WORLD – The International Grains Council lifted its estimate for the world grains harvest to the second largest on record, citing improved ideas on wheat and, especially, corn production.

The intergovernmental group raised by 20m tonnes to 2.069bn tonnes its estimate for world production of wheat and coarse grains, such as barley, corn and sorghum, in 2017-18.

The upgrade raised the figure above the 2014 total to the second highest harvest ever, behind only the 2.133bn tonnes produced last season.

Some 6m tonnes of the upgrade was down to wheat, for which output was now pegged at 748m tonnes, boosted by improved ideas of Russia’s harvest, and halving to 6m tonnes the shortfall behind last season’s record crop.

Corn output was pegged at 1.029bn tonnes, a 12m-tonne upgrade, “mainly because of adjustments to Argentina and the US”, the IGC said.

While increased expectations for demand were seen swallowing up part of the extra output, the IGC raised its forecast for overall world grain inventories at the close of 2017-18 by 12m tonnes to 496m tonnes.

The revision reduced to 28m tonnes the expected drop in world inventories over this season.

Inventory outlook

Indeed, factoring in “heavy” carry-in inventories, “overall grains availabilities will be only a little lower year on year”, the council said – a dynamic which would imply pressure on prices.

“After an enormous harvest and with logistical constraints likely to limit exports, Russia’s wheat inventories could be the biggest in a quarter of a century.”

Wheat stocks in China “are seen at the highest on record”, although these are less important for pricing, given that China is, unlike Russia, not a major exporter of the grain, nor indeed a large importer either.

China’s corn stocks were seen falling year on year, as were those in the US, allowing a 25m-tonne drop in global inventories over 2017-18 to 208m tonnes – although that figure represented an upgrade of 12m tonnes from last month’s forecast.

Wheat prices rise

In fact, grain prices had risen over the past month nonetheless, by 2.5%, helped by factors including “generally solid export demand, logistical issues, currency market fluctuations and spells of less-than-ideal southern hemisphere crop weather.”

Excessive wetness has raised concerns over Argentina’s wheat crop, while that in Australia has been dogged by drought.

Indeed, wheat prices as measured by an IGC index gained by 5.3% month on month, “with gains noted across most origins”.

The corn price index, by contrast, rose by just 0.1%, “with export quotations trading in a fairly narrow range”.

Agri Money