Grain market: another season of record stocks and low prices – who is to blame?

26.01.2017

Grain oversupply has been observed in the global market over the last four seasons, leading to growth of grain carryovers. Respective annual price drops with consequent reduction of market participants’ profits as a natural response of the market, UkrAgroConsult notes. At the same time, despite the long term period of low prices and attempts of some market players to decrease plantings of the least profitable crops, season 2016/17 was also marked with their bumper production. What or who prevents restoration of the world market balance, Olena Hesona, grain market analyst of UkrAgroConsult, notes?

Let’s consider the situation with such a major export crop as wheat. Global wheat consumption has increased by 6.9% since the season 2012/13, to 734.8 MMT, but its output rose much faster during this time (up 14.3% to 752.7 MMT). This entailed increasing stocks and steadily sliding world prices from season to season. 

Full version of the article is available to subscribers for weekly market report “Black Sea Grain&Oil” and “Online market review” by UkrAgroConsult.

 

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