First grain stocks fall in five years expected despite bumper harvest

Strong demand for maize in China and the US will eat into global reserves, but it remains a mixed bag elsewhere. We sum up supply and demand across markets in a few charts.

Grain production is forecast to remain at stratospheric levels for the 2017-18 season, with output levels projected to come second only to last year’s harvest.

Total production is set to hit 2,069 million tons, 65 million tons shy of 2016-17’s record, according to forecasts by the International Grains Council. The organization revised its initial prevision 19 million tons upward, driven in part by wheat and barley crop increases in Russia.

The bumper forecasts, which come on the back of robust projections by the US Department of Agriculture, have surprised many. Earlier this year, signs were that last season’s historic performance would not be repeated, owing to delayed planting as well as cold and then hot and dry spells at key moments of the growing cycle across regions.

But signs are that crops withstood natural challenges better than expected, resulting in upgrades to prospects for the likes of rice and soybeans.

Another surprise is the possibility that two whopping harvests in a row will result in the first decline in grain stocks in five years. “Total consumption is predicted to edge upward,” the IGC said. “A larger projection for feed outweighs cuts for food and industrial uses and boosts the forecast for total consumption by seven million tons, to 2,096 million, up a fraction year-on-year to a new peak.”

The organization says maize in China and the US will account for most of depletion, with wheat stocks predicted to rise further. “After an enormous harvest and with logistical constraints likely to limit exports, Russia’s wheat inventories could be the biggest in a quarter of a century, while those in China are seen at the highest on record,” the IGC said.