Global Grain Forecasts

The United States Department of Agriculture (USDA) published its first forecast of global grain output for harvest 2015 on the 12^th May.  This shows that both wheat and coarse grain (feed grain) production is estimated to fall marginally this year compared to last.  For wheat, production will still be above consumption, leading to a rise in stock levels.  The opposite is the case for the coarse grains, but the predicted shortfall is too small to move prices.   

The table below summarises the USDA figures for wheat and coarse grains.  Wheat production shows a 1% decrease between the 2014 and 2015 harvest years.  Whilst world usage of wheat is expected to increase marginally, it will remain below output.  This results in a further build-up in stocks for the 2015/16 season.  The availability of grain (shown by stock levels) has not been an issue in the wheat market for some years – prices tend to react when stocks approach 20% of usage.   The coarse grain market is dominated by maize (around 80% of total production).   A stocks to use ratio of 15% sees prices move in this market.  Stocks dropped to this level after harvest 2011 and 2012, but have since been rebuilt.  The USDA forecasts a very small drop in world coarse grains output for this harvest (far less than 1%).  With usage increasing, stock levels are forecast to fall, but not to levels that are likely to cause prices to rally. 

Overall, these forecasts do nothing to dispel the impression that the world is well-supplied with grains at present, and looks likely to remain so for the foreseeable future.

It is worth highlighting that forecasting at this time of the year is a very inexact science.  Things could still change substantially in the grain market over the coming 12 months.  The weather over the next two or three months will be crucial as the northern hemisphere crop approaches harvest and yield levels start to become more certain.