MercoPress. South Atlantic News Agency

World cereal stocks are set to end 2016 seasons at 642 million tons, higher than they began.

Wheat output in Canada and Russia and maize output in China, Canada and Paraguay drove the upward revision.

Weather patterns associated with El Niño are sending mixed signals about the early prospects for cereal crops in 2016, especially in the Southern Hemisphere, according to FAO's Cereal Supply and Demand Brief, released on Thursday.

 2016 crop prospects have been “severely weakened” in Southern Africa, and a 25% cut in wheat production in South Africa now appears likely. Conditions for the crop are generally favorable in the Russian Federation and the European Union, but winter plantings declined in the United States and Ukraine. The area under wheat is also expected to be cut in India, following a poor monsoon and below average rains since October.

The 2016 outlook for rice along and south of the Equator is “dim” due, at times, to insufficient water and, at others, to excessive rains.

As for the 2015 season, FAO modestly raised its forecast for world cereal production to 2 531 million tons, up slightly from that released in December.

Wheat output in Canada and Russia and maize output in China, Canada and Paraguay drove the upward revision. FAO also slightly raised its expectation regarding 2015 world rice production, mostly on account of higher forecasts for China, Viet Nam and the United States.

At the same time, FAO lowered its forecast for world cereal utilization in the 2015/16 season to 2 527 million tons, which remains 0.8 percent above that of the previous year. This reflects a 2.0 percent increase for wheat, largely on account of higher livestock feed use in developed countries and a 0.3 percent increase in maize. World rice utilization is projected to expand by 1.1 percent, keeping world per-capita consumption stable.

As a result of the upgraded production and downgraded consumption forecasts, world cereal stocks are set to end the 2016 seasons at 642 million tons, higher than they began. That level implies a steady and comfortable global cereal stock-to-use ratio of around 25%.

However, the inventory build-up varies geographically and depending on the crop. Notable increases in wheat inventories are forecast for the United States, European Union and China whereas some reductions are likely in Canada, India and the Islamic Republic of Iran. On the other hand, world rice stocks would need to be drawn down to bridge the expected gap between world production and consumption, with much of the release likely to concern India and Thailand, the two leading rice exporters.