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IGC stokes US corn debate, as it cuts world grain stocks hopes

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World grain stocks will fall even further in 2019-20 than had been expected, thanks to weakened expectations for global wheat output, and a hefty forecast for the decline in US corn inventories.

 

The intergovernmental group cut by 3m tonnes to 585m tonnes its forecast for world stocks of grains – comprising wheat, plus coarse grains such as barley, corn and oats – at the close of 2019-20.

 

That stocks figure would represent shrinkage of 36m tonnes year on year to the lowest inventory in five years, accelerating the declining trend from the high of 565m tonnes set in 2016-17.

 

“A third successive contraction of global stocks is forecast at the end of 2019-20,” the IGC said.

 

Crop downgrades

The downgrade reflected an 8m-cut to 2.148bn tonnes in the forecast for world grains production, down in the main to wheat, for which the global 2019-20 harvest was now pegged at 763m tonnes.

 

While still, narrowly, a record high crop, this estimate was 6m tonnes below last month’s forecast, with the reduced expectation on cuts to hopes for Canadian, European Union and Russian harvests.

 

Other crops receiving downgrades included US sorghum and Chinese corn, although the forecast for world corn stocks at the end of 2019-20 was nudged higher by 2m tonnes to 273m tonnes.

 

This corn stocks forecast still represents a drop of 50m tonnes year on year, of which 26m tonnes was attributed to a China drawdown, but “of more note to the global market, the US maize carryover is projected to shrink by 18m tonnes year on year, to a six-year low”.

 

Acreage debate

The IGC forecast for the decline in US corn stocks in 2019-20 is far bigger than that of the US Department of Agriculture, which sees inventories falling by 8.38m tonnes to a four-year low of 51.07m tonnes.

 

However, the USDA forecast is based on an assumption of sowings of 91.7m acres which many commentators feel is an overestimate, and poised for a downgrade after a resurvey of some states.

 

Separately, Rabobank said that the USDA “will likely revise 2019-20 acreage and carry-out estimates downwards in August, having resurveyed the Midwest”.

 

The bank - saying that “from 20,000 feet, the US Corn Belt landscape appears visibly pockmarked… reflecting patchwork, frenzied planting by farmers taking advantage of surging Chicago prices” – stood by an estimate that 7.4m acres of US corn went unplanted.

 

Some other investors are talking of higher figures, with market chat of an alleged tweet, since withdrawn, from the UDSA’s Risk Management Agency suggesting a shortfall of up to 20m acres.

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