5-year grain outlook shows consumption continues to outstrip demand
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.
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
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.Also Read: Soybeans: What you need to know and why US soybeans are important to Irish farmers
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.