World harvests of corn and wheat to fall, says IGC

The world faces weaker production of both corn and wheat next season, thanks to the likelihood of yields failing to match elevated levels of the latest harvests, the International Grains Council said.

The intergovernmental group, in its first forecast for the world corn harvest for 2014-15, pegged it at 954m tonnes, a drop of 5m tonnes year on year.

Global sowings of the grain will rise by 1m hectares to a record 175.5m hectares, as further increases in sowings in Ukraine, which has grown to become the third-ranked exporter, and China offset decreases in the European Union and the US, the biggest grower.

However, "assuming normal weather conditions, yields are expected to fall short of the previous year's record levels," the IGC said.

Its figures assumed US corn area of 35.0m hectares (86.5m acres) on a harvested basis, above the 84.6m acres that the US Department of Agriculture forecast last week in its first estimates for this year's domestic harvests, and down some 1.1m acres year on year.

Wheat downgrade

For wheat, the council forecast a world harvest of 696.3m tonnes, down 11.4m tonnes year on year, and trimmed from a previous estimate of 697m tonnes.

The downgrade reflected a cut of 500,000 hectares to the estimate for world area, although this will still come in at 223.7m hectares on a harvested basis, up 5.0m hectares year on year.

The revision reflected in the main a cut to forecasts for harvested area in Ukraine, where wet weather hampered autumn sowings, and in Turkey, where plantings were "hit by drought and then cold weather, raising concerns of potential losses".

The IGC also highlighted that, broadly, "average yields are unlikely to be as high as the exceptional levels seen in some countries during the previous year".

Wheat trade prospects

With world wheat consumption rising by 7m tonnes to 698m tonnes in 2014-15, lifted by food use prompted by population growth, production will prove insufficient to cover demand.

However, the decline in stocks will only be of the order of 1m tonnes, leaving them at 189m tonnes.

And inventories held by major exporters, which are particularly important for world prices, will actually rise, by 2m tonnes to 58m tonnes, the council said.

Indeed, global trade in the grain will actually fall by 5m tonnes to 141m tonnes, undermined by lower Chinese and Iranian imports, while exporters could face extra competition for the shrinking market "from sustained sales by India".

Less promising for importers is that "at the projected crop levels, the combined export surplus in the Black Sea region could be moderately lower than the year before.

"Export demand for EU supplies could again be quite strong if Black Sea shipments are no higher than in the current marketing year."

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Corn prices to fall despite drop in sowings - USDA
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