The International Grains Council ditched expectations of rising
world corn inventories thanks to the drought besetting the US crop, which is on
course for its worst result since 2006.
The intergovernmental group said that corn inventories, which
had had seen showing a healthy rise, would fall to a six-year low of 115m
tonnes – of which only 26m tonnes would be accounted for by the major exporting
The downgraded reflected a cut of 50m tonnes to 300m tonnes,
also a six-year low, in its estimate for the US harvest, the world's biggest.
"The 2012-13 outlook for corn production has generally
worsened, especially in the US, where high temperatures have reduced prospects,"
the IGC said.
Lower than USDA
The downgrade takes the council's estimate for the US corn
harvest well below the US Department of Agriculture's own forecast, of 329.5m
The USDA, whose estimates are followed particularly closely
by traders, also still foresees a small rise in world corn inventories.
|IGC world corn forecasts 2012-13, change on last and (year on year)|
Production: 864m tonnes, -53m tonnes, (-6m tonnes)
Trade: 97m tonnes, -6m tonnes, (+3m tonnes)
Consumption: 878m tonnes, -32m tonnes, (+8m tonnes)
Carryover stocks: 115m tonnes, -22m tonnes, (-14m tonnes)
However, analysts have already started the countdown to the
next USDA Wasde report, on August 10, when it will revise estimates for crops worldwide.
"The USDA supply and demand report is looming," broker US Commodities
"There is no doubt that there will be reductions in the
production end, but the question will be how much demand will be slashed and
how inventive will the USDA be in making those cuts."
Separately, an annual crop tour by broker Doane put the corn
yield in Iowa, America's top producing state, at 119.6 bushels per acre,
compared with the 172.0 bushels per acre that growers achieved last year.
Informa Economics will on Friday unveil fresh forecasts.
The IGC's forecast of lower world corn stocks deepened its
estimate for the decline in world inventories of grains overall, which were now
seen closing 2012-13 at a five-year low of 337m tonnes, down 29m tonnes.
Only 104m tonnes of these will be held in major exporting
countries such as Australia, Canada and the US, a figure important given that
these inventories have an unduly large impact on world prices.
|IGC world grain forecasts 2012-13, change on last and (year on year)|
Production: 1.810m tonnes, -58m tonnes, (-36m tonnes)
Trade: 256m tonnes, -9m tonnes, (-11m tonnes)
Consumption: 1.839m tonnes, -37m tonnes, (-5m tonnes)
Carryover stocks: 337m tonnes, -23m tonnes, (-29m tonnes)
While China and India hold large stocks of some grains,
these countries are only small exporters, meaning these supplies hold less sway
in traders' thinking.
The IGC said that its grains and oilseeds price index
reached an all-time high last Friday, as corn and soybean futures set record
highs in Chicago.