Tags: Grains | Global | Corn | Forecast

Grains Council Cuts Global Corn Production Forecast to Nine-Year Low Due to Drought

Thursday, 23 August 2012 09:13 AM

Devastating droughts in the United States and Russia are set to drive global stocks of maize (corn) and wheat to multiyear lows, a world cereal body said on Thursday, heightening fears of rising prices and a food emergency such as the one in 2008.

Wheat output from key global supplier Russia is also now seen slipping below levels seen in 2010 when drought destroyed crops and sparked a surprise ban on exports.

The International Grains Council (IGC) said in a monthly report that stocks of maize would fall to a nine-year low of 120 million tonnes with the smaller global crop to result in a drop in consumption in 2012/13 for the first time in nearly 20 years.

"Exportable (maize) supplies in the U.S. and Ukraine had tightened and, while the next crops in Brazil, Argentina and South Africa may be large, harvests are still several months away," the inter-governmental body said.

The U.S. Midwest has suffered its worst drought in 56 years and the IGC cut its forecast of the U.S. maize crop by 25 million tonnes to 275 million tonnes, bringing it broadly into line with the current U.S. Department of Agriculture estimate.

Earlier this month, USDA cut its forecast to 274 million, a six-year low.

The IGC cut global maize production in 2012/13 by 26 million tonnes to 838 million tonnes, well below the prior season's 875 million. Global maize consumption was also cut sharply by 25 million tonnes to 853 million, now also below the prior season.

Wheat supplies are also tightening as the IGC cut its forecast for Russia's crop by 4 million tonnes to 41 million, now below the amount produced during the last drought in 2010, which led to Russia imposing a ban on exports.

The deteriorating outlook for Russia's grain crops has set off a wave of speculation that it could impose an export ban as it did in 2010. SovEcon agricultural analysts cut Russia's wheat crop forecast to an even lower 39 million tonnes on Thursday after yields deteriorated in Siberia and Urals regions because of drought.

"World stocks (of wheat) are forecast to contract by 17 million tonnes to (a 4-year low of) 180 million. A projected fall in the major exporters is led by the Black Sea region," the IGC said.

Global wheat production in 2012/13 was seen at 662 million tonnes, down 3 million from its previous estimate and well below the prior season's 696 million.

Deteriorating crop outlooks have sent prices for maize to a record high this month while there has also been a sharp rise in the wheat market.

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Thursday, 23 August 2012 09:13 AM
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