Global grain production to fall in 2016/17, but opening stocks to compensate for decline – IGC

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  • Stocks at the end of 2016/17 are expected to stay close to the 29-year peak of the season before.
  • Changes to domestic policies in China may impact global trade trends in 2016/17, especially for barley and sorghum.
  • After reaching a record in the previous season, world soybean output could fall marginally in 2016/17, with stocks also anticipated to tighten.
  • Global rice output is seen recovering in 2016/17 on improved Asian crops but, with food use likely to expand, inventories are set to retreat.

Another season of ample grain availability is ahead, the International Grains Council (IGC) said, forecasting a decline in production – but not enough to force a fall in global stocks.

In its first full forecast for the world grains harvest in 2016-17, the IGC pegged it at 1.997 billion tonnes, taking it back below 2 billion tonnes for the first time in four years.

However, output at that level, down a modest 9 million tonnes year on year, would remain in line with consumption, which means there will be no decline in world grain stocks that were forecast closing this season at a 29-year high of 466 milion tonnes.

“World consumption is predicted to stay strong, but amid ample supplies, ending stocks will probably remain at elevated levels,” the council said.

“Preliminary projections for 2016-17 point to another season of ample global grains availabilities.”

The production forecast included a first estimate for world corn output of 993 million tonnes, an increase of 21 million tonnes year on year, and the third-biggest harvest on record.

Highlights:

  • Following increases from before for wheat, maize (corn) and barley, the forecast for world total grains (wheat and coarse grains) production in 2015/16 is up by 4 million tonnes month-on-month), at slightly over 2 billion, only 2 percent less than last year’s all-time high.
  • Most of this month’s rise in supply is absorbed by greater use, with the figure for all-grains stocks lifted only marginally, to 466 million tonnes, the most since 1986/87.
  • Revisions for wheat, maize and barley raise the trade forecast by 3 million tonnes to 321m, only a fraction down year-on-year.
  • Preliminary projections for 2016/17 point to another season of ample global grains availabilities. A small drop in production is assumed, with a recovery in the maize harvest outweighed by declines for wheat, barley and sorghum. However, large beginning stocks will keep overall supplies at record levels and while consumption is seen staying strong, ending stocks could match the 29-year high of 2015/16.
  • The 2015/16 soybean production outlook is lifted slightly, to a record of 323 million tonnes, including an upward revision for Brazil.
  • Nevertheless, the IGC said, owing to an adjustment for Argentina, forecast carryovers are cut by 5 million tonnes, to 39 million, but are still marginally higher y/y and a new peak.
  • In the Council’s initial outlook for 2016/17, the world outturn is projected fractionally smaller y/y, at 320 million tonnes, on expectations for reduced plantings in some producers. With global use likely to rise further, inventories could tighten markedly but, at 33 million tonnes would still be above average. Trade is seen up 3 percent y/y on China’s growing needs.

Amid few significant developments in the past month, global rice supply and demand forecasts for 2015/16 are broadly unchanged from before, with inventories set to contract heavily on a drop in the main exporters.

Tentatively assuming a recovery in Asia, 2016/17 world rice output could rise by 2 percent, to a record of 485 million tonnes. However, with food use likely to underpin growth in total uptake, world reserves are seen receding to an eight-year low of 93 million tonnes.

 

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