April 16, 2009

Despite last year's record harvests, industry experts have warned that the "stocks-to-use" ratio is still tight for corn and wheat and the world balance is vulnerable to major crop problems.

The markets will remain volatile, especially for wheat because it is grown mainly in the northern hemisphere and so there is only one crop per year, the experts said.

Heike Hintze-Gharres, market analysis team manager of the Home-Grown Cereals Authority (HGCA), said while record harvests last year led to greater availability and lower feed prices, the world's reserve stocks were still being rebuilt and growers had experienced difficult conditions at planting for the 2009-10 harvest due to higher input costs and the world economic slowdown.

This resulted in world wheat area planted falling by two million hectares from last year to 222 million hectares, he said.

Hintze-Gharres said the EU wheat and corn area for 2009 was down by about two percent, and wheat output was expected to drop seven percent. World 2009-10 wheat crop was projected at 651 million tonnes, down about 37 million tonnes from last year.

But long-term demand for grains and oilseed may increase significantly due to world population growth and rising demand for biofuel markets. The world markets are also vulnerable to volatile crude oil prices and future currency fluctuations and the weather.

The British Pig Executive said the markets are not out of danger yet and the future remains uncertain, so all producers should ensure they stay on top of markets and take out adequate risk management measures to mitigate against any sudden price increases.