World grain inventories will fall to a five-year low, the International Grains Council said in its first forecasts for 2020-21 – although acknowledging risks to its forecasts from coronavirus, which it said has raised rice prices to a five-year high.
The intergovernmental group, in its first forecasts for next season, forecast world grain stocks easing by 3m tonnes to 605m tonnes, declining further from their 2016-17 high above 650m tonnes.
Global grains output was seen rising by 48m tonnes to a new record high of 2.223bn tonnes - but will remain narrowly behind consumption, buoyed by factors including increased corn feed demand in the US, and growth in wheat food needs in India.
“Another modest decline in ending stocks is foreseen,” the council said, flagging in particular expectations of a 25.3m-tonne drawdown in China’s inventories, “which more than offsets an accumulation of that grain in the US”, seen growing by 13.7m tonnes to 64.2m tonnes.
The expected decline in stocks of grains overall comes despite expectations of a further increase in wheat inventories by 8m tonnes to a fresh record high of 283m tonnes.
The global wheat harvest – seen growing 5m tonnes year on year at 768m tonnes, buoyed by increased output in the likes of Australia, Canada and Russia – was expected to expand roughly in pace with consumption, supported by food needs.
However, the IGC acknowledged that its 2020-21 forecasts were “tentative until the progress and duration of the [Covid-19] pandemic become clearer,” highlighting factors including logistical “challenges”.
“Transportation restrictions could hamper the distribution of farm inputs and disrupt spring fieldwork,” the council said, although adding that “at this stage” it was assuming that “planting intentions will be fulfilled”.
‘Surge in consumer demand’
The IGC underlined the changes the “escalating concerns about the global spread of the coronavirus” has wrought on demand patterns too, noting a “sharp upturn in nearby demand” for some commodities, “especially for rice and wheat-based foods”.
For wheat, the trend had helped prices, as measured by an IGC index, rise by 2.1% month on month to among their highest in five years for this period.
“An uptick in export demand and a spike in consumer buying reversed earlier losses.”
However, for rice, prices “climbed to a more than five-year peak, rising by 4% month-on-month on a coronavirus-related surge in consumer demand”.
The gain in rice values came despite expectations of world stocks of the grain rising by 4m tonnes to 177m tonnes this season, and by a further 8m tonnes in 2020-21, buoyed by “record production in India”.
The IGC added that, while the Covid-19 outbreak may boost grain demand for now, “weakening economic conditions could dampen usage in the longer term, particularly for industrial products such as maize-based ethanol and starch”.