Global inventories of wheat and soybeans are falling more than forecast, while U.S. corn reserves head to a 16-year low, as farmers fail to keep pace with rising demand for food, livestock feed and biofuel.
The U.S. Department of Agriculture today cut its forecast of world wheat stockpiles on May 31 by 1.7 percent to 209.6 million metric tons, less than all 21 estimates collected in a Bloomberg survey. Soybean reserves on Aug. 31 will drop to a three-year low of 57.3 million tons, while the amount of corn held in the U.S., the world’s top grower and exporter, will slip to the lowest since at least since 1996, the agency said.
U.S. farm exports rose to a record $136.3 billion in 2011 on surging demand for grain and meat in Asia. The government today boosted its forecast of U.S. wheat exports by 2.6 percent from February, which will send domestic stockpiles to a three- year low. Global food prices tracked by the United Nations rose for a second consecutive month in February on higher costs for cereals, cooking oils and sugar.
“This was probably one of the best reports we’ve seen in wheat in six or seven months,” Mike Zuzolo, the president of Global Commodity Analytics & Consulting in Lafayette, Indiana, said in a telephone interview. “Corn is getting replaced by wheat in the feed rations and some of the food rations even, because of the price discount.”
Global use of wheat in livestock feed will reach a record 131.06 million tons, up from 130.66 million estimated last month, the USDA said. Corn futures for May delivery are trading near parity with wheat on the Chicago Board of Trade, compared with an average discount of about 89 cents in the past year. Global wheat exports may reach 142.93 million tons, up from 140.25 million forecast last month.
Today’s report is “neutral-to-bullish wheat on higher U.S. exports, lower global stocks,” Morgan Stanley analysts led by Hussein Allidina said in a report. “Higher imports in Iran and North Africa are needed to satiate higher domestic demand, providing the impetus for higher exports from Australia, Brazil and Kazakhstan, as well as the U.S.”
Wheat prices are up 9 percent since reaching this year’s low on Jan. 18, after prices dropped 18 percent last year. Wheat futures for May delivery rose 1.3 percent to settle at $6.43 a bushel at 1:15 p.m. in Chicago.
Soybean prices are up 18 percent since November on the CBOT on concern that hot, dry weather would hurt crops in South America. Soybean futures for May delivery dropped 0.1 percent today to $13.3775 a bushel, after earlier climbing as much as 1.3 percent.
Soybean production in Brazil and Argentina, the two biggest growers after the U.S., will fall to 115 million tons from 124.5 million last year and 127 million forecast in December, the USDA said today. The reductions since December in South America have now exceeded those seen three years ago when hot, dry weather also damaged crops, Rabobank said today in a report.
The declining production in South America “will continue to give soybeans further upside,” Rabobank analysts led by Luke Chandler in London said. “The combined production cuts were more aggressive than we expected.”
Global soybean production at 245.07 million tons would be about 19 million tons lower than a year earlier, the biggest year-over-year drop since at least 1965, USDA data show.
The government’s outlook for domestic corn supplies, unchanged at a 16-year low of 801 million bushels, still was bigger than the 776.5 million expected by analysts in a Bloomberg survey. World corn stockpiles may total 124.53 million tons before the 2012 harvest in the Northern Hemisphere, down 0.7 percent from last month’s estimate, while more than the 123.43 million analysts expected.
“Even though the report was neutral to slightly negative, we are still historically tight in corn and coarse grains,” Zuzolo said.
Corn futures for May delivery rallied 1.5 percent to settle at $6.45 a bushel on the CBOT. The price declined 1.5 percent this week.
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