by PressWhat is the reason for the reduction of grain stocks in the world market
FAO predicts reduction of grain stocks in the world market
FAO made a forecast for the cereals market. According to the document, this year stocks are expected to decrease, compared to the opening level, they will decrease by 1.7% and will amount to 808 million tons. This forecast is less than the previous estimate by 3.3 million tons.
According to analysts, FAO, the world is witnessing an increase in demand for crops. As a result, the ratio of stocks to consumption will decrease to 28.4%, last season this figure was 29.6%. This value will be the lowest for the past 7 years.
First of all, experts expect an increase in consumption in the segment of feed production. It especially concerns China, where livestock is growing and more grains are needed to provide them with food. As a result, the rate of wheat replenishment on the domestic market is declining. World grain stocks are forecast at 284 million tonnes, 2.8% more than at the start of the season. Prior to this analysts estimated stocks at 8 million tons higher. Stocks of coarse grains will reach 341 million tons, they were increased by 4.5 million tons from the last forecast. The adjustment is due to an increase in stocks in the U.S. and India.
However, according to FAO, world stocks of forage crops are likely to decrease by almost 6% compared with the indicators of the beginning of the period. The reason may be low stocks of corn in China and the U.S., they decrease by about 23 million tons.
As for the forecast for Ukraine, here the harvest of grain and leguminous crops will reach the mark of almost 74 million tons, which is 13% higher than it was recorded last season.
The commodity market is booming for the second week, with spot price index fixed at a maximum for the last 9 years. The declining dollar and bond yields have contributed to this situation, but the rise is primarily due to the rally that continues in several agricultural commodity sectors, including soybean oil, corn and wheat.
The commodity market rush could affect inflation forecasts by underestimating them. Having assessed the situation, investors decided to increase the demand for those instruments, which are tied to the commodity segment.
Cereals continue to rise in price with futures for several crops hitting record highs on the Chicago Board of Trade. For example, corn was traded at $6 a bushel and soybeans at $15. The reason is that grain stocks are declining and Chinese demand is not going down. Colder weather in the U.S. also plays its part, which may affect the quality of the crop.