Global grain production will continue to increase over the next five years, as will consumption, according to the International Grains Council (IGC) which presented a five-year supply and demand outlook for grains and soybeans at the Cereals event in the UK recently.

The figures detailed the total production for 2017/2018, the forecast production for 2018/2019 and the projected production from 2019/2020 up to 2023/2024.

Total production is projected to rise each year from 2018/2019 and hit 2,246 million tonnes by 2023/2024.

Decline in stock-to-use ratio

In the same period, consumption is set to outstrip demand and the stock-to-use ratio is set to decline.

The stock-to-use ratio is a good indicator of which direction price is going to take. This ratio shows the level of carry-over stock of a commodity, as a percentage of the total usage.

In the presentation, the IGC stated that there is a “comfortable supply and demand outlook” with a “gradual stock recovery expected”.

Maize is a different story. The IGC reported that “stocks look tight, despite record crops”. The presentation stated that consumption is at new peaks, but growth is assumed to be slower.

Year-on-year changes

The IGC also reported the year-on-year changes. From 2014/2015 to 2018/2019, the five-year average, year-on-year change was 0.8% in production and 2.1% in consumption.

The production average looks set to increase to 1.5% in 2019/2020, while consumption will be lower at 0.9%. The five-year average change from 2019/2020 to 2023/2024 is also set to be 1.5% for production and 1% for consumption.

One thing that was not clarified is what proportion of stocks are projected to be in certain regions. For example, if a large proportion of stock is in China this will most likely not be traded and therefore will not affect the market.

However, stocks in major exporting regions – like the EU or Russia for example – can have a significant effect on grain prices

Soybeans

Soybean production and consumption is also projected to increase, but unlike wheat and coarse grains these figures are tighter. In 2023/2024 soybean production is projected to reach 390 million tonnes, while consumption hits 392 million tonnes.

The trade outlook for the commodity continues to look uncertain as the US/China trade war carries on.

International Grains Council

The EU, as well as 27 other countries across the world – including major exporters such as Russia, the US, Canada and Australia – form the membership of the IGC.