Grains experts have dashed hopes for any recovery in world grain inventories next season, lifting forecasts for consumption at a time when weather is threatening crops in many major producing nations.
The International Grains Council (IGC) had until recently forecast that the grains deficit in 2011/12 would be 3mt (million tonnes), but has recently raised this estimate to 10mt.
The deficit will lower stocks to a four- year low of 334mt, representing 18.4% of consumption, down from 23% two seasons ago, when readier supplies accelerated a fall in grain prices.
“A further downturn in world carryover stocks is likely,” the IGC.
The forecasts helped a rally in grain prices which took Chicago wheat for May back over $8 a bushel at one point, and saw London’s May contract hit a record high of
222.00 a tonne. However, the rally foundered as weather forecasts introduced
drier weather into the outlook for major US corn areas, where chances had looked dim of getting sowings wrapped up anywhere near 10 May, seen as the cut-off date after which yields suffer.
“Latest extended outlooks have turned drier and could allow the farmers in the fields in early May,” Benson Quinn Commodities said.
While the broker, for wheat, noted continued “dry conditions in US, the European Union, Russia and China” — four of the world’s top five producers — and snow in North American areas gearing up for spring wheat plantings, corn prices lost 2% in Chicago, dragging US wheat into negative territory by the close.
The IGC flagged the threats to wheat production in cutting by 1mt to 672mt its estimate for the world harvest in 2011/12.
“Less-than-ideal conditions for some crops lower the projection of world wheat production,” the council said, adding that “adversely dry conditions and a delayed start to spring seeding in parts of the northern hemisphere may affect the final outcome.”
But it highlighted world corn inventories as set to prove particularly thin in 2011/12, falling for a third successive season, this time by 8mt.
“Unless the US maize [corn] crop exceeds all expectations, supplies of this grain will remain very low,” despite better prospects for the European Union crop this year, and a likely switch by livestock farmers to wheat in the face of high corn prices.
Indeed, IGC analysts lifted further their estimate for corn consumption by US ethanol plants.
They also highlighted concerns about “dwindling supplies” of high-protein milling wheat, following rain damage to last year’s Australian, Canadian and German crops.