"Overly dry weather" has left the world on track for its
steepest drop in grains output in at least a decade, the International Grains
Council said, flagging "particular concerns" over supplies of high-quality
The intergovernmental group cut by 11m tonnes to 2.04bn
tonnes its forecast for world grains production in 2017-18, downgrading its harvest
estimate for a third successive month.
The revision reflected setbacks from dryness in many major
producing areas, concerns over which sent the IGC's grain and oilseed price
index up 5% in July to a one-year high.
"Because of overly dry weather, including in North America,
the European Union and Australia, the outlooks for global maize (corn), wheat
and barley harvests are revised lower," the council said.
Lower area, yields
The downgrade took to 88m tonnes, or 4.1%, the drop in world
grains production expected in 2017-18 - the largest decline in at least a
decade, beating a 3.0% drop in 2012-13.
"Both harvested areas and average yields [are] expected to
be lower year on year."
While the impact on the inventory estimate was less dramatic
- with a higher figure for carry-in stocks and reduced demand forecast offsetting
somewhat the impact of the weaker harvest estimate – the estimate for world
inventories at the close of the season was still downgraded by 2m tonnes to
"Although record opening stocks will help to cushion the
fall in output, overall availabilities are expected to shrink by about 2% year
on year," the council said.
The estimate for inventory held in major exporting countries,
which being readily available to the world market is particularly important for
prices, was downgraded by 6m tonnes to a four-year low of 150m tonnes.
The council flagged in particular the setback to supplies of
high protein wheat, prospects for which have been undermined by dryness in the northern
US Plains, a major growing area, and to some extent in Canada's Prairies too.
"In the wheat sector, there are particular concerns about a
tightening outlook for supplies of premium grade milling wheats," it said.
However, the grains production and stocks downgrades related
more to coarse grains, with the IGC flagging that corn accounts for 34m tonnes
of the drop expected in overall grain inventories, "as carryovers are drawn
down in the US and China".
The IGC added that "barley is expected to see a relatively
large reduction as well, to the least in five seasons, while wheat inventories
in the major exporters could be the smallest for four years".