Bullish forecasts for global cereal crops

The latest bullish cereal production predictions for 2013 produced by the Food and Agriculture Organisation (FAO)did not dent confidence in grain trading futures yesterday with markets remaining at previous levels.

The FAO predictions assume more normal weather conditions than were experienced in 2012, and, that being the case, the expectation is global wheat production this year will reach 695 million tonnes, 5.4 per cent up from last year’s harvest and just some 6 million tonnes short of the 2011 record production. In coarse grain production, 2013 is expected to set a new record of 1,266 million tonnes; a massive 9.3 per cent up on the previous high of 1,167 million tonnes in 2011. The bulk of coarse grain production is in maize where 960 million tonnes is expected to be realised, up 10 per cent on 2012. The bulk of the increase is expected in the US, the world’s largest producer, where maize plantings are forecast to reach their highest level since 1936. The FAO also predict recovery from drought in the major CIS producing countries should also contribute significantly to the record global production.

Despite expected production increases, world cereal utilisation is expected to stagnate in 2012-2013 levels, constrained by both rising grain prices and faltering ethanol demand. World cereal stocks by the close of 2013 are forecast at 505 million tonnes.