The International Grains Council cut its forecast for world grain
stocks at the end of next season to a three-year low, citing increased
expectations for industrial use of corn, particularly in China and the US.
The IGC slashed by 12m tonnes to 479m tonnes its estimate
for global corn inventories at the close of 2017-18, representing a tumble of
34m tonnes year on year.
That compares with a previous estimate of a 25m-tonne drop in
stocks, and would take the inventory estimate to the lowest since 2014-15.
Compared with consumption – to form the stocks-to-use ratio
much watched as an indicator of price potential – inventories will come in some
1 point ahead of average, and down 1.6 points year on year.
The revision reflected an upgrade to expectations for grains
consumption, now seen sticking close to record highs, at a time when output is
seen declining, as yield retreat from last year's bumper levels.
'Robust food, feed
and industrial demand'
"Consumption is projected to match the previous season's high,"
the IGC said, adding that this expectation was "underpinned by robust food, feed
and industrial demand".
This trend was seen being led by corn, responsible for the
bulk of the inventory downgrade, with world stocks of the grain now seen
tumbling below 200m tonnes to a figure not far from that outlined by the US Department
of Agriculture earlier this month in its first 2017-18 estimates.
"Increased consumption from last time is mostly for
industrial use, on upward revisions for corn-based ethanol in the US and starch
in China," said the IGC.
"This contributes to smaller ending inventory figures for
The comments follow a string of unexpectedly strong US ethanol
output data, while China is incentivising industrial corn users, in an effort
to shrink its huge stocks of the grain built up by a now-reformed guaranteed
pricing scheme for farmers.
For wheat, the IGC made few revisions, leaving the forecast
for world stocks at the close of 2017-18 at 239m tonnes, down 2m tonnes year on
However, the amount of the stocks accounted for by major
exporting countries – whose supplies, being readily available to the market,
are particularly important for pricing – was cut by 5m tonnes to a three-year
low of 68m tonnes.