LONDON, Aug 27 (Reuters) – Global grain supplies will reach historic highs in the 2015/16 season, the International Grains Council said on Thursday, a development that could make world food prices even cheaper.
The IGC raised its forecasts for wheat crops in Russia, Ukraine and the European Union and also upwardly revised its outlook for corn (maize) production in the United States.
The improved outlook for global crops helped to send benchmark wheat futures in Chicago to a 3-month low on Thursday and has added to downward momentum for global food prices which fell to a six-year low in July.
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Global grain production in 2015/16 was forecast to total 1.988 billion tonnes, up 18 million tonnes from the IGC’s previous forecast but still below the prior season’s record 2.015 billion tonne crop.
“With a large carryover from the previous season, total supplies (production and stocks) are projected to increase about 10 million tonnes to a new all-time high,” the IGC said.
Favourable weather in the key Black Sea grain exporting region led the IGC to upgrade its forecasts for Russia’s wheat crop by 4 million tonnes to 59 million and Ukraine’s production by 3 million tonnes to 25 million.
The outlook has also improved for the European Union’s wheat crop (151.9 million tonnes vs a previous forecast of 148.5 million) and the U.S. corn crop (340 million from 332 million).
“While much of this month’s upgrade is tied to larger than expected wheat and barley crops in the CIS (former Soviet Union) and the EU, projections for US sorghum and maize (corn) are also lifted from July,” the IGC said.
The improved outlooks more than offset cuts to production forecasts for Canadian wheat (25.5 million tonnes from 28 million) and EU corn (60.1 million tonnes vs 66.9 million).
“Following reports of worse than anticipated drought damage, estimates for maize (corn) in the EU and Ukraine and spring wheat in Canada are lowered from before,” the IGC said.
China has raised imports over the past year as a substitute for expensive domestic corn in animal feed but this month said it will require importers of barley, cassava, distillers’ grains (DDG) and sorghum to register purchases under a new system to come into force on Sept. 1.
“As China has recently been a heavy importer of feedstuffs, including sorghum, barley and DDG, traders are wary of potential changes to state support mechanisms which could alter buying patterns,” the IGC said.
China’s grain imports were in 2015/16 were put at 22.4 million tonnes, up from a previous estimate of 21.1 million but still below last season’s 24.8 million.
