Carryover stocks of grains seen declining

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.