The International Grains Council slashed its estimate for world
grain stocks at the close of 2012-13 to a five-year low, citing reduced expectations
for wheat production and upgraded hopes for corn demand.
The intergovernmental group, which had been expecting global
grain inventories to rise over the season, changed its forecast to a 9m-tonne decline,
to 360m tonnes – the lowest supply figure since 2007-08.
The downgrade - which took to 23m tonnes the extent of the world
grain harvest that the IGC believes has been lost in the last two months, as heat
and dryness have tested crops in China, the former Soviet Union and the US –
reflected in the main reduced hopes for wheat production.
"The outlook for world wheat production in 2012-13 continued
to be affected by unfavourable conditions in some countries, including a
further deterioration in crop expectations in Russia," the council said.
The estimate for wheat production was trimmed to 665m tonnes,
representing a 30m-tonne decline on last year's crop.
The Russian harvest itself was downgraded by 6.0m tonnes to 49.0m tonnes.
US vs China
However, corn supplies too will prove more scarce than had
been expected, thanks to an 8m-tonne upgrade, to 910m tonnes, in the forecast
for consumption, led by the need to keep fed growing livestock numbers.
"With meat consumption expected to increase, feed/residual
demand is expected to rise at an above-trend 6%," the IGC said.
|IGC corn, wheat forecasts, 2012-13, change on last and (on 2011-12)|
Wheat production: 665m tonnes, -6m tonnes, (-30m tonnes)
Carry-out stocks: 182m tonnes, -9m tonnes, (-17m tonnes)
Corn production: 917m tonnes, +4m tonnes, (+49m tonnes)
Carry-out stocks: 137m tonnes, -4m tonnes, (+8m tonnes)
While industrial consumption "will likely climb to new
record levels… the growth rate will be subdued and again tied to firmer demand
for starch and sweeteners in China".
The forecast for world corn output was actually edged higher, by 4m
tonnes to 917m tonnes, despite the concern over the US crops which sent Chicago
futures to a fresh nine-month high on Monday.
Although the US crop, the world's biggest, was downgraded by
5m tonnes to 350m tonnes, "prospects elsewhere have become brighter, particularly
in China and India".
The downgrade in world stocks of grains overall, a set which
includes the likes of barley, oats and sorghum too, leaves the stock-to-use
ratio at 19.2%, the lowest indeed since the 18.1% in 2007-08.
The stocks-to-use ratio is a much-watched metric in
commodity markets, signalling the availability of a raw material and therefore
the level of competition among buyers, which will have a big impact on prices.
|Rise and fall in world grain carry-out stocks and (stocks-to-use ratio) |
2012-13: 360m tonnes, (19.2%)
2011-12: 369m tonnes, (20.0%)
2010-11: 370m tonnes, (20.7%)
2009-10: 404m tonnes, (22.8%)
2008-09: 374m tonnes, (21.6%)
2012-13: 303m tonnes, (18.1%)
For wheat, while the stocks-to-use ratio remains at a
relatively high 26.7% even in the latest data, the proportion of supplies in
the hands of leading exporters, rather than tied up in countries such as China
and India which tend not to sell, will show a sharp decline.
At 58m tonnes, sapped by poor prospects for Russian output,
it will end 2012-13 at a five-year low.
"Smaller export surpluses in the Black Sea region will see
demand switch to other origins in the year ahead, especially the US," the IGC