The forecast for 2012 world cereal production lowered sharply from last month as dry weather hampers potential for the US maize crop

The forecast for world cereal production has been lowered from last month, which is likely to result in a smaller build-up of world inventories by the end of seasons in 2013 than previously anticipated. However, the overall supply and demand situation in 2012/13 remains adequate thanks to abundant supplies of rice, a leading food staple, and sufficient exportable supplies of wheat and coarse grains.

FAO's latest forecast for world cereal production in 2012 stands at 2 396 million tonnes, a record level and 2 percent up from the previous high of last year, but as much as 23 million tonnes less than reported in June. While the bulk of the increase in cereal production from last year is still expected to originate from a significant expansion in maize production in the United States, the deteriorating crop conditions due to the continuing dryness and above-average temperatures in much of the major growing regions of the country have dampened this outlook. The FAO's latest forecast for maize production in the United States stands at 350 million tonnes, down 25 million tonnes from the June forecast but still 36 million tonnes (11.5 percent) higher than in 2011. As a result, global coarse grain production is now foreseen to reach 1 229 million tonnes this year, implying a 65 million tonne (5.6 percent) increase from 2011, but 19.5 million tonnes less than anticipated in June. World wheat production is heading toward a contraction of about 3.2 percent, to 678 million tonnes, or 2 million tonnes less than reported in June, as downward adjustments in Australia, China and the Russian Federation more than offset upward revisions in the EU and Morocco. World rice production in 2012 is now anticipated to grow by 1.6 percent to 489.1 million tonnes (in milled equivalent), which compares with a previous forecast of 490.5 million tonnes. The small reduction mainly reflects some deterioration of prospects in a few major producing countries, especially India.

The forecast for global cereal utilization in 2012/13 has been lowered slightly (by around 6 million tonnes) from the previous month to 2 370 million tonnes, but still 1.8 percent higher than 2011/12. The reduced forecast reflects expectations of somewhat slower expansion of feed use. World feed utilization of cereals is currently forecast at 816 million tonnes, up 3.2 percent from the previous season but down from the 3.8 percent expansion expected last month. Food consumption of cereals is forecast in the order of 1 085 million tonnes, an increase of 1 percent from the previous season, which is largely in pace with the world population growth. Total industrial use of cereals is also anticipated to increase by 1 percent, mostly on stronger demand from the starch industry, while the use of cereals for the production of biofuels could stagnate at around the 2011/12 level.

Read full article here