January 21, 2011

 

IGC lifts its estimates for world sowings

 

 

The influential intergovernmental group, in its first forecast for wheat output in 2011-12, which kicks off with around May with the first northern hemisphere harvests, pegged the crop at 670 million tonnes.

 

The figure represents an improvement of 3.6% on-year, although leaves production short of the record 683 million tonnes set three years ago, and reflected a rise in area greater than the 2% forecast last month, with farmers expected to stretch even further to exploit soaring grain markets.

 

"The global wheat area is projected to rise by about 3%, boosted by higher prices and a return to more normal abandonment rates, especially in Russia," the IGC said, adding that the outlook for northern hemisphere grains crops "generally appears favourable at this early stage".

 

Russia's grains output fell by nearly 40% last year, dented by the worst drought on record.

 

IGC's comments came hours after Strategie Grains analysts trimmed forecast for wheat sowings and production in the European Union, which as a bloc counts as the world's top grower of the grain.

 

Soft wheat seedlings will rise by less than 2% to 23.3 million hectares, the Paris-based analysis group said.

 

However, the IGC's production estimate came out bang in line with a forecast released separately by Macquarie analysts, in a report which estimated that even production at this level would be insufficient to prevent a further small drop in world wheat stocks and send prices to 2009 levels.

 

"There is a long road ahead until major wheat importers can breathe easily," the bank said, forecasting Chicago wheat would remain would top US$9 a bushel this year, and stay above US$7 a bushel at least until late 2012.

 

Separately, the council edged its forecasts for the world 2010-11 wheat crop three million tonnes higher to 647 million tonnes, highlighting an Australian crop which had beaten production hopes, if facing "significant quality downgrading".

 

Indeed, shipments from the US, one of the few exporters with ample supplies of igh-grade wheat, were set to come in two million tonnes higher than previously expected, hitting 36 million tonnes for the first time in 19 years.

 

USDA lifted its estimate of domestic wheat exports to 35.4 million tonnes last week

 

Meanwhile, the IGC trimmed further its forecast for world corn output in 2010-11, by one million tonnes to 809 million tonnes, citing weaker expectations for Argentine and US crops.

 

The estimate for world year-end stocks was reduced to 120 million tonnes, reflecting a 33 million-tonne drop year on year, with robust rates of consumption by US bioethanol plants also eroding supplies.