September 26, 2014

With an improving outlook of wheat supplies from the EU and Ukraine, the International Grains Council anticipates global production of the crop to rise to a record 717 million tonnes in the 2014-15 season, higher than last month's forecast of 713 million tonnes and 0.6% bigger than 2013, according to a Bloomberg report.

The forecast for global corn production was also raised to 974 million tonnes, 0.1% more than the August estimate while still below last season's record harvest of 983 million tonnes.

"Wheat output is already seen at its highest ever level, while prospects for exceptional yields in the US and EU help to boost the global corn forecast to within 1% of last season's biggest-ever crop," the IGC reported. "Expectations for large grains, rice and oilseeds supplies continued to weigh on global export prices."

Prices for wheat, corn and soybeans on the Chicago Board of Trade, the global benchmark, have all tumbled to four-year lows this week amid prospects of bumper supplies. The USDA expects world production of all three crops to reach records in 2014. The corn and soybean harvest is under way in the US while most Northern Hemisphere growers have finished harvesting wheat.

EU wheat production was estimated at 153.1 million tonnes, higher than last month's forecast of 150.8 million tonnes, according to the IGC. The agency left its forecast for France's crop, the bloc's biggest, unchanged at 39.1 million tonnes while raising its estimate for Germany by 4.6%, at 27.5 million tonnes.

Ukraine's wheat harvest was pegged at 23 million tonnes, more than last month's forecast of 21.5 million tonnes, the IGC said. The estimate for Russia was unchanged at 60 million tonnes. World inventories of wheat at the end of the 2014-15 season may total 195 million tonnes, unchanged from last month's forecast while up 4.3% from the prior year, according to the report.

The IGC raised its forecast for US corn production to 360 million tonnes from 355 million tonnes last month. The USDA pegs the country's harvest at a record 365.66 million tonnes. Global corn inventories may rise to 191 million tonnes by the end of 2014-15, 8.5% more than the prior season, the IGC said.

"Fundamentals are broadly unchanged" for corn, compared with last month's report, the IGC said. "Production forecasts for the US, EU and Russia are raised due to good yield potential. Because of drought damage, China's crop is expected to show its first contraction in five years."

Soybean production worldwide may rise to 310 million tonnes, 2% more than estimated last month and up from 282 million tonnes in the previous year, the IGC said.

Total global grain production may be 1.983 billion tonnes, compared with 1.976 billion tonnes estimated last month.