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This is the result of both increased plantings and an improvement in the average yield. However, the headline figure masks a marked divergence between grains. While reduced yields are expected to cut wheat output by 4.3% to 665m. tons, coarse grain production (notably maize) is set to see a significant increase, up 4.8% year-on-year to 1,203m. tons.

While the market has been focusing on deteriorating US conditions for maize, prospects elsewhere have become brighter, particularly in China and India. However, the risks are on the downside unless US weather prospects improve.

World grains consumption is expected to outpace output in 2012/13, expanding by 1.8% year -on- year, to 1,876m. tons. The growth is led by a 2.5% rise in feed needs, largely due to increasing meat consumption, particularly in developing countries. The forecast for world grain carryover stocks at the end of 2012/13 is reduced by 13m. tons this month, to 360m., which is now below the 369m. estimated for the end of 2011/12. Wheat carryovers have been reduced further to a four-year low of 182m. tons. Maize stocks are still expected to rise for the first time in four years, but to a reduced level of 137m. tons from last month’s estimate of 141m., mainly due to a smaller US crop. Global grains trade is forecast at 265m. tons in 2012/13, unchanged year-on-year. While maize trade is expected to reach an all-time high of 103m. tons, wheat shipments are expected to fall significantly as improved maize availability reduces feed wheat demand. Barley shipments are expected to be lower year-on-year due to a decline in EU import demand, but increased US exports to Mexico should lift sorghum trade.

Wheat: The outlook for world wheat production in 2012/13 continued to be affected by unfavourable conditions in some countries, including a further deterioration in crop expectations in Russia. However, results from the US harvest were generally better than expected, while recent rains helped crops in parts of the EU to show some recovery from the less than ideal conditions earlier in the season. The production forecast is reduced by 6m. tons from last month, to 665m., down by 4% from the 2011/12 record. While increased global maize supplies are still expected to curtail demand, the forecast for world feed wheat use is revised higher due to likely narrower than previously envisaged price differentials. Nevertheless, reduced feed use is expected to outweigh continued growth in food and industrial uses and total world consumption is forecast to fall by 1%, to 682m. tons.

Together with lower opening stocks and reduced production, higher than previously forecast demand cuts the projection for world carryover stocks by 9m. tons, to 182m., with most of the year-on-year decline of 17m. in the major exporters. The forecast for world trade is only slightly lower than last month, at 134.6m. tons (143.5m.), as reduced milling wheat imports, particularly in North Africa, are nearly balanced by an increase in projected feed wheat trade. Smaller export surpluses in the Black Sea region will see demand switch to other origins in the year ahead, especially the US.

Read the full IGC report here

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