(Dow Jones) -- Global grain consumption will grow faster than supply in the 2019-20 season, the International Grains Council said Thursday, a combination that would squeeze inventories for a third straight year.
The intergovernmental organization forecast that grain consumption would rise 1.2% from a year prior to 2,192 million tons, driven by a 1.5% increase in industrial grain usage. Total grain supply, a combination of production and the previous year's stockpiles, is expected to grow by only 0.4%.
As a result, the IGC said grain inventories will continue to run down, falling by 2.4% to 602 million tons at the end of the 2019-20 season.
Evidence that demand is strengthening relative to supply could bolster the rally in crop prices that began in mid-May, ignited by weather-related disruption in the U.S. Midwest.
Until then, crop prices had suffered a yearlong downturn amid concerns about the world economy and the U.S.-China trade dispute, as well as booming exports from the Black Sea region and Latin America. But after surging for more than two weeks, corn futures on the Chicago Board of Trade hit a three-year high of $3.48 a bushel on Wednesday.
The IGC stressed that its supply and demand forecasts for the coming year are tentative, especially for soybeans, which are highly exposed to the trade dispute.
The organization forecast that international trade in grains will rise 1% in 2019-20 from a year before. At 369 million tons, it said trading volumes will slightly exceed their 2017-18 peak, mainly as a result of higher shipments of wheat and barley.
|
Welcome
