LONDON, U.K. (Reuters) – A record global grain crop should be harvested in 2011-12, but stocks are still likely to fall from already low levels, says the International Grains Council.
The rise in prices have contributed to a wave of political unrest in the Middle East and North Africa, while food has been a key element in inflationary pressures in many other regions.
“The first comprehensive analysis covering all grains (for 2011-12) points to continued tightness in the global market unless output exceeds current projections,” the council said in a monthly report.
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Production of crops such as corn and wheat failed to keep pace with consumption this year, partly because of the worst drought in decades in the Black Sea region. The reduction sparked a sharp rise in prices and sent global grains stocks to a three-year low.
The grains council expects global grain production in 2011-12 to climb to a record 1.805 billion tonnes, up from 1.73 billion in 2010-11.
However, it would remain just shy of consumption, which for 2011-12 is projected at 1.808 billion tonnes.
“The biggest increases (in production) are forecast for Russia, the United States and the EU, with sizeable gains also expected in Canada, Kazakhstan and Ukraine,” the council said.
The anticipated rise in production assumes a four percent increase in the global grains area to 1.3 billion acres, the largest since 1998. Nearly half the increase was attributed to a recovery in Russia.
Global grains stocks at the end of the 2010-11 season were seen at a three-year low of 341 million tonnes and a further drawdown was seen in 2011-12.
“Global closing stocks are expected to fall only slightly from this year’s forecast level, but will nevertheless remain low,” the council said.
Global corn production was seen rising by 33 million tonnes to a record 841 million tonnes in 2011-12 but could still remain below consumption, which for 2010-11 was estimated at 842 million tonnes.
“Even a minor increase in global maize use is likely to result in some further drawdown in stocks,” the council said.
Demand for corn has risen strongly in recent years, driven by the expansion of ethanol production in the United States and increasing use as animal feed.
“With meat consumption continuing to increase in developing countries, feed use is expected to climb further but, in view of the likelihood that maize supplies will remain tight and prices relatively high, the increase is likely to be less than one percent,” the council said.
Global wheat production was seen rising by nearly four percent to 673 million tonnes in 2011-12.
“World wheat supplies and demand are projected to be broadly balanced, with carryover stocks slightly increased,” the council said.
Some recovery in production was anticipated in the Black Sea region, it added.
