September 29, 2006
IGC cuts 2006/07 world wheat crop estimate to 588 million tonnes
The International Grains Council (IGC) now forecasts 2006/07 world wheat output at 588 million tonnes, a drop of 5 million tonnes from last month's forecast and 30 million tonnes from last year's estimated harvest.
Meanwhile, the agency raised its 2006/07 world corn output forecast to 698 million tonnes, up 2 million tonnes from last month's forecast. This is also 5 million tonnes higher than the estimated 2005/06 crop.
IGC now sees total 2006/07 world grain production at 1.572 billion tonnes. This is down 3 million tonnes from the August forecast and 27 million below last season's estimated crop.
The IGC pinned the lower wheat output estimate on deteriorating conditions in key producing countries in the southern hemisphere.
"Very dry conditions in Australia threaten to severely reduce production, with while more rain is also needed in Argentina," the IGC said.
For corn, the agency said the US crop is developing well and offsets prospects for a lower European Union crop.
The IGC now forecasts US corn output at 282 million tonnes in 2006/07, up from last month's projection of 278 million tonnes and nearly unchanged from the 2005/06 estimate.
The IGC now forecasts 2006/07 world wheat ending stocks at 116 million tonnes, down 1 million from last month's estimate and 19 percent from 2005/06.
To partially offset the lower crop, the IGC forecast a 4-million-tonne cut in world wheat consumption to 607 million tonnes.
The IGC said EU feed users are switching from wheat to relatively cheaper barley and oilseed meals. "High wheat prices will limit feed use in North America, but more wheat will be used for ethanol in Canada," it added.
Looking at world wheat trade, the IGC said India's imports may reach 6.2 million tonnes, which is up from last month's forecast of 4.6 million and relatively nothing last year.
"Brazil's (wheat) purchases will also increase after the poor harvest," IGC said. Reduced export availability in Argentina and Australia are offset by higher-than-expected projected exports for Russia and Ukraine. However, exports from Russia and Ukraine are still expected to remain below last year's high levels.
Despite the IGC's upward revision in world corn output for 2006/07, the agency kept its ending stock forecast at 100 million tonnes, which is down 25 percent on the year.
To do this the agency raised its estimates for world corn trade and consumption by 1 million tonnes each.
IGC said this was due to stronger feed demand from a number of importing countries, due to recovering poultry numbers and a switch from feed wheat.