[FoRK] Grain stockpiles at lowest for 25 years
Adam L Beberg <
beberg at mithral.com
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Sun Oct 15 20:33:48 PDT 2006
At least the American SUV's and 50 mile commutes are safe... for now.
Grain stockpiles at lowest for 25 years
By Kevin Morrison in London
Published: October 12 2006 18:48
The world’s stockpiles of wheat are at their lowest level in more than a
quarter century, according to the US Department of Agriculture, which on
Thursday slashed its forecasts for global wheat and corn production.
The lower forecasts were largely attributable to the severe drought in
Australia, where the forecast for this year’s wheat crop was cut by 8.5m
tons to 11m. That is less than half of the 24m produced last year, of
which about 17m went to exports.
As a result of the low Australian crop, AWB, the country’s main wheat
exporter, said it would suspend exports from the country’s east coast
due to the poor crop and review its export requirements.
To add to the global supply concerns, Ukraine has introduced licences
and quotas on its wheat exports, effectively bringing shipments to a
standstill. This has already halted Ukrainian wheat shipments of 50,000
tonnes to India. The USDA also lowered wheat output for China, Brazil
and the European Union.
Wheat futures on the Chicago Board of Trade reached a new 10-year high
of $5.51 a bushel before the release of the USDA report, which
represented a rise of 18 per cent since last Friday. The December CBOT
wheat contract eased 4 cents to $5.27 in early afternoon Chicago trade,
a 56 per cent rise on the year to date.
The USDA, which provides one of the most authoritative reports on global
grain markets, said global wheat production would fall by 11m tons to
585.1m, causing global stockpiles to drop a further 7.1m from its
previous forecast, to 119.3m. This represents a fall of 20 per cent from
a year ago, putting stocks at their lowest level since 1981.
“The concern now is what happens next year. If we have poor conditions
for growing wheat again, supplies could get very tight and we might see
some demand rationing,” said Dan Cekander, grains analyst at Fimat.
James Barnett, grains analyst for Man Global Research, part of the Man
Group, said there is more concern in the global corn market after the
USDA cut crop estimates in the US by 209m bushels to 10.9bn after it
said that 800,000 fewer acres were growing corn than had previously been
expected. The US is the world’s largest corn grower.
“We are looking at a structural change in the corn market, because
demand is going to increase next year from the ethanol industry, and we
might not be planting corn in enough acres to satisfy that demand,” said
Corn futures on the CBOT rose 20 cents to $3.04 a bushel, its highest
level since June 2004 and up more than 35 per cent in the past month.
Analysts estimate ethanol to consume between 20 and 25 per cent of the
US corn crop next year, which is estimated at about 11.1bn bushels, and
forecast to account for about 35 per cent of the following year’s crop.
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