Farmers around the world will harvest record-setting wheat, corn and rice crops, said the U.N. Food and Agriculture Organization, citing improved prospects for the Russian wheat crop, larger rice plantings in Asia and the mammoth U.S. corn crop nearly ready for harvest. With huge amounts of grain flowing into warehouses, supplies will be “even more comfortable than predicted at the start of the season.”
There will be more than 13 weeks’ worth of grain in storage when the 2017 harvest begins — the third year in a row of large stockpiles, said FAO in its Cereal Supply and Demand Brief. In 2007-08, when harvests ran short worldwide and food prices spiked, the stockpile equaled less than an 11-week supply.
FAO issued its forecasts just days ahead of USDA’s monthly Crop Production report, set for release on Monday, along with the companion WASDE report, which takes a global view of harvests and consumption. The UN agency estimates world cereal production of nearly 2.566 billion tonnes, a hair larger than the record set in 2014.
Traders are skeptical the U.S. corn crop is as large as the 15.153 billion bushels USDA forecast in August, although they expect USDA to stick to its guns. They say the soybean crop is marginally larger, at 4.09 billion bushels, than USDA estimated. In a Reuters poll, analysts said that when the harvest is over, the final count of the corn crop would be 14.898 billion bushels. That’s 255 million bushels smaller than USDA’s current estimate but an awesome 682 million bushels larger than the 2014 record.
If USDA is correct, the country is on the cusp of cracking the 15 billion-bushel mark for corn for the first time, and the first soybean crop to exceed 4 billion bushels. And whether the corn crop proves smaller than USDA estimated a month ago or not, commodity prices are widely expected to run at comparatively low levels for years to come due to ample supplies.
Economist Darrel Good of U-Illinois said U.S. soybean supply may be somewhat smaller than USDA calculated. Writing at farmdoc Daily, Good estimated the soybean stockpile on Sept. 1, the start of the marketing year, was 200 million bushels, 55 million bushels below USDA’s figure. The size of the stockpile “is of some importance given the large crops expected this year,” wrote Good, adding that USDA estimates of Sept. 1 stocks “often differed from expectations.”
FAO’s Food Price Index rose by 1.9 percent during August and stood at its highest reading since May 2015. The index, which tracks international market prices for five major food groups, has trended upward since January, pausing only in July. Cereal prices fell by 3 percent during August, reflecting the flood of wheat from the harvest in the Northern Hemisphere and expectations of a record-large U.S. corn crop. Prices for the four other components of the index — vegetable oils, sugar, dairy products and meat — rose, with dairy leading the way.