World grains production is to grow by more than 260m tonnes
over the next five years – but that will still only just keep up with demand,
supporting prices and leaving conditions "largely favourable for agricultural
The International Grains Council, in its first forecast for world
harvests next year, foresaw wheat production rebounding by 5.4% to 690m
bushels, and continuing to grow thereafter.
A rise in output at that pace would be ahead of the 2.2%
rise in sowings the council has forecast, signalling a recovery in yields from
weather-dented levels in producing areas such as the European Union and former
For corn, global production will jump to a record 916m
tonnes in 2013-14, up 10.4% from this year, when drought depleted harvests in
the US and South America.
And corn output too will continue to increase, by an average
of 1.7% a year, to 2017-18, slightly ahead of increases in wheat and, indeed,
'Feed use dominates'
However, consumption will, after a relatively slow 2013-14,
settle down to even faster annual expansion, thanks to "strong growth in demand
for feed use".
"Animal feed use of grains dominates the outlook, expanding
at an average rate of 2.5%," the council said.
The boost will foster a decline to 16% in the stocks-to-use
ratio for grains at the end of 2017-18, compared with 18% forecast at the close
For wheat, the ratio will drop from 25% to 23%, and for corn
from 15% to 8%.
The stocks-to-use ratio is a key pricing metric, indicating
the tightness of supplies, and thereby the competition between buyers to
"The tighter outlook will leave markets more vulnerable to
price gains, as well as volatility, in the event of poor crops," the IGC said.
'Limited scope for stockbuilding'
A similar picture will be evident in oilseeds, for which
prices "are expected to be supported by further increases in demand for edible
oils, particularly in Asia".
For soybeans, world production will recover by 8.5% to 141m
tonnes next season, before beginning increases at expected at a pace of 1.6%,
narrowly behind consumption.
The oilseeds' stocks-to-use ratio will stay at 12% both next
season and in 2017-18.
"Oilseed consumption is also expected to grow particularly
strongly, by 2.6% per annum, predominately led by the crushing industry and
ultimately the expansion in animal feed use that is driving demand for corn," the
"There appears to be limited scope for stockbuilding.
"Grain and oilseed prices are assumed to remain largely
favourable for agricultural investment, underpinned by structural growth in
demand for animal feed in particular, together with high energy prices."