World grain stocks to fall less steeply than thought in 2017-18 - IGC


World grain stocks will fall by less than had been thought next season, the International Grains Council said, nudging higher its harvest forecast, while trimming wheat demand expectation too.

The council, in its second estimate for the world grains balance sheet in 2017-18, raised its estimate for inventories at the close of the season by 7m tonnes to 491m tonnes.

The upgrade, which reduced to 25m tonnes the estimate for the drop in global stocks expected over the season, reflected in part a higher expectation for inventories carried into the period.

However, the IGC flagged that "upward revisions for wheat and corn [output] boost the 2017-18 production projection by 4m tonnes", although adding that "at 2.054bn tonnes, output is still seen falling by 3%"year on year.

'Concerns about adverse weather'

The estimate for corn output in 2017-18 was edged higher by 2m tonnes to 1.026bn tonnes, while that for wheat as raised by 1m tonnes to 736m tonnes.

The upgrades came despite acknowledgement of weather worries, such as over wetness slowing US Midwest corn sowings and cold testing European wheats crops, which have spurred some revival in prices.

"While overall northern hemisphere conditions remained favourable, concerns about adverse weather contributed to modest late-month gains" in values, the council said.

China's stocks to fall

For wheat, the council now saw global inventories dropping only 1m tonnes year on year next season, compared with a previous expectation of a 5m-tonne fall.

Besides increasing production hopes, the revision to inventory expectations also reflected lower ideas for world wheat consumption and trade.

Corn inventories were seen ending next season at 207m tonnes, an upgrade of 2m tonnes on last month's forecast but a drop of 20m tonnes year on year nonetheless.

"Corn accounts for most of the drop" expected in world grain stocks in 2017-18, the IGC said.

The expectations of a drop in corn inventories to a three-year low was "partly linked to ongoing efforts to reduce inventories in China", which has ditched guaranteed prices of the grain to farmers in an effort to reverse its build-up of huge stocks.


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