Grain prices have stellar run

Grain prices have stellar run


Cropping
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GRAIN prices increased substantially last season and will stimulate higher crop plantings throughout the world’s major cropping zones in 2011 and in Australia, according to the Australian Bureau of Agricultural Resource Economics and Sciences (ABARES) grain’s outlook for the year ahead.

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GRAIN prices increased substantially last season and will stimulate higher crop plantings throughout the world’s major cropping zones in 2011 and in Australia, according to the Australian Bureau of Agricultural Resource Economics and Sciences (ABARES) grain’s outlook for the year ahead.

But this trend is also expected to place downward pressure on world grain prices in 2011–12, ABARES said.

World grain and oilseed prices increased substantially in 2010 and have remained high in early 2011, primarily because of shortfalls in production in some major exporting countries.

Adding to that, lower production volumes combined with stronger demand has also resulted in a general draw-down in global grain and oilseed stocks, particularly for corn, which is the world’s main feed grain.

Grain and oilseed producers are expected to respond to current high prices by increasing production next season but with more grain produced, prices are forecast to fall.

ABARES says the world wheat indicator price (US hard red winter, fob Gulf) is forecast to fall by 19 per cent in 2011–12 to average US$250 a tonne.

Increased wheat supplies are forecast to outweigh increased demand.

For coarse grains, the world indicator price (US corn, fob Gulf) is forecast to average around US$216/t in 2011–12 - US$24/t lower than the previous season.

The stocks-to-use ratio for corn is forecast to increase but still remain relatively low in historical terms by the end of 2011–12.

In 2011–12, trade in wheat is forecast to increase, largely as a result of higher production and an expected easing of export restrictions in the Black Sea region.

Exports are forecast to increase for all major world exporters, with the exception of the United States where lower wheat opening stocks (compared with 2010–11) and an assumed return to trend yields are forecast to result in lower export availability.

In Australia, favourable prices and a high soil moisture profile in some grain growing regions is expected to result in the area planted to wheat rising by 3pc from last year, to 13.8 million hectares.

Despite the forecast increase in area, wheat production is forecast to be around 24 million tonnes as a result of an assumed decline in yields from the record achieved in many regions.

Given this predicted volume, Australian wheat exports are forecast to be around 16.5 million tonnes.

The area planted to canola is forecast to increase by 6pc, reflecting favourable prices and strong global demand for high oil bearing oilseeds.

Production is forecast to be around 2.2 million tonnes, 4pc higher than last season, reflecting a larger area and a return to average yields, particularly in Western Australia after drought last season.

However, the area planted to barley is forecast to fall 3pc to just under 4 million hectares.

Production is forecast to fall by 5pc, reflecting a return to average yields, particularly in NSW, Victoria and South Australia, where record yields were achieved in 2010–11.

ABARE production forecasts in 2011-12

  • World wheat production forecast to increase by 4pc to around 675 million tonnes.
  • World coarse grains and oilseeds production forecast to increase by 6pc and 5pc, respectively, to 1.1 billion tonnes and 467 million tonnes.
  • World wheat consumption forecast to increase by 2pc to 670 million tones.
  • World wheat closing stocks forecast to increase by 3pc.
  • Stocks as a percentage of consumption forecast to increase to 29.1pc - second highest since 2001–02.
  • After declining by 22pc in 2010–11, world coarse grains stocks forecast to increase by 10 million tonnes to 156 million tonnes.
  • Global oilseeds stocks forecast to increase by around 8pc to around 69 million tonnes, after falling by around 12pc in 2010–11 because of lower production.
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