The International Grains Council last week increased it forecast of 2009-10 global wheat production by 1 million tonnes and raised ending stocks by 3 million tonnes from September, adding to the already-bearish scenario of world wheat supply and demand.
The I.G.C. forecast 2009-10 wheat production at 667 million tonnes, up from its September forecast of 666 million tonnes but still 3% below the record output of 687 million tonnes in 2008-09. World wheat consumption in the current year was projected at a record 643 million tonnes, unchanged from September and up 3 million tonnes from 2008-09. World wheat trade in 2009-10 was projected at 116 million tonnes, up 3 million tonnes from September but down 20 million tonnes from a record 136 million tonnes in 2008-09. World wheat ending stocks in 2009-10 were projected at 188 million tonnes, up from 185 million tonnes projected in September, up 23 million tonnes, or 14%, from 165 million tonnes in 2008-09 and the largest year-ending inventory since 2001-02.
It was last year’s record large crop that initially boosted global stocks, which continue to grow. The I.G.C. noted that carryover in the five largest wheat exporters (Argentina, Australia, Canada, EU-27 and the United States) was at a four-year high, while stocks in the United States alone were the highest in nine years. The I.G.C. expects the impact of rising carryover on prices to result in reduced wheat plantings next year.
“The further decline in wheat prices since mid-2009 prompted some growers, especially in the U.S., to reduce wheat sowings,” the I.G.C. said. “The global area in 2010 is expected to be smaller than this year’s, although much will depend on spring wheat planting decisions and the subsequent southern hemisphere sowing season.”
Like wheat, global production of rice in 2008-09 was record large. The I.G.C. estimated 2009-10 outturn at 435.1 million tonnes, down 2% from 2008-09. But the I.G.C. put a somewhat tentative slant on the global rice market, especially noting conditions in Asia.
“Late and uneven monsoon rains have resulted in a greatly reduced main crop area and with average yields expected to be lower, the total rice output in 2009-10 is forecast at 85 million tonnes, down 14% year-on-year,” the I.G.C. said of the crop in Inida, the world’s second largest rice consumer. The Indian government last week suspended its usual 70% tariffs on imports of certain classes of rice.
And of the Philippines, the I.G.C. said, “Recent adverse weather in the country’s main growing areas has heightened concerns about availabilities.”
On Oct. 28 rough rice futures at the CME Group’s Chicago Board of Trade surged more than 40c a cwt while other agricultural commodities were trading mostly lower. Trade sources explained the strength at least in part to developments in the Asian rice market, and the prospect that India could be a net rice importer rather than an exporter as in typical years.
The market action illustrates the delicate balance of world supply and demand for many crops and how quickly market sentiment can change even when production and supplies are seemingly abundant.