The United Nation's Food and Agriculture Organization (FAO) has released its first estimate of 2012 global coarse grain production, in which it projects a 3.7% increase over 2011 at a record 1,207.3 million metric ton (MMT). But it notes that higher production would result in only a slight uptick in carryover, a factor they say may continue to support prices.
Additional balance sheet updates include:
CEREALS: World cereal production is heading towards a modest expansion in 2012 to a new record of 2,370.7 MMT, more than sufficient to cover the projected cereal utilization in the new season, and resulting in increasing global inventories. Ending stocks are estimated to climb by 1.7%.
WHEAT: The forecast for 2012 wheat production has been cut sharply since March, now estimated at 675.1 MMT, down 3.6% from the previous year. However, global wheat supplies in 2012-13 are still expected to be adequate in view of an anticipated decline in utilization. As a result, international prices are likely to remain under downward pressure, barring any unexpected major supply shocks.
RICE: Slackening import demand and the return of India as a major rice exporter are behind a weakening of international rice prices since September 2011. World rice crops in 2011 and 2012 are expected to exceed consumption lifting the world stock-to-use ratio to new highs.
OILSEEDS: International prices for oil crops and derived products have appreciated strongly since January and should remain firm given the increasingly tight supply and demand situation of the current season. The market is thus increasingly focusing on 2012-13 planting intentions. The group has not released an estimate for 2012-13 oilseed production.
SUGAR: Despite falling production in Brazil, world sugar output in 2011-12 looks set to exceed consumption, generating a large surplus for the second consecutive year. Weakening import demand is forecast to result in a contraction of world trade but also in an easing of international sugar quotations from the high levels recorded in 2011.
MEAT: Global meat markets in 2012 are expected to see a recovery of supplies in traditionally importing countries and strong competition for markets. Near record prices are constraining consumption growth.
- MILK: International prices of dairy products are declining in the face of rising supplies. At the same time, import demand remains strong, keeping prices well above recent historical averages.
Additionally, FAO's Food Price Index fell three points or 1.4% from March to April, but seems to have stabilized at a relatively high level of 214 points. "Although the outlook for the second half of this year and into the next indicates generally improved supplies, demand remains strong and global food import bill in 2012 is expected to fall only slightly from the 2011 record," it notes.