IGC cuts world grain output forecast by 11%

by Eric Schroeder
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LONDON, ENGLAND — The International Grains Council (IGC) on July 27 lowered its forecast for total grains production in 2017-18 to 2.038 billion tonnes, down from 2.049 billion tonnes in June, and down from 2.126 billion forecast for 2016-17. Total consumption was lowered to 2.083 billion tonnes from 2.084 billion tonnes.

“At (2.038 billion tonnes), global total grains (wheat and coarse grains) production in 2017-18 is forecast to be 4% below the previous season’s all-time peak, with both harvested areas and average yields expected to be lower y/y,” the IGC said in its report. “Adverse dryness continued in a number of countries over the past month and rains would likely be too late to reverse damage in some areas. Although record opening stocks will help to cushion the fall in output, overall availabilities are expected to shrink by about 2% y/y. In the wheat sector, there are particular concerns about a tightening outlook for supplies of premium grade milling wheats.”

The IGC forecast world wheat production in 2017-18 at 732 million tonnes, down 3 million tonnes from June and down from 754 million tonnes forecast in 2016-17. World wheat ending stocks were forecast at 241 million tonnes, unchanged from June but down from 244 million tonnes in 2016-17.

The IGC forecast 2017-18 maize production at 1.02 billion tonnes, down from 1.025 billion tonnes in June and compared with 1.072 billion tonnes in 2016-17. The consumption projection was lowered to 1.054 billion tonnes from 1.055 billion tonnes in June.

Soybean production for 2017-18 was forecast at 345 million tonnes, down 3 million tonnes from June and down from 351 million tonnes in 2016-17. The consumption projection, meanwhile, was lowered to 350 million tonnes from 352 million. The IGC said global trade is expected to total 148 million tonnes, unchanged from the June forecast.

The 2017-18 world outturn for rice is expected to total 486 million tonnes, unchanged from the forecast in June. Consumption also is forecast unchanged, at 488 million tonnes.

The IGC Grains and Oilseeds Index (GOI) increased nearly 5%, the IGC said.

“With stronger grain and oilseed export quotations countering a drop in rice values, the IGC GOI touched a one-year peak in July, rising by a net 5% m/m,” the IGC said. “Sizeable gains in soyabeans were linked to worries about dryness in the western and northern parts of the U.S. Midwest, as well as a slowdown in farmer selling in Brazil. Wheat and maize also firmed on underlying weather concerns, but with advances partly reversed during the second half of the month. Rice markets turned mostly lower on weaker export demand.”
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