The International Grains Council downplayed the setback to grain production prospects from Canadian and European dryness as it lifted its world harvest forecast, and cut expectations for a drop in inventories.
The intergovernmental group lifted by 4m tonnes to 1.97bn tonnes its forecast for global output of coarse grains and wheat in 2015-16, making it the third biggest harvest on record.
The upgrade came despite weather setbacks which the group acknowledged had “reduced crop prospects in some regions, especially in the European Union, for wheat and corn, and Canada, for wheat, barley and oats”.
However, the estimate for world wheat output was trimmed by a modest 1m tonnes to 710m tonnes.
And the council flagged “gains elsewhere” in grain production estimates, “mainly for corn in China and sorghum in the US”.
The forecast for world corn output in 2015-16 was lifted by 3m tonnes to 966m tonnes, albeit remaining below the 1.00bn tonnes produced last season.
‘Slack export demand’
The stronger output forecast prompted the IGC, and a downgrade to the estimate for grain consumption in livestock feed, prompted an upgrade of 13m tonnes to 435m tonnes in the forecast for world grain inventories at the close of 2015-16.
That represents a decline of 9m tonnes year on year, well below the reduction expected last month.
“Inventories are expected to remain comfortable.”
Strong supplies typically undermine pricing potential, and the IGC highlighted the role of “slack export demand and generally ample world supplies” in dragging wheat prices from early-July highs, and leaving them down by 5.7% over the past month.
Corn prices, as measured by an IGC index, were down 2.1% month on month.
“Markets were initially buoyed by US weather worries and tighter than expected US stocks, but values later eased as crop conditions stabilised and exporters competed for business.”