by Agrimoney.com
The United Nations forecast "calmer" cereals market, and lower prices, as it raised its estimate for the world wheat harvest to a record high, and forecast a jump in overall grain stocks to a 12-year high.
The UN's food agency, the Food and Agriculture Organization, forecast that world production of cereals, including rice, will soar by 6.5% to a record 2.46m tonnes in 2013-14.
With use set to rise by a more modest 2.9%, inventories will end the season 11.3% higher than they started it, at 568.8m tonnes.
"Good production prospects and a likely replenishment in world stocks could pave the way for calmer markets and some easing of prices in the new season," the FAO said.
US corn forecast
The forecast came despite a relatively downbeat forecast, of 340m tonnes (13.385bn bushels) – albeit still a record - for the US corn harvest, with the FAO flagging the "much-slower-than-normal" early pace of corn seedings.
The estimate is well below the 372.6m tonnes at which the US Department of Agriculture on Wednesday pegged the crop, in its closely-watched monthly Wasde crop report, although many investors believe a sizeable downgrade may be in the offing to account for lost acres, the extent of which will be clarified by a separate briefing later this month.
However, the FAO was more upbeat on prospects for Brazil's corn harvest and for both production and stocks of coarse grains overall in China, the second-ranked producing country after the US.
Indeed, the agency, which was given enhanced access to official Chinese crop data for a special report published last week, said that China's coarse grain inventories would end 2013-14 at 67m tonnes, up 5m tonnes year on year and well above the USDA figure of 55.8m tonnes.
Wheat prospects improve
The FAO also diverged with the USDA in lifting its estimate for the wheat harvest to 702.0m tonnes, surpassing the record 701.5m tonnes set two years ago.
The USDA in Wednesday's Wasde cut its forecast for production by 5.2m tonnes to 695.9m tonnes, reflecting downgrades including a reduction to 137.4m tonnes in the estimate for the European Union harvest, and a cut to 19.5m tonnes in the figure for Ukraine.
However, the FAO lifted its estimate for the EU crop by 1.0m tonnes to 139.0m tonnes, reflecting an estimate of a 2% rise in sowings and average yields.
And for Ukraine, where "winter wheat conditions are reported to be generally good, and spring planting is progressing well", the harvest was upgraded by 400,000 tonnes to 20.2m tonnes.
Canada's crop was also upgraded, by 1.0m tonnes to 29.4m tonnes, to reflect a government survey showing farmers intended to plant more of the grain than had been thought.
'Positive development'
The record world harvest will be sufficient to raise world wheat stocks by 8.4m tonnes over the season to 173.0m tonnes, lifting the stocks-to-use ratio, an important pricing metric, by 1.1 points to 24.6%.
The ratio in exporting countries, whose supplies have a particular influence on values, will rise by 1.3 points to 15.5%.
"This ratio would be 2.6 percentage points higher than in 2007-08 when international prices surged on growing supply concerns," the agency said.
"Given the importance of wheat as a food staple, the increase in these ratios is a positive development for global food security."
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