Global inventories of wheat and soybeans are falling more than forecast, while U.S. corn reserves head to a 16-year low, as farmers fail to keep pace with rising demand for food, livestock feed and biofuel.
The U.S. Department of Agriculture today cut its forecast of world wheat stockpiles on May 31 by 1.7 percent to 209.6 million metric tons, less than all 21 estimates collected in a Bloomberg survey. Soybean reserves on Aug. 31 will drop to a three-year low of 57.3 million tons, while the amount of corn held in the U.S., the world’s top grower and exporter, will slip to the lowest since at least since 1996, the agency said.
U.S. farm exports rose to a record $136.3 billion in 2011 on surging demand for grain and meat in Asia. The government today boosted its forecast of U.S. wheat exports by 2.6 percent from February, which will send domestic stockpiles to a three- year low. Global food prices tracked by the United Nations rose for a second consecutive month in February on higher costs for cereals, cooking oils and sugar.
“This was probably one of the best reports we’ve seen in wheat in six or seven months,” Mike Zuzolo, the president of Global Commodity Analytics & Consulting in Lafayette, Indiana, said in a telephone interview. “Corn is getting replaced by wheat in the feed rations and some of the food rations even, because of the price discount.”
Global use of wheat in livestock feed will reach a record 131.06 million tons, up from 130.66 million estimated last month, the USDA said. Corn futures for May delivery are trading near parity with wheat on the Chicago Board of Trade, compared with an average discount of about 89 cents in the past year. Global wheat exports may reach 142.93 million tons, up from 140.25 million forecast last month.
Livestock Feed
“Wheat feeding is still an issue,” Dale Durchholz, a senior market analyst at AgriVisor LLC in Bloomington, Illinois, said in a telephone interview before the report. Supplies are “going to be a little tighter, and everyone is kind of encouraged about exports.”
Wheat prices are up 8.9 percent since reaching this year’s low on Jan. 18, after prices dropped 18 percent last year. Wheat futures for May delivery rose 1.6 percent to $6.45 a bushel at 9:58 a.m. on the Chicago Board of Trade.
Soybean prices are up 20 percent since November on the CBOT on concern that hot, dry weather would hurt crops in South America. Soybean futures for May delivery advanced 1.1 percent today to $13.5275 a bushel.
Soy Crop
The USDA lowered its outlook for Brazil’s crop to 68.5 million tons, 4.9 percent less than projected last month and a bigger cut than analysts expected. The agency also reduced its forecast for Argentina’s crop to 46.5 million, 3.1 percent less than expected in February.
The USDA “got fairly aggressive with Brazil’s soybean crop and Argentina’s soybean crop,” Jason Britt, the president of brokerage Central States Commodities Inc. in Kansas City, Missouri, said in a telephone interview. “Obviously there’s been quite a bit of damage done there.”
The government’s outlook for domestic corn supplies, unchanged at 801 million bushels, was bigger than the 776.5 million expected by analysts in a Bloomberg survey. World corn stockpiles may total 124.53 million tons before the 2012 harvest in the Northern Hemisphere, down 0.7 percent from last month’s estimate, while still more than the 123.43 million analysts expected.
“Even though the report was neutral to slightly negative, we are still historically tight in corn and coarse grains,” Zuzolo said.
Corn futures for May delivery rallied 1.9 percent to $6.4775 a bushel on the CBOT.
Source: Bloomberg