Bearish assessment by US of global crop supply and future demand

The latest US Department of Agriculture crop report delivered a comprehensively bearish assessment of global fundamentals this week. The report featured the second-highest combined stockpile of the major crops in history and a 40m tonne excess of total crop output relative to projected consumption.

But a major factor overlooked by market bears is the strong likelihood for overall crop demand to climb notably from current levels in response to any further declines in price.

USDA has pencilled in total demand for the major crops to climb around 1.75% from last year to a record 2.53 billion tonnes. But that growth rate is less than half of that seen the year before and is a full percentage point below the recent five-year average.