August 31, 2015
Grain supplies worldwide could reach 1.988 billion tonnes for the 2015/16 season, according to the International Grains Council (IGC) which raised its forecasts for wheat in Russia, Ukraine and the EU, as well as revising the outlook for corn in the US.
The volume jumped 18 million tonnes from a previous forecast, albeit still below the prior season's crop volume of 2.015 billion tonnes. Due to better outlooks for crops, benchmark wheat futures in Chicago fell to a three-month low.
IGC also observed a potential increase of supplies to about 10 million tonnes, a "new all-time high", supported by a huge carryover from the last season. In addition, it explained that the August forecast upgrade is linked to wheat and barley crops in the former Soviet Union and EU exceeding expectations.
For Russia, wheat production is expected to rise by four million tonnes, to 59 million tonnes. Ukraine's output will increase by three million tonnes, to 25 million tonnes. The upward trend in productions is attributed to good weather in the main grain exporting region of the Black Sea.
For the EU, the forecast for wheat output is now 151.9 million tonnes, compared to a previously anticipated volume of 148.5 million tonnes. The US is expected to produce 340 million tonnes of corn, a rise over the last forecast of 332 million tonnes.
If the outlooks are fulfilled, the revised volumes could make up for possible losses resulting from lower forecasts for Canadian wheat (which dropped from 28 million tonnes to 25.5 million tonnes) and EU corn (falling from 66.9 million tonnes to 60.1 million tonnes).
"Following reports of worse than anticipated drought, estimates for corn in the EU and Ukraine, and spring wheat in Canada are lowered from before," the IGC added.
For China, corn imports swelled over the past year, given the more costly alternative of buying local corn. Grain deliveries to the mainland is expected to reach 22.4 million tonnes in the 2015/16 season, higher than a previous estimate of 21.1 million tonnes but lower 24.8 million tonnes in the last season.
However, by September 1, importers of barley, cassava, distillers' grains (DDG) and sorghum are required to register purchases under a new system that could affect buying patterns, according to the IGC.
"As China has recently been a heavy importer of feedstuffs, including sorghum, barley and DDG, traders are wary of potential changes to state support mechanisms…," the body said.