The United Nations countered downbeat talk on world grains production this year by lifting its forecast for the global harvest, citing improved expectations for corn output in the European Union and South America.
The UN food agency, the Food and Agriculture Organization, nudged higher by 2.2m tonnes to 2.527bn tonnes its forecast for world production of grains, including rice, in 2015-16.
The rise contrasts with increased worries expressed by grain investors, thanks to excessive rains in parts of the US Midwest, and too little rainfall in the likes of Argentina, Canada and the European Union.
However, the FAO said that “prospects for world cereal production in 2015 remain favourable, despite recent adverse weather conditions in some regions, and continuing concerns over El Niсo”.
The Australian Bureau of Meteorology on Tuesday cautioned that the current El Niсo, a weather pattern linked historically to widespread weather anomalies, “is likely to strengthen in the coming weeks, largely due to recent tropical cyclone activity”.
The FAO said that its upgrade reflected a 3.5m-tonne increase to 1.304bn tonnes in the forecast for world production of coarse grains, and in particular corn.
“The upgrading of the coarse grains production outlook mainly rests on a 1%, 5m-tonne, increase for corn to 1.007bn tonnes, reflecting larger than earlier-anticipated crops in Europe and South America, owing to improved weather conditions,” the agency said.
The forecast for wheat output was kept at 723.4m tonnes, a little above the estimate of 721.55m tonnes from the US Department of Agriculture, which is up for revision in Friday’s monthly Wasde world crop supply and demand report.
The FAO estimate included a relatively upbeat estimate, of 30.1m tonnes, for the harvest in dryness-pressed Canada, “reflecting an expected larger spring durum crop that is expected to more than offset a reduction in the small winter wheat crop”.
The Russian crop was pegged at 56.5m tonnes, some 1.5m tonnes above the USDA forecast, although concurring with more positive talk this week in grain markets on the country’s production prospects.
Estimates for the Australian harvest, at 23.6m tonnes, and the European Union crop, at 148.5m tonnes, were below USDA forecasts.
Sugar price slump
However, the FAO also acknowledged the boost to grain prices from “unfavourable weather in some regions”, although adding that the “rise was contained, amid abundant carryover stocks and generally good production prospects”.
World grain prices rose 1.5% last month, their first increase of 2015, although remained 17% down year on year.
The increase in grain prices bucked the trend of food values overall, which fell by 0.9% to their lowest since September 2009, led by a 6.6% tumble in sugar prices to their lowest since 2008.
“The sharp decline was prompted by reports of higher-than-expected sugar production in India, the world’s largest sugar consumer, and Thailand,” the FAO said.
“Better-than-forecasted output in Brazil, the world’s largest producer and exporter, helped by good harvesting conditions for most of the month of June also contributed to the general price decline.”
Dairy values fell by 4.1% month on month, taking their decline in the year to June to 32%.
“A favourable opening to the dairy-year and the abolition of the milk quota system in the EU, along with large unsold dairy stocks in New Zealand weighed on the sector, amid uncertainty over the level of China’s dairy imports and the maintenance of import prohibitions by the Russian Federation.”
‘Hotspots of food insecurity’
The agency added that despite the “favourable prospects” for world cereals output, there remain “localised hotspots of food insecurity”, with 28 African countries alone requiring external assistance for food.
“In Southern Africa, aggregate cereal production is projected to decrease by 17%, mainly due to irregular seasonal rains and an extended dry spell.”
(Source – http://www.agrimoney.com/news/un-citing-corn-hopes-lifts-world-grains-output-forecast–8561.html)