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Global Grain Production, Consumption And Stocks Forecast For 2022/2023 Revised Downward in October

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The latest FAO 2022 global cereal production forecast of 2.768 billion tons was revised downward for the second consecutive month, down 5.9 million tons from a year earlier and 1.7% from a year earlier. The downward revision of coarse grain production is the main reason for the lower cereal production forecast this month. World coarse grains production forecast for 2022 is 1.468 billion tons, down 14.3 million tons sequentially and 2.8% year-over-year, given that severe weather continues to dampen yield prospects in major producing countries. The downward revision on a year-over-year basis was mainly driven by lower corn production expectations in the U.S. On the one hand, the lack of rainfall led to a contraction in corn yield forecasts; on the other hand, the country's corn planted area was also revised slightly downward. The EU and the Republic of Moldova corn production forecast has also been revised downward, but to a lesser extent, mainly due to drier weather than in previous years further affected the yield expectations. According to recently released official data from Brazil, corn production forecasts were revised slightly downward, but production remains at the country's all-time high. Global barley production forecasts were revised upward by 2.5 million tons, partially offsetting the impact of lower corn production, mainly reflecting the positive outlook for barley production in Russia, now forecast at 147.9 million tons, up 1.7% year-on-year. Ukraine's coarse grains production forecast was unchanged from last month at 33.1 million tons, down 38% y/y. The 2022 world rice production forecast decreased 1.7 million tons YoY this month to 512.8 million tons (in milled rice), down 2.4% from the all-time high in 2021, but still above average. The downward revision in the chain is mainly due to a further contraction in China's production forecast, as the ongoing summer drought and high temperatures have affected crop growth in the Yangtze River basin; on the other hand, the recent outbreak of severe flooding has dampened production in Pakistan. There were also slight downward revisions to rice production forecasts for some other countries. Although the Islamic Republic of Iran, Thailand and some West African countries have revised their production forecasts upward, but overall still can not reverse the downward trend of rice production. In contrast to the trend in coarse grains and rice production, the 2022 global wheat production forecast was revised upward this month by 10.2 million tons from a year earlier to a record high of 787.2 million tons, up 1.0% from a year earlier. In particular, the EU soft wheat crop had a better-than-expected harvest due to improved yield prospects, while Russia contributed the largest share of this month's upward revision supported by favorable weather conditions. In Australia, good soil moisture at planting and favorable rainfall forecasts boosted yield prospects, and the country's wheat production in 2022 is expected to be likely to reach the second highest level on record, after 2021. Therefore, despite the slight deterioration in crop conditions due to the lack of rainfall in Argentina, the slight downward revision of the Argentine wheat yield forecast will not affect the overall trend this month. In addition, Ukraine's wheat production forecast for this month remains stuck at 20 million tons, down 38% from the previous year.

World cereal consumption forecast for 2022/23 is 2.784 billion tons, revised downward by 8.7 million tons, down 0.5% from 2021/22. In line with the production forecast, the main factor behind this month's downward revision is also driven by coarse grains. This month's coarse grains consumption forecast was revised downward by 6.4 million tons to 1.491 billion tons, down 0.6% from the previous year, almost entirely due to lower feed use, but this was expected. Corn feed use declined significantly, especially in the EU and the U.S., where reduced domestic harvests led to tight supplies; in Canada, corn feed use was too high last year due to tight supplies of other grains, and has fallen back this season. In addition, the 2022/23 barley feed use forecast is also downward, mainly due to the contraction of feed use due to lower production in Morocco. In sorghum, the expected decline in feed use in China has pulled down the global sorghum feed use forecast. FAO's forecast for world rice consumption in 2022/23 was revised downward by 3.6 million tons from September to 518.6 million tons, 0.7 percent below the 2021/22 peak, implying that non-edible consumption of rice has fallen back from the previous year's excessive levels, while edible consumption has kept roughly in line with population growth rates. 2022/23 wheat consumption is forecast at The forecast for wheat consumption in 2022/23 is 774 million tons, close to the 2021/22 level, with an upward revision of 1.3 million tons from the previous year, as tighter corn supplies and higher prices in the EU have led to a shift in feeding demand to wheat, and therefore higher than previously expected wheat feed use in the region.

The forecast for world grain stocks at the end of the 2023 season is 848 million tons, down 1.6% from the beginning of the period, despite an upward revision of 2.9 million tons. The ratio of global cereal stocks to consumption in 2022/23 is 29.7% based on the latest stocks and consumption, down from 31.0% in 2021/22, but still at historically high levels. The main reason for the downward revision of the world cereal stocks forecast is that global coarse grains stocks are expected to decline by 5.4% from the initial level to 352 million tons, down 2.9 million tons YoY. Global corn stocks are expected to contract significantly by 5.3% in 2022/23, due to lower production in the EU and the US, which is expected to lead to a significant reduction in corn stocks; meanwhile, the growth in domestic corn feed use in China is also expected to affect the country's corn stocks. Since September, FAO has raised its forecast for world rice stocks at the end of the 2022/23 marketing season by 2.1 million tons to 193.1 million tons, down 1.8% from the record high of 2021/22, but still the third highest level on record. Rice stocks in China and India are expected to grow, supporting global rice stocks at high levels. The outlook for other regions is less positive, with total rice stocks in all other countries falling 8.2% from the previous year to 50.1 million tons, coming in at the lowest point in nearly three years. In contrast to coarse grains and rice, global wheat stocks are expected to increase by 3.2% from the beginning of the period level to 303 million tons, an upward revision of 3.6 million tons from the previous year. Among them, Russia will benefit from good wheat production prospects and wheat stocks will grow; together with Canada, China and Ukraine, most of the growth in global wheat stocks is concentrated in these countries.

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