March 25, 2011
 

Global grain inventories to decrease despite record harvest

 

 

World grain stocks are set to drop again in 2011/12 in spite of a record harvest, as higher feed and food use negate raised production, according to the International Grains Council (IGC).

 

The powerful intergovernmental group, in its first grains prediction for the coming season, approximated grains production rising 4.6% to a record high of 1.805 billion tonnes.

 

"The biggest increases are forecast for Russia, the US and the EU, with sizeable gains also expected in Canada, Kazakhstan and Ukraine," the council said.

 

However, even this approximation, which made the assumption of a 4% increase in plantings to a 13 year high of 537 million hectares, would not be to enough to put production higher than demand.

 

World consumption of grains, defined as wheat and coarse grains including corn, will increase by 1.1% to 1.808 billion tonnes.

 

"The first comprehensive analysis covering all grains points to continued tightness in the global market unless output exceeds current projections," the IGC said.

 

"A significant upturn will be required in production in 2011-12 to prevent another fall in end-of-season inventories."

 

Their analysis suggests stocks dropping to a four year low of 338 million tonnes in 2011/12, and a stocks-to-use ratio; a vital measure of supply readiness, and therefore of price potential of 18.7%, down 0.4 points, though still looser than in 2006/07 and 2007/08, whose tightness gave rise to the previous rally in grain prices.

 

In the council's first approximation for 2011/12 corn production, the world harvest was put at 841 million tonnes, a rise of 4.1% on this season's outcome
 

However, rises were also predicted both food and feed use of grains, if not for the industrial use of corn.

 

"Continued tight corn supplies and resultant strength in prices will likely restrict growth in industrial use, particularly in the fuel ethanol sector," the IGC said.

 

"After several years of strong growth, industrial use of corn is expected to level off, with starch use a little higher, but an easing in the US ethanol sector is likely."