August 4, 2010

International Grains Council cuts wheat forecast to 651 million tonnes

The International Grains Council (IGC) has lowered its world wheat production estimate for 2010-11 by 13 million tonnes to 651 million tonnes.

With the production in 2009-10 estimated at 677 million tonnes, the most recent estimate is still the third largest crop on record. Carryover stocks were cut to 192 million tonnes, down from 201 million tonnes in the June estimate and 197 million tonnes last year. The 2009-10 stocks were an eight-year high. Stocks held by major exporters remained unchanged at 50 million tonnes (well above the 31 million tonnes in 2007-08).

For corn, IGC cut world production one million tonnes to 823 million tonnes, which will still be record high, compared to 805 million tonnes a year ago. Carryover corn stocks are estimated at a four-year low of 134 million tonnes, down three million tonnes from last month and below the 140 million tonnes last year. "Wheat futures in the US reached their highest levels in over a year with considerable speculative activity, but export values nevertheless became increasingly competitive against other origins, with this year's ample availabilities likely to spur a sharp recovery in foreign sales," IGC said.

IGC also said that drought is cutting northern hemisphere wheat and barley production and prompting a downward revision in feed use forecast. Corn feed use is expected to rise, but growth in industrial use of corn will again outstrip the rise in feed use. Reduced wheat trade is about equal to the increase in corn trade. "Offsetting the expected reductions in exports by Russia and Ukraine are significant increases in shipments forecast for the US and Argentina, with global availabilities remain ample," IGC stated.