November 2012 Update on Global Food Stocks-to-Use Ratios

The above chart has been updated using the latest released stocks-to-use estimated percentages from the Food and Agriculture Organization of the United Nations.

In good news from the FAO, lower international prices and freight rates, together with lower cereal purchases, have pushed down the world food import bill in 2012 to an estimated $ 1.14 trillion for 2012, 10 percent lower than last year’s record level of $ 1.27 trillion.

Maize, wheat, and soybean supplies are tight, while rice and cassava production is strong.

All eyes are on wheat, since production fell by 5.5 percent from last year’s record due to droughts in eastern Europe and central Asia. The biggest production declines happened in the large wheat producers of Kazakhstan, the Russian Federation and Ukraine. While the largest wheat exporting nations have lower stocks, some of the largest importing nations now have higher supplies. If the wheat stocks-to-use ratio does reach 24.0 percent this marketing year, it would compare to the 22.0 percent low experienced in the 2007/08 food crisis year which had low wheat and rice supplies. Because of higher prices, however, the FAO expects wheat production to rebound in 2013.

A separate report from the USDA last week gave the projected corn and soybean ending stock numbers for the 2012/13 marketing year. It reported a U.S. stocks-to-use ratio of 5.8 percent for corn which amounts to only a 21-day supply, and a U.S. soybean stocks-to-use ratio of 4.6 percent which is a 17-day supply. The global corn stocks-to-use ratio is projected at 13.8 percent, the lowest level in nearly 15 years. This low resulted from the Midwestern drought combined with the U.S. ethanol policy’s mandated use of corn. The global soybean stocks-to-use ratio is projected at 23 percent, also a very low level. On the demand side, increased global production of rapeseed, sunflower seed, and palm oil are helping to offset the current low soybean supplies.

Note that the stocks-to-use ratio reflects the excess of supply against demand. It is calculated by dividing the ending stocks of a commodity by the total demand of that commodity and is one of the most useful statistics that we have for measuring supply and demand of food commodities. Comfortable levels vary by commodity type.

In my stocks-to-use report six months ago, I included the subject of grain storage capacity and changes for any interested readers.

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