WHEAT carryover stocks are expected to continue to rise to a record 288 million tonnes (Mt) at year end 2020/21, despite slightly reduced production forecasts for EU, Russia and the US, according to the International Grains Council’s (IGC)  July Grain Market Report released overnight.

With a reduction in forecast US corn production as well, IGC has reduced its forecast for total world grains production in 2020-21 to 2225Mt, down 13Mt from last month.

The report sees consumption largely unchanged at 2218Mt, with lower global feed use balanced by higher food and industrial use.

An increase in estimated opening stocks only partly compensates for lower new-season supplies, with the global total wheat and coarse grains 2020-21 carryover down 10Mt from June to 625Mt.

Most of the cut since last month on the global all-grains stocks forecast reflects a lower figure for the US corn carryout because of the smaller-than-anticipated harvest.

The world trade projection for the year to June 2021 has been lifted 1Mt on increased wheat and corn shipments.

While total world grain stocks at the end of 2020-21 are forecast to edge higher to 625m t, anticipated increase in demand would see the ratio of global stocks-to-use a fraction down year on year to the lowest level in six years.

This is mainly linked to the fourth successive annual decline in world corn stocks, with this mostly associated with a sustained contraction in China.

Global ending inventories of other grains are all seen expanding, including those of wheat which at an all-time high (chart 1).

Chart 1. World wheat ending stocks this year would rise to record 288 million tonnes. Significant stock increases have been occurring over a decade not among major exporters but among other wheat majors such as China and India. Million tonnes. Source: IGC

A small increase in total grains trade is envisaged to a fresh peak, including the twelfth consecutive annual rise in maize shipments.

Price indices higher

Buoyed by strength in grain and oilseed export prices, the IGC Grains and Oilseeds Index (GOI) touched a six-month peak this month, up 3 per cent from last month’s figure.

Chart 2. GOI wheat sub-Index rose 3pc over the month. Base January 2000 is 100. Source: IGC

With support from disappointing harvest results in parts of Europe and the Black Sea region, the wheat sub-index rose 3pc (chart 2). Link here to IGC website market information including interactive price indices.

The maize sub-index rose by 4pc in July on rising export premiums; gains in Argentina were pronounced, but with net increases at other origins as well.

The IGC GOI soybean sub-index rose 5pc from last month, with US prices bolstered by export demand from China, while dwindling availability contributed to higher values in Brazil.

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Source: IGC