by Agrimoney.com
The world will not, after all, balance its books in wheat next season, despite weaker prospects for consumption by biofuels plants highlighted by the mothballing of Europe's biggest bioethanol plant.
The International Grains Council cut its forecast for world wheat consumption in 2011-12 by 3m tonnes, to 669m tonnes, reflecting in part lower expectations for use by biofuels users such as the UK's Ensus site, which is being mothballed because of high grain prices.
Wheat prices as of 18:00 GMT Minneapolis: $10.61 a bushel, +4.0% Paris: E252.75 a tonne, (closed) London: £198.50 a tonne, +2.7% (closed) Kansas: $9.52 a bushel, +2.6% Chicago: $8.21 a bushel, +3.1% Prices for July contracts on US exchanges, and November lots on European ones |
However, it lowered its estimate for production even more, by 5m tonnes, to 667m tonnes, reflecting "overly dry conditions in the southern US, much of Europe, and parts of the former Soviet Union".
"The outlook for wheat crops has been affected by unfavourable weather in a number of countries."
'Panic buying'
The warning places the intergovernmental group among the growing band of forecasters to ditch expectations of a rise, or even stasis, in global wheat stocks in 2011-12, although inventories are set to remain at an ample level.
IGC 2011-12 wheat estimates, change on last, (yr-on-yr change) Production: 667m tonnes, -5m tonnes, (+2.8%) Consumption: 669m tonnes, -3m tonnes, (+1.2%) Trade: 127m tonnes, +1m tonnes, (+4.1%) Carryover stocks: 185m tonnes, -1m tonnes, (-0.5%) |
And it came as, thanks to weather scares, wheat futures posted a second day of strong gains, notably in Minneapolis, which trades spring wheat, which US and Canadian farmers are struggling to plant amidst overly damp conditions.
Minneapolis wheat for July soared to $10.78 a bushel at one point, the highest for a spot contract since July 2008.
"Some panic buying is finally surfacing because of the continued delays in the Northern Plains," Darrell Holaday at US broker Country Futures said.
In Europe, grain institute Arvalis raised its estimate of drought damage to France's soft wheat crop, the region's biggest, to "more than 10%" from "far more than 5%".
Total grains
The IGC edged is forecast for consumption of corn by US bioethanol plants in 2011-12 lower too meaning that, while the estimate for production of overall grains was cut by 5m tonnes, inventories were seen higher than before, at 338m tonnes.
Stocks are expected to end this season at 348m tonnes.
Total grain stocks held by major exporters – a metric which exclude those held by countries such as China which are rarely traded, and so have less of an impact on prices – were pegged at 111m tonnes, an eight-year low but 3m tonnes above the previous forecast.
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