I.G.C. notes tight global grain, oilseed balances

by Ron Sterk
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LONDON — At a Dec. 6 meeting, the International Grains Council noted the global supply and demand balance for wheat had tightened significantly in 2012-13, and that near-record production would be needed in 2013-14 to maintain the global stocks-to-use ratio. The I.G.C. in late November forecast a 4% increase in 2013-14 global wheat production from 2012-13.

In addition to wheat, the I.G.C. noted global grain and oilseed supplies were tight overall, “as dry conditions had a significant impact on grains and harvests in the Northern Hemisphere.”

The I.G.C.’s daily Grains and Oilseeds Index rose to an all-time high in September, boosted by high corn and soybean prices that resulted from the U.S. summer drought. The index has since retreated but still was up 19% since the first of the year, the I.G.C. said.

Global corn consumption was forecast to decline in 2012-13 for the first time since 1993-94 due to lower supplies, the I.G.C. said, with carryover stocks forecast at a 16-year low.

Forecast record large 2012-13 soybean crops in South America “would merely return the aggregate level of stocks in major exporters to average levels,” the I.G.C. said, with “significant vulnerability to any further supply-side difficulties.”

In the longer term, the I.G.C. forecast strong grain and oilseed prices would result in increased planted area over the next five years.

“For wheat and coarse grains, the projections indicated increasing production over the outlook period,” the I.G.C. said. But the Council saw little potential for stock building as improved supplies were expected to be absorbed by demand.
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