IGC cuts world corn stocks forecast, despite higher 2018 harvest hopes

27.04.2018

The International Grains Council cut its forecast for world corn inventories at the close of next season, despite increasing its output hopes, citing buoyant demand for the grain.

The intergovernmental group raised by 2m tonnes to 1.054bn tonnes its forecast for world corn production in 2018-19, citing improved prospects for China, and for the European Union, where a slow start to spring sowings had spurred ideas of a switch from early-planted grains such as barley.

The upgrade extended to 8m tonnes the year on year increase expected in world corn production next season, although output would remain below the record 1.088bn tonnes set in 2016-17.
 
‘Consumption to climb’

However, the IGC cut by 3m tonnes its forecast for world corn stocks at the close of 2018-19 despite the increase production forecast, reflecting ideas of buoyant consumption.

After reaching a “new high” this season of 1.075bn tonnes, backed by “strong gains for feed and industrial demand” of corn, consumption will rise to 1.099bn tonnes over 2018-19.

“Consumption of [corn] is set to continue to climb,” said the council, whose forecasts imply a 124m-tonne, or 13%, jump in just three seasons.

‘Strong spot buying interest’

The revisions left the corn inventory estimate at the close of 2018-19 at 262m tonnes, a drawdown of 45m tonnes over the season, and the lowest figure in at least five years.

The forecast for stocks held in exporting countries – supplies which, in being readily available to the market, are particularly important in determining prices – was also cut by 3m tonnes, to 55m tonnes, also taking it to its lowest in at least five years.

The IGC said that corn prices had in fact, as measured by its index, risen by 2.8% last month, a gain “primarily driven by firmer US export prices, which rose on early sowing delays, strong spot buying interest, and tight nearby loading capacity at the Gulf”.

The increase took to 19.0% the headway in prices year on year.

‘Worries about adverse weather’

Nonetheless, this gain was eclipsed by wheat, which thanks to a rise of 4.9% in prices last month, took its year-on-year apprecation to 19.9%.

Values were last month “buoyed mainly by worries about adverse 2018-19 crop weather”, the IGC said, flagging too that “solid demand and tight logistics contributed to advances in the Black Sea region”.

In contrast to corn, however, the IGC raised its forecast for world wheat stocks at the close of next season, by 4m tonnes to 257m tonnes, despite a cut in the production estimate of 2m tonnes to 739m tonnes.

The inventory upgrade reflected ideas of bigger stocks left at the close of 2017-18 than had been previously expected.

The council said its cut to its forecast for the world wheat harvest this year reflected downgrades for countries “including for the US, India and Australia”.


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