Grains open to 'volatility' despite strong crops

The expected recovery in global grain and soybean stocks is not enough to protect investors from the threat of price volatility, USDA chief economist Joseph Glauber said, highlighting growth in consumption as well as production.

Mr Glauber, whose position makes him one of the most important commentators on agriculture markets, said that world wheat crops were "pretty good" apart from in the US southern Plans, "where a lot of the crop continues to be in poor and very poor shape".

He also highlighted the strong condition of the US corn crop, which "all of a sudden looks quite good", adding that "prices have fallen accordingly".

The USDA on Monday estimated the corn crop at 75% in "good" or "excellent" condition, an unusually strong rating, even for early in the growing year when figures tend to be higher.

'Potential for volatility'

Nonetheless, "largely we are looking at grain stocks which, whole increasing, still look fairly tight", Mr Glauber told the International Grains Council conference in London.

Although the world was looking at record harvests of many crops, we also have global record use".

"The rebuild has not occurred as fast as we would have anticipated 15 years ago."

In soybeans, consumption had been fuelled by a "strong annual growth rate, of 4% in recent years, in China", he said.

Grain markets were "still subject to some weather disturbance somewhere. There is still potential for some [price] volatility".

Data later

The comments came ahead of the release on Wednesday of the USDA's monthly Wasde crop report, which is expected to trim estimates for world inventory levels of corn, soybeans and wheat in 2014-15, but to levels still showing some recovery in inventories over the season.

Soybean inventories are expected to be shown ending the season at a record 81.97m tonnes.

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