's wheat production has reached a new high this year. The global total utilization of coarse grains is predicted to be 1.501 billion tons, an increase of 1.2% year-on-year; The global utilization of rice reached 520.9 million tons, an increase of 800000 tons compared to the expected level in July, and remained basically stable year-on-year. Meanwhile, the global grain inventory this year is expected to be 878 million tons, with an annual growth rate of 2.2%; The ratio of global grain inventory to utilization is 30.5%, which is almost unchanged from the previous year's 30.6%. The FAO believes that "from a historical perspective, this is an overall satisfactory global supply level".
At the same time, the path to restoring grain trade is slightly difficult. In the report, the Food and Agriculture Organization of China lowered its forecast for world grain trade this year to 466 million tons, a decrease of 1.7% from last year's sales season. The report points out that this is the result of multiple factors, including unstable global demand for grain imports, poor expectations for grain production prospects, the Ukrainian crisis, and the resulting termination of the Black Sea Grain Initiative.
The Food Price Index report released by the Food and Agriculture Organization on the same day showed that the global food price index fell by 2.1% in August, a 24% drop from its historical high in March 2022. Affected by seasonal supply increases and other factors, the grain price index decreased by 0.7% month on month in August, while international wheat prices fell by 3.8%; The record breaking corn harvest in Brazil and the entry of the United States into the corn harvest season have jointly ensured global corn supply, and international crude grain prices have also decreased by 3.4%.
In stark contrast, the rice price index rose 9.8% month on month in August, setting the highest level in the past 15 years for this data. The main reason is that India, a major global rice exporter, has recently tightened restrictions on rice exports. The export ban implemented by India has led to seasonal supply shortages on the eve of the new crop harvest, with all parties in the supply chain holding onto inventory and starting to renegotiate contracts or simply stop quoting, resulting in current rice trade being mostly small-scale transactions or previously agreed sales.
The Food and Agriculture Organization of China (FAO) stated that the duration and scope of these restrictions are still uncertain. If they continue and are combined with the El Ni ñ o phenomenon, it may lead to a decrease in rice production in other Asian exporting countries, which may make it difficult for global rice trade to recover in 2024. Bo Daman, an official from the Natural Resources Department of the Asia and Pacific Regional Office of the Food and Agriculture Organization of the United Nations, has warned that global food security is at a "turning point", with rice shortages and soaring prices hitting the world's most vulnerable groups.
