World grains supplies to hit tightest in five years in 2018-19, says IGC

23.03.2018

The world grains market has a “tighter outlook” for 2018-19, the International Grains Council said, forecasting a further decline in stocks, which on one key measure will fall to their lowest in five years.

The intergovernmental group, in its first full forecasts for world grains supply and demand next season, forecast inventories closing at 560m tonnes – a drop of 46m tonnes year on year, and indeed the lowest in four years.

“Initial projections for grains supply and demand in 2018-19 indicate a tighter outlook,” the council said.

‘Sustained growth in demand’

Indeed, compared with consumption, to form the stocks-to-use ratio viewed as key indicator of price potential, inventories will come in at their smallest since 2013-14.

“Sustained growth in demand is predicted to result in another drawdown of stocks, and could see the ratio of stocks to use come down to its lowest in five years,” the IGC said.

On another much-watched pricing measure too, the level of inventories in the hands of exporting countries, the market will also be at its tightest in five years.

The estimates pegged exporting nations’ grains stocks – whose importance to world pricing reflecting their ready availability to the global market – at 145m tonnes at the close of next season, shrinking 29m tonnes year on year.

Wheat output falls, corn use rises

The inventory decline reflects in part expectations for a drop in wheat output next season with the IGC sticking by a world harvest forecast of 741m tonnes, a drop of 17m tonnes from 2017-18.

However, the council also stressed expectations of rising demand for coarse grains, and in particular corn, for which consumption was seen rising by 20m tonnes next season to 1.094bn tonnes.

“Corn accounts for much of the expected growth” expected in world consumption of grains next season.

And the crop will, indeed, sustain most of the overall grains inventory drop, with corn stocks alone seen falling by 43m tonnes to 265m tonnes, their lowest in at least four years.


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