June 15, 2009

World grain markets are shrugging off the recession, as prices continue to rise strongly in recent months with market fundamentals coming into play.

Addressing the International Grains Council's annual conference in London on Tuesday (June), executive director Etsuo Kitahara noted to a 3 percent forecast drop in global coarse grains supply in 2009-10 to 1.73 billion tonnes.

While the world planted area was static at 528 million hectares, yields were expected to be down on last year's record crop, he said.

But global grain consumption is seen to rise by 13 million tonnes in 2009-10, according to the IGC's figures, to 1.74 billion tonnes, leading to a drop in world coarse grain stocks "mostly in the key exporting countries".

Kitahara said demand for feed grains would fall slightly this year but industrial use of grains - especially corn for ethanol production in the USA - would climb 6 percent to 256 million tonnes.

The international price of grain has increased strongly since March, he said, pointing to supply concerns, stronger export demand and the increase in other commodities, notably oil, as well as a firming of equities.

The weaker US$ had also boosted world markets, while a significant upturn in freight costs since the turn of the year had increased the cost of getting grain to the main destinations.