World wheat output for fall in 2018-19 for second successive year, says UN
World wheat production is to fall for the second year in a row, the United Nations said, although stressed that this would be an “above-average” crop – and come at a time of record world inventories.
The UN food agency, the Food and Agriculture Organization, in its first forecast for 2018-19 world wheat output, pegged it at 744m tonnes, “indicating a second successive decline”, from levels of 757.6m tonnes in 2017-18, and 761.3m tonnes last season.
“Most of the projected decline [for 2018-19] stems from forecast reductions in the EU and the Russian Federation, reflecting anticipated fall in yields from the highs of 2017,” when Russia achieved a record harvest.
“A likely recovery in Australia’s output is foreseen to prevent a larger production decrease at the global level,” the FAO added, with Australia’s latest harvest undermined by dryness and late frost.
Nonetheless, the agency highlighted that a 2018-19 harvest of 744m tonnes – which is in line with an International Grains Council forecast of 741m tonnes – would “remain above average”.
Furthermore, it would come at a time of bumper inventories, with global wheat stocks expected to swell over 2017-18 despite a smaller harvest, with stockpiles seen growing by 21.7m tonnes to a record 269.8m tonnes.
This represented an upgrade of 12.8m tonnes from last month’s forecast, a revision reflecting an increased estimate for production and carry-in stocks, and a lower figure for consumption.
By contrast, the estimate for 2017-18 demand for coarse grains was lifted by 8.5m tonnes, reflecting “faster growth in the use of corn for feed in Asian countries”.
‘Brisk trade activity’
The comments came as the FAO raised its forecast for world grain stocks overall, including rice, at the close of this season by 12.8m tonnes to 738.6m tonnes, reflecting the upgrade to the wheat stocks estimate.
Nonetheless, the agency said that cereals prices rose in February by 2.5%, to a seven-month high, “underpinned by a brisk trade activity and concerns over unfavourable weather adversely affecting the US winter wheat and Argentina’s corn-growing regions”.
Dairy prices increased even faster, by 6.2%, “supported by strong import demand amidst lower than expected milk output in New Zealand”, the top milk exporting country.
Vegetable oil, sugar price declines
However, growth in food prices overall was curtailed to 1.1% by weakness in prices of vegetable oils and sugar.
Values of vegetable oils dropped 3.1% to a 19-month low, “amid prospects of a growing global production surplus” this season, with soyoil values undermined by an “outlook of record soy crushings in the US”.
“Palm oil price quotations dropped the most, underpinned by slower-than-expected export activities and rising inventories in Malaysia and Indonesia,” the FAO added.
Sugar prices dropped 3.4% to a two-year low, “as production by major producers, such as Thailand and India, continued to expand”.
The FAO also stressed expectations of a “sharp rise” in European Union sugar production, “boosted by higher beet yields and last year’s removal of output quotas, which gave rise to larger plantings”.
Source: Agri Money