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World wheat stocks to hit record high, says IGC

World wheat stocks will this end this season at an all-time high, with improved ideas for the global harvest more than offsetting expectations of extra supplies being fed to livestock, the International Grains Council said.

The IGC, in a monthly report, raised by 7m tonnes to 211m tonnes its estimate for global wheat inventories at the end of 2015-16, a figure it termed "a record".

The revision reflected an upgrade to 727m tonnes in the estimate for wheat production this season, confirming the harvest as "a third successive record" high.

This more than offset an increase of 3m tonnes, to 719m tonnes, in the estimate for wheat consumption, reflecting largely increased ideas for inclusion in livestock rations.

"Tighter supplies of corn," with lower production expected in many major growing countries, "will increase interest in alternative feeds, and use of wheat is seen at its second highest level ever, including a jump in the European Union," the council said.

The EU has seen its own corn harvest prospects hurt badly by a dry and hot summer in many major growing countries.

'Concerns about dry weather'

The IGC noted that wheat prices had, despite the improved supply prospects, gained over the past month, by 3.1%, amid concerns over dryness in the former Soviet Union, where farmers are planting crop for the 2016 harvest, and in Australia, where combines have just begun rolling."

Selected IGC grain estimates for 2015-16, change on previous, and (year on year)

World wheat production: 727m tonnes, +7m tonnes, (+7m tonnes)

End-season wheat stocks: 211m tonnes, +5m tonnes, (+9m tonnes)

 World corn production: 967m tonnes, -1m tonnes, (-38m tonnes)

End-season corn stocks: 199m tonnes, +1m tonnes, (-4m tonnes

World grains production: 1.996bn tonnes, +8m tonnes, (-21m tonnes)

End-season grain stocks: 456m tonnes, +9m tonnes, (+11m tonnes)

"Recent advances in wheat were partly tied to speculative short covering in US futures, as well as concerns about dry weather in some countries," the council said.

Nonetheless, "sentiment across most markets was weighed by bearish fundamentals, as well as worries about the world economy and how demand for commodities might be affected".

Corn prices fell by 0.2% month on month and barley values by 1.1%, according to the council's own indices.

Corn estimates

Indeed, the IGC restated expectations of world stocks of grains overall ending 2015-16 at a 29-year high - although with the figure upgraded by 9m tonnes to 456m tonnes, mainly reflecting the increased wheat inventory estimate.

The estimate for corn stocks at the end of the season was raised by 1m tonnes to 199m tonnes, still down 4m tonnes year on year.

The upgrade reflected a decreased expectation for consumption, which will fall in particular in the EU as farmers switch to wheat for feeding livestock.

The production estimate was trimmed by 1m tonnes to 967m tonnes, a drop of 38m tonnes year oin year.

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