FAO predicts world cereal output to increase in 2019 06-01-2019

On May 9, 2019, the Food and Agriculture Organization of the United Nations (FAO) released a report that the world cereal production is predicted to hit a new record of 2.72 billion tonnes in 2019, with a year-to-year increase by 2.7%. Similarly, the world cereal utilization is also likely to experience a growth by 1.5%, while the global cereal consumption will rise by 1.1%. Meanwhile, the consumption growth of rice is anticipated to speed up, and the demand for animal feed and industrial-grade coarse grain will swell to a greater extent.

Under the circumstance of sufficient supply and demand, the world cereal price will continue to be under pressure. However, world trade in grain is predicted to have a promising future, especially the trade in wheat and rice.

Besides, as the food price index from FAO demonstrates, there is a growing tendency towards the price of meat and dairy products, but not for cereal.

The increase of world cereal production to have less influence on China's cereal price

FAO’s prediction has aroused some concerns regarding whether the increasing grain output in the world will drag down the cereal price in China. However, Chinese industry insiders hold an opinion that the growth of world cereal production will not have a great impact on China’s cereal price.

According to statistics in terms of China’s agricultural consumption and import, the import of rice will total to about 3 million tonnes in 2019, while the inventory is over 100 million tonnes at the moment. The import of wheat is predicted to reach around 3.5 million tonnes in 2019, while the domestic stock already gets to tens of millions of tonnes. The import of corn will be under 4 million tonnes in 2019, in contrast to the current stock of 80 million tonnes. This data shows a sufficient storage of grain in China, compared with the less amount of grain import. Insiders analyse that China is self-sufficient in food production, with great surplus. A decrease of price in grain, caused by a huge quantity of grain import is not expected, due to the strict supervision under the Chinese government. Hence, the increase of world grain output will not have much effect on China‘s cereal price.

Chinese cereal price to increase in the long run

With increasing costs and constant improvement in mechanism of agricultural product price, a rising price in Chinese agricultural products in the future is predicted.

Rice stock will decline in a faster way. Rice output will remain around 200 million tonnes, but an upward tendency towards rice consumption will appear, which may speed up the reduction of rice stock.

Corn price will increase in fluctuations. Corn supply and corn demand will have a tension. The sown area and output of corn will experience a growth, together with the price.

Wheat price will recover after a slight drop. In the next ten years, the sown area of wheat will reach around 240 billion m² steadily, with a rise towards the consumption. In 3 -5 years, wheat price will undergo a slight decline after being stable for a while. It is estimated that wheat price will recover again in a stable way in 2022. In 2028, the market price will again remain stable.


For more information about China’s grain market, please have a look at our monthly newsletter Crop Farming China E-News.

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