GLOBAL – World grain stocks will tighten over the coming years but, after a small contraction, harvests will rise back to record breaking levels, predicts a grain market monitoring body.
The rise will mostly come from higher yields, says the International Grains Council (IGC).
Some sowing expansion, particularly in South America and the Commonwealth of Independent States, is expected, however.
In its Five-year global supply and demand projections, the IGC states that most impetus is thought to be from China’s maize buying going forward, as well as “solid rises” from Latin America, Asia and Africa. World grain trade is expected to continue growing, largely due to more maize shipments.
Wheat trade is expected to stay below the records of 2013/14.
Higher maize stocks fuel sentiment that feed wheat demand will be down this year. World maize production is expected to break 1 billion tons for the first time in 2018/19, despite a reduction on planting and yield growth rate.
Currently, livestock agriculture feeds 500 million tons of maize annually, compared to feed wheat at 135 million tons. Feed maize demand is tipped to rise two per cent a year to 2020, driven by developing countries.
Maize harvests will be “larger than average” over the next five years but the IGC predicts that farmers may have to contend with tighter margins due to high input costs.
Tipped to be most likely to go into steadily expanding ethanol production, Maize stocks have become “much more comfortable”, said the report. Record harvests from high planting and strong yields, particularly in China, Ukraine, the EU and US.
The report sees Japan remaining the world’s biggest maize importer and the US the biggest exporter. With Argentina, Brazil and the Ukraine, the US will account for 85 per cent of trade to 2020. China’s demand is tipped to treble by this time.
Two consecutive strong years have kept global wheat markets well supplied despite strong demand. This has built stocks from a five-year low at the end of 2012/13.
World wheat stocks will contract as Indian production flat-lines and China stocks inch higher.
Consumption is strong today and supplies are consistently much tighter than in the 1990s.
Africa and Asia will drive a growth in world trade, with India becoming a marginal net importer, if only just, by 2020.
Higher food use will drive consumption one per cent each year to 2020, the report predicts, which scaled back feed wheat demand to account for “comfortable” maize supplies. Average human consumption is expected to track around 66 kilos as ethanol production slowly increases.
Egypt will export less as food subsidy with a production lift expected.
The US will remain the biggest single export, although market share will be eroded as other nations grow.
Black Sea trade will take a bigger share of world trade and European shipments will remain large but not match exceptional highs of recent years.
Farmers will plant less Sorghum over the coming year before a “modest” increase – 40 million hectares for 2019/2020, says the IGC.
US farmers are expected to favour maize for productivity reasons. However, low input and water requirements will mean Australia, Argentina and Africa continue to grow it.
Supply and demand is looking balanced for the medium term as China, after having muscled out some traditional buyers, sustains “strong purchases”, the IGC predicts tentatively.
Feeding of sorghum is projected to rise slightly over the five years, to 28 mega tonnes, said the report.
However, it added: “Much will depend on prices relative to alternatives. China has significantly increased use in recent seasons, as feed manufacturers have boosted incorporation amid cheaper prices relative to domestic maize.
“Future demand in China will depend on price relationships with other grains as well as possible changes to import protocols. While staying at historically high levels, it is assumed that feed use in China rises more slowly in the coming five years.
World stocks have recovered thanks to some “bumper harvests” following a production plunge in 2011/12.
World carryovers could rise rise 40 per cent year on year, says the IGC. Major exporters will lead this drive, particularly the US, with Brazil possibly taking over the reins in coming seasons in terms of expanding plantings.
Argentinian and Brazilian cropping area has “risen strongly”, as has Black Sea plantings, where an entirely spring-sown crop is expected to continue rising.
Demand for the crop will rise 1.7 per cent annually, with livestock sector growth, especially in Asia, being a driver – 90 per cent of increase will be due to increasing soybean crush.
China's domination of the market is projected to continue, although overall use expansion may be slow.
“Shipments to China have almost entirely shaped the pattern of world trade over the past decade,” wrote the IGC.
“While that country’s requirements are expected to remain central to the projected rise in volumes during the next five years, growth is likely to be somewhat slower. The share of the three major exporters in global trade is set to remain close to 90 per cent.”