IGC slashes grain stocks forecast, citing industrial demand for corn


The International Grains Council cut its forecast for world grain stocks at the end of next season to a three-year low, citing increased expectations for industrial use of corn, particularly in China and the US.

The IGC slashed by 12m tonnes to 479m tonnes its estimate for global corn inventories at the close of 2017-18, representing a tumble of 34m tonnes year on year.

That compares with a previous estimate of a 25m-tonne drop in stocks, and would take the inventory estimate to the lowest since 2014-15.

Compared with consumption – to form the stocks-to-use ratio much watched as an indicator of price potential – inventories will come in some 1 point ahead of average, and down 1.6 points year on year.

The revision reflected an upgrade to expectations for grains consumption, now seen sticking close to record highs, at a time when output is seen declining, as yield retreat from last year's bumper levels.

'Robust food, feed and industrial demand'

"Consumption is projected to match the previous season's high," the IGC said, adding that this expectation was "underpinned by robust food, feed and industrial demand".

This trend was seen being led by corn, responsible for the bulk of the inventory downgrade, with world stocks of the grain now seen tumbling below 200m tonnes to a figure not far from that outlined by the US Department of Agriculture earlier this month in its first 2017-18 estimates.

"Increased consumption from last time is mostly for industrial use, on upward revisions for corn-based ethanol in the US and starch in China," said the IGC.

"This contributes to smaller ending inventory figures for those countries."

The comments follow a string of unexpectedly strong US ethanol output data, while China is incentivising industrial corn users, in an effort to shrink its huge stocks of the grain built up by a now-reformed guaranteed pricing scheme for farmers.

Wheat revision

For wheat, the IGC made few revisions, leaving the forecast for world stocks at the close of 2017-18 at 239m tonnes, down 2m tonnes year on year.

However, the amount of the stocks accounted for by major exporting countries – whose supplies, being readily available to the market, are particularly important for pricing – was cut by 5m tonnes to a three-year low of 68m tonnes.


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