October 26, 2012

 

 

On Thursday (Oct.25) the International Grains Council (IGC) cut its 2012-13 forecast for global corn and wheat crops, further tightening supplies with grain stocks at the end of the season seen sinking to a five-year low.

 

"Inventories (of grain) for the major exporters will be even tighter and the smallest for 17 years," the IGC said in a monthly market report.

 

The IGC cut its forecast for total grain stocks at the end of the 2012-13 season by four million tonnes to 328 million, now representing a fall of 44 million or 12% from year-earlier levels.

 

"Reduced availabilities and higher prices are expected to ration demand, resulting in the first on-year fall in grains consumption since 1998-99," the IGC said.

 

The IGC cut its forecast for the global corn crop in 2012-13 by three million tonnes to 830 million, mainly reflecting lower estimates for the US and Ukraine.

 

A severe drought in the US has contributed to a sharp fall in global corn production this season from the record 876 million tonnes harvested in 2011-12. The US corn crop was seen at 272.0 million tonnes, down from a previous estimate of 275.0 million and well below the prior season's 313.9 million.

 

The IGC also cut its forecast for the corn crop in Ukraine to 19.0 million tonnes from 20.0 million.

 

"Northern hemisphere production prospects have mostly worsened. Although sowing is slightly delayed, the outlook for South American crops remains mostly favourable," the IGC said.

 

The IGC's forecast for Argentina's corn crop was raised by one million tonnes to 26 million while the projection for Brazil was kept at 72.0 million. Global corn consumption in 2012-13 was downwardly revised by one million tonnes to 848 million, down from the prior season's 872 million.

 

"Despite a forecast 3% contraction in demand, the stocks outlook has tightened further - end season inventories in the major exporters could shrink by almost one quarter," the report said.

 

The IGC also cut its forecast for the global wheat crop in 2012-13 by two million tonnes to 655 million.

 

"Lower yields in the EU and Kazakhstan, as well as deteriorating prospects in Argentina and Australia, reduced the forecast for world (wheat) production," the IGC said.