IGC cuts global grain and soybean projections, signaling tighter supplies and increasing stocks
The International Grains Council (IGC) has updated its forecasts for global grain and soybean supplies, indicating a tightening in grain stocks while projecting an increase in soybean inventories.
Reductions in global grain production estimates
The IGC has reduced its projections for the 2023/24 and 2024/25 global grain crops.
For the 2023/24 season, grain production estimates were cut by 3.5 million tonnes, primarily due to disease and drought impacts on southern hemisphere maize.
The council also noted a significant 10.1 million tonne reduction in the 2024/25 global grain crop production forecast, largely due to anticipated decreases in US maize production and lower EU wheat outputs.
Decline in grain stocks heightens market sensitivity
The revised forecasts suggest a steeper decline in 2023/24 carry-out stocks than previously anticipated, decreasing by 8.4 million tonnes from earlier estimates.
This reduction in stocks, particularly a 3.6 million tonne fall in wheat and a 4.8 million tonne decline in maize, heightens the vulnerability of the global grain supply to future production disruptions, maintaining market sensitivity to weather fluctuations.
Record grain production juxtaposed with rising demand
Despite these cuts, total global grain production for 2023/24 is still expected to be 21.3 million tonnes higher year-on-year, setting a new record.
However, global grain demand for the same period has been revised downward, mainly due to decreased feed demand in the US.
Soybean supply outlook remains robust
In contrast to grains, the global soybean supply and demand forecast appears more stable.
The IGC has slightly raised its stock projections for the 2023/24 and 2024/25 seasons by 0.3 and 0.5 million tonnes, respectively, thanks to larger crop forecasts in Argentina. This surplus is likely to continue exerting downward pressure on soybean prices.
Upcoming agricultural reports and market impact
As markets await further updates, the next IGC forecast set for release on May 23 and the USDA’s first projections for the 2024/25 season on May 10 will be crucial in shaping future market dynamics.
These reports will provide additional insights into the agricultural sector, potentially influencing commodity prices and market strategies.
The interplay between reduced grain stocks and increased soybean supplies presents a complex scenario for commodity markets, with traders closely monitoring upcoming weather reports and agricultural data to navigate these changes.
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