News last update:6 Aug 2012

Carryover stocks of grains seen declining

Rising prices of major crops such as corn (maize), wheat and oilseeds, has resulted in tightening supplies and falling inventory. The world therefore needs more grains in 2007 in order to augment supplies and contain prices, acoording to the International Grains Council (IGC).

The situation is sure to lead to severe competition for acreage and area expansion for certain crops. A big increase in production could result in a recovery of stocks, as occurred in 1996-97, for example. However, due to strong level of demand, a particularly larger outturn would be required in 2007 to rebuild inventories of wheat and corn, according to the IGC.

A notable rise in wheat sowings was already evident in several northern hemisphere countries; and based on an overall 4% forecast expansion in the world area, the outlook was for a significant rise in wheat output in 2007, IGC said.

World grain output, especially wheat, had fallen significantly for the second successive year. In 2006-07, ending stocks would be sharply lower. While grain demand in some sectors, notably animal feed, would be reduced, industrial use continued to rise largely as a result of rapidly rising bio-fuel needs for maize and other grains. While the aggregate closing stocks with the five major exporters was expected to fall to their lowest level since 1996-97, world trade in grains in 2006-07 has been forecast to be only modestly higher than in the previous year. This is despite unusually large milling wheat purchases by India and Brazil, IGC pointed out.

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