Analysis of cereal production, supply, and demand globally

1. Overview of global cereal production: According to our monitoring, global sown area of cereal stood at 767.9 million hectares in 2018/19, a year-on-year decline of 0.38%, and the yield reached 2.893 billion tons (note: unshelled paddy), down 0.08% year-on-year. In the top five countries in yield per unit area, the sown area of cereal totaled 61.485 million hectares, total output stood at 508 million tons, and their average yield registered at 8255kg/hectare.
In 2019, the sown area, total output, and average yield per unit area of cereal in the whole world reached 727.7 million hectares(a year-on-year growth of 0.62%), 2.949 billion tons (a year-on-year growth of 2.74%), and 3816kg/hectare respectively. Droughts in Asia, Australia, and Africa had a bad impact on global cereal production. In the top five countries (in terms of yield per unit area), the sown area totaled 60.348 million hectares, total output stood at 521 million tons, and their average yield registered at 8634kg/hectare. Calculated on the yield per unit area in developed countries, China’s output would reach 818 tons. As for cereal production concerned, there’s a big gap in per unit area yield between China and advanced countries, and China’s per unit area yield has a growth space of 46.42%.
Global cereal supply and demand balance: the global production of cereals (paddy is converted into rice) reached 2.656 billion tons in 2018/19, while cereal consumption increased to 2.729 billion tons, resulting in a decline in safety factor(inventory/consumption).
The inventory of cereals at the end of the crop year stood at 614 million tons, registering at a safety factor of 22.5%. The composite price index of cereal in this crop year would rise to 183 ( the mean value was 100 from 1998 to 2000, similarly hereinafter).
Expectations in cereal production in 2019/2020: the total production of cereals (paddy is converted into rice) is expected to be 2.718 billion tons, while the consumption is estimated to reach 2.737 billion tons. The consumption will exceed output for the fifth year in a row, and the safety factor will further decline, driving up the price of cereals.
The inventory of cereals at the end of 2019/20 is expected to be 521 million tons, the lowest level since 2002, and the safety factor will drop to 21.7%. Low safety factor sure will push grain price up and promote the recovery of grain production. It’s predicted that the composite price index of cereals will increase to 198 in this crop year.