2016/17 world update 2017/18 forecast

The monthly USDA grain and oilseed world supply and demand estimates and forecasts are especially important in May as it is the first month of each year when they publish their entire thoughts on the forthcoming global grain crop.

For 2016/17, global grain production has, once again, been revised up by 14 Mt to almost 2,593 Mt. However, 2017/18 output is forecast to decline by nearly 62 Mt. Although this 2.7% decline may appear to be slight in percentage terms, it is almost three times that of UK cereals production (22 Mt). That said, it must be remembered that the 2017/18 forecast is nearly 64 Mt ahead of 2015/16.

Total global grains supply & demand at 10 May 2017 (Mt)

Output

Trade

Total use

Cl. stocks*

2015/16

2,467.12

377.07

2,439.19

606.93

2016/17 est April

2,578.58

413.12

2,555.41

628.36

2016/17 est May

2,592.72

416.95

2,566.25

633.40

2017/18 forecast

2,530.95

406.45

2,564.91

599.44

*closing stocks Source: USDA

World wheat production (737.8 Mt), although projected to be the second highest on record, is forecast to decline by 15 Mt in 2017/18. This estimate is heavily influenced by the US (down by 13 Mt to 49.5 Mt) and helped to rally the markets. Early US survey estimates suggest that winter wheat production is down sharply with the lowest harvested area in a century and lower yields. April snow storms affected large portions of the US winter wheat crop, especially in Kansas, and the US spring wheat area is also projected to decline. But, with global wheat consumption forecast to fall and stocks increasing, the outlook for prices remains rather bearish for 2017/18.

Wheat supply & demand at 10 May 2017 (Mt)

Output

Trade

Total use

Cl. stocks*

2015/16

737.00

172.85

712.08

242.42

2016/17 est April

751.36

180.68

740.84

252.26

2016/17 est May

753.09

179.74

740.16

255.35

2017/18 forecast

737.83

178.35

734.89

238.29

*closing stocks Source: USDA

Coarse grains (feed grains) output is more than double the total wheat crop around the world and 75% of them are maize. Coarse grains production (1,312 Mt) is projected to fall by 3.4% (46 Mt) in 2017/18 vis-à-vis 2016/17 (1,358 Mt). This decline is significant and leads to a 38 million tonne fall in stocks, a 15% decline which is also substantial. This is far more bullish news.