With current USDA’s 2017-18 wheat crop forecasts at 738 million tons, global production levels are expected to edge slightly lower in comparison with the last year’s record of 753 million tons. Although the production levels are forecast to increase in the EU countries and Argentina, expected production increase is likely to be offset by the slowdown in other regions. Forecast at 735 million tons, 2018 wheat consumption is expected to experience a minor decrease compared with the last year’s levels. As a main catalyst behind the consumption decrease, rising popularity of corn as a cheaper feeder option is expected to soften wheat consumption in the agriculture sector. Per the current USDA forecasts, 2018 wheat inventories will edge higher to a total of 258 million tons.
Currently, global corn inventories stand at a record level of 224 million tons. According to the latest USDA forecasts, global corn consumption growth is expected to continue and reach a total of 1.06 billion tons in 2018, mainly contributed by continued demand growth in North African, Middle East and Asian regions. In the meantime, global production is expected to edge lower to 1.03 billion tons, a 3 percent decrease in comparison with the last year’s record of 1.07 billion tons. As a result, global inventories are forecast to slide to 195 million tons, 13 percent lower in comparison with the last year.
Due to favorable crop conditions during the current season, soybean production continues to stay at record levels of 348 million tons. However, per the USDA estimates, production metrics are expected to mean-revert during the next production season, bringing the global production back to a total of 345 million tons. Soybean consumption growth is forecast to stay on course, raising the 2018 global consumption estimates to 300 million tons, a 3.7 percent year-over-year increase. However, despite the favorable consumption dynamics, global inventories – forecast to decline to a total of 88.8 million tons in 2018 – are likely to remain high relative to the current consumption levels.
Although the global soybean meal consumption is still on the rise, current production levels continue sustaining the supply and demand balance. According to the current USDA estimates, 2018 production levels – projected at 237 million tons – will exceed global consumption by 3 million tons. However, despite the continued supply surplus, global inventories are forecast to edge slightly lower to a total of 12.3 million tons.
Forecast to decrease by a mere 242 thousand tons in 2018, global rice production will stay nearly unchanged at a total of 481.3 million tons. Global consumption growth is expected to continue and reach a record total of 480 million tons next year, with favorable demographic conditions pointing to a significant consumption uptick in India. In the meantime, it is important to note that certain Asian regions begin to demonstrate a switch towards higher grain consumption. In particular, despite the continued population growth, consumption levels are staying unchanged in Bangladesh and Indonesia. Rice inventories are forecast to experience a slight increase and stay just short of 120 million tons in 2018. Expected inventory growth is mainly contributed by China, which accounts for approximately 60 percent of the global inventory levels.
As a consequence of sugar production quota withdrawal in the EU, European sugar production is forecast to increase to a total of 25.8 million tons in 2018, an increase of 18 percent. With the global production growth staying on course, USDA estimates 2018 figures at just below 180 million tons. Maintaining the long-term focus of decreasing dependence on imports, the Chinese government substantially raised the import quotas on sugar in May 2017. In the meantime, as a consequence of a global trend towards lower sugar use in dairy products, 2018 consumption estimates have been cut to 171.6 million tons, 0.2 million tons lower in comparison with the current year. Global sugar inventories are forecast to continue decreasing, albeit at a slower rate compared with the previous forecasts. Current USDA estimates point to a total of 38 million tons in 2018.
Global cotton production remains in an uptrend and is forecast to reach a total of 24.7 million tons in 2018, a 7 percent increase. In parallel, growing cotton consumption is expected to reach a total of 25 million tons by the end of the next year. With Asia remaining the key cotton-consuming region, China alone accounts for more than a half of global cotton inventories. Despite the Chinese government’s efforts aimed to cut the national cotton reserves, domestic inventories are staying at elevated levels, resulting in a 6th consequential year of inventories exceeding the national consumption levels. Currently, USDA estimates 2018 global inventories to decline to a total of 19 million tons. Of particular note is the current situation on the futures market. With the price of the contract for July delivery significantly exceeding that of the December contract, current prices clearly reflect the expectations for better weather conditions and a significant production uptick for the December crop
There were no significant changes to the coffee supply and demand estimates this May. After reaching a record 9.2 million tons in 2016, world coffee crop is estimated to edge lower this year. In the meantime, global consumption dynamics point to continued growth, leading to a forecast decline in global inventory levels. Nonetheless, the coffee price remains stressed, with the recent Brazilian Real depreciation and rising domestic political tensions adding to the pressure. In the meantime, rising exports from the major producers – mainly Vietnam, Colombia and Indonesia – are going to weigh on the coffee prices throughout the rest of the year.