Global Grain Production Forecast Revised Downward as Stocks Tighten, Trade Rises

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The International Grains Council (IGC) has revised its forecast for global grain production in the 2023/24 marketing year downward, citing smaller-than-expected sorghum and barley harvests. While the supply outlook is somewhat buffered by increased carry-in stocks, the IGC also trimmed its forecast for global ending stocks, reflecting tighter supplies.

In its latest grain market report, the IGC now projects total grains production (wheat and coarse grains) in 2023/24 at 2,297 million tons, a 4-million-ton reduction from the previous month's estimate. The forecast for carryover stocks, which represents the aggregate of respective local marketing years, has been cut by 3 million tons to 588 million tons.

"World total grains (wheat and coarse grains) production in 2023/24 is forecast 4m t lower m/m (month-on-month), at 2,297m, mainly reflecting smaller sorghum and barley estimates," the IGC report states. "While the supply outlook is somewhat cushioned by increased carry-ins, the estimate for carryover stocks (aggregate of respective local marketing years) is cut by 3m t m/m, to 588m."

Despite tighter supplies, the IGC forecasts a significant increase in global grains trade, driven by larger wheat and maize flows. Global grains trade is projected at 416 million tons, a 2 million-ton reduction from the previous month's forecast.

"Boosted by larger wheat and maize flows, the forecast for trade is hiked by 8m t from last time," the report notes.

Looking ahead to the 2024/25 marketing year, the IGC has also revised its production forecast downward, reflecting reduced output for maize, primarily in Argentina and sub-Saharan Africa, and wheat, particularly in Russia, Ukraine, and the US.

"Including cuts for maize (mainly in Argentina, sub-Saharan Africa) and wheat (Russia, Ukraine, the US), the projection for global grains production in 2024/25 is down by 10m t m/m, to 2,312m, up by 1% y/y (year-on-year)," the report states.

Despite a slight increase in overall production, tighter supplies and a reduction in forecast consumption are expected to result in a second consecutive sharp monthly reduction in closing stocks, projected at 580 million tons, a 10-year low.

The IGC Grains and Oilseeds Index (GOI) has reflected these market trends, posting solid gains and reaching a four-month peak. The GOI soared by 9% month-on-month, driven by strong advances in wheat prices.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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