LONDON, ENGLAND — Following revisions for wheat and maize (corn), the projection for world total grains (wheat and coarse grains) production in 2016-17 is 10 million tonnes higher month-on-month, at 2.015 billion, an increase of 1% year-on-year and the second biggest harvest ever, the International Grains Council (IGC) said in a May 26 report. Wheat prospects are better than before in the E.U., the U.S. and Russia, although Morocco’s crop is cut to a nine-year low. Maize figures are raised for the U.S. and Argentina, but lowered for China and parts of sub-Saharan Africa.

The projection for global grains consumption is also up by 10 million tonnes month-to-month, to 2.009 billion, higher by 1% year-on-year; use is now expected to broadly match the 2014-15 record. Following increases from before for feed and industrial uses, maize demand is seen exceeding 1 billion tonnes for the first time. Taking into account bigger opening inventories than previously projected, the world 2016-17 carryover is boosted by 2 million tonnes to a fresh peak of 474 million (+6 million year-on-year), with China potentially accounting for over 40% of the total. The trade forecast is lifted by 3 million tonnes, to 318 million, with maize shipments now expected to be close to the all-time high that is anticipated in 2015-16.

Owing to a further downgrade to crop outlooks in South America, the 2015-16 world soybean outturn is cut by nearly 5 million tonnes, to 314 million, down by 2% year-on-year. Prospects for 2016-17 are highly tentative, but production could rebound to 320 million tonnes, on a marginal increase in plantings and improved yields. However, reflecting a reduced forecast for opening stocks, coupled with growing use, aggregate carryovers are placed about 3 million tonnes lower than in April, at 29 million, the second consecutive annual contraction, linked to a fall in the major exporters. Trade is anticipated at a new high on firm demand from Asian processors.

Because of the impact of dry weather on crops in Asia and a further rise in uptake, global rice stocks in 2015-16 are seen declining by 9% year-on-year. With the projection little changed from April, the 2016-17 world outturn could recover by 13 million tonnes year-on-year, to 486 million. Nevertheless, owing to thinner carry-in stocks and growing use, end-season inventories may drop by 2%, to a seven-year low of 99 million tonnes. The figure is lifted by more than 5 million tonnes month-on-month owing to historical revisions. 

Assuming a larger area for harvesting rice and improved growing conditions, 2016-17 production is projected to rise by 3%, to a record of 486 million tonnes. But with total use likely to expand further, albeit more slowly than in past years, together with smaller carry-ins, ending inventories could retreat to a seven-year low of 99 million tonnes. Trade in 2016 is predicted to be underpinned by demand from Asian buyers, in part due to disappointing local crop outcomes, with volumes expected to remain high in 2017.

With gains for all the components other than wheat, the IGC Grains and Oilseeds Index (GOI) rose by 4% month-on-month. 

While wheat, barley and sorghum crops are predicted to be smaller, this is seen being outweighed by a bumper maize harvest, including gains in the U.S. and Argentina, as well as recoveries from poor outturns the year before in the E.U. and South Africa. Output prospects for wheat continue to improve, including in the E.U., the U.S. and the CIS, but following a drop in area and adverse dryness in places, world production is expected to be 2% short of the previous year’s record.

Anticipated increases for food, feed and industrial uses will likely see grains consumption close to a new peak in 2016-17. Despite strong demand, a further accumulation of carryover stocks is probable at the end of the season. Those among the major exporters could be the biggest in seven years, but much of the projected growth is in China. At almost 200 million tonnes, inventories there may be the heaviest since 1999-2000, nominally accounting for more than 40% of the world total.