The US government made surprise cuts to its outlook for global corn and wheat stockpiles amid signs of improving grain demand.
The forecast for world corn stockpiles was smaller than the lowest prediction in a Bloomberg survey of 16 analysts, a US Department of Agriculture report showed 10 March. The agency also reduced its estimate of domestic reserves for both grains. Corn and wheat futures climbed on Wednesday.
Smaller grain inventories can help to revive crop prices after surging world harvests drove the Bloomberg Agriculture Index down 27 per cent in the past year. Improving demand for US corn exports will erode American stockpiles, while global use of the grain in livestock feed will climb, the USDA said.
“The overall conclusion is corn demand has been better than expected,” Bryce Knorr, a Chicago-based senior grain- market analyst at Farm Futures, said in a telephone interview. “Prices are cheap, and we have a growing livestock herd. The pace of exports is quite good, even if sales are a little slow.”
Corn futures for May delivery advanced 0.7 per cent to $3.9075 a bushel on the Chicago Board of Trade at 2:11 p.m. in Singapore, after falling 0.2 per cent on Tuesday. The most-active contract has dropped 1.6 per cent in 2015. The grain plunged 43 per cent in the previous two years after farmers harvested record crops in the US, the world’s top grower. World food prices tracked by the United Nations extended a drop to the lowest since July 2010 last month amid bigger global crops.
World corn stockpiles before this year’s harvest in the Northern Hemisphere will total 185.28 million metric tons, the USDA said. That compares with 189.64 million forecast in February. Analysts surveyed by Bloomberg were expecting 189.84 million, on average. The agency reduced its estimate for domestic reserves for a fifth straight month amid a better outlook for exports.
The USDA’s cuts to the inventory outlook mean that “the corn market will be more nervous about the outcome of this year’s growing season,” Don Roose, president of US Commodities Inc. in West Des Moines, Iowa, said in a telephone interview. “All attention will shift to the start of the planting season next month,” Roose said. “Today’s report will put a floor under the market until more is known about the weather this year.”
Wheat futures for May delivery rose as much as 1.7 per cent to a one-week high of $5.0175 a bushel in Chicago. A fourth day of gains would be the longest streak since 18 December.
Bloomberg News, edited by ESM
