IGC flags rising world grain stocks, despite EU harvest woes

30.09.2016

The International Grains Council underlined disappointment at the European Union's cereals output, even as it said that the world wheat harvest would set a record by an even bigger margin than previously thought.

The intergovernmental group said that a downgrade of 3m tonnes to 1.03bn tonnes in its forecast for world corn production in 2016-17 reflected downgrades in the European Union and China, where "overly dry weather has affected crop prospects".

The assessment tallies with that earlier this week from the European Commission's own Mars agricultural meteorology unit, which cut by 5.4% to 6.84 tonnes per hectare its forecast for the EU corn harvest, citing "hot and dry" conditions in parts of France, Italy and Romania.

In wheat too, for which excessive rain was the key problem in Europe, the IGC said that "the outlook is again cut for the EU".

Record harvest

However, the IGC raised its forecast for world wheat production in 2016-17 nonetheless, saying that the EU downgrades was "outweighed by increases for Australia, Canada, China and Kazakhstan" harvest estimates.

The revision left the council's estimate for global wheat output at a record 747m tonnes, up 11m tonnes year on year.

The forecast for stocks left at the close of the year was upgraded by 2m tonnes to 231m tonnes – a 13m-tonne increase on inventories carried into the season.

'Stocks are to expand again'

Global stocks of grains overall, excluding rice, were pegged at 492m tonnes, the same as last month's estimate, with upgrade to the wheat inventory figure balanced out by a cut to expectations of supplies of coarse grains, such as barley and corn.

Nonetheless, the stocks estimate represents an increase of 20m tonnes year on year, with those in major exporting countries – whose inventories are particularly important in gauging price prospects – expected to rise by 17m tonnes, to 163m tonnes.

"Despite further growth in demand, grains stocks are set to expand again, with those in the major exporters the biggest in seven years," the council said.

Rice stocks divergence

The situation contrasts with that in the rice market, where the forecast for inventories in top exporting countries was trimmed by 1m tonnes to 25m tonnes – a 2m-tonne reduction year on year.

"Major exporters' inventories are predicted to drop to a nine-year low, largely on a drawdown in Thailand, where the government continues to offload state reserves at competitive prices," the IGC said.

The forecast contrasted with expectations of a small rebuild, of 1m tonnes to 114m tonnes, in overall world rice inventories, helped by ideas of production rising by 11m tonnes year on year.

"Assuming weather patterns are beneficial in Asian producers, including India, output could expand by 2%, to 482m tonnes."



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