US grain unlikely to improve low world supplies

It is unlikely that US maize yield will increase significantly enough to move world grain stocks out of historically low levels.

And there is only a 50% probability that production will keep up with worldwide demand, according to a report by researchers at the Rabobank International Food & Agribusiness Research and Advisory group.

The finding has major consequences for animal feed price trends.

More maize is being grown on less productive land, and crop rotations have been reduced. “We’ve known for some time that corn yield increases will not be able to keep up with the surging global consumption,” said Sterling Liddell, global strategist with the Rabobank research and advisory team.

“In the next three to five years there is very little room for error as ethanol, exporters and livestock feeders all compete for the available supply.”

The long term prediction comes as shorter-term market trends lead to grain markets firming up.

Dry conditions in South America and Southern Europe (some parts of Spain have seen no rain since early November) are the main driving factors behind higher future prices, along with early emergence from dormancy by northern hemisphere wheat, which leaves it at greater risk to frost damage.

Across the Mediterranean, crop damage due to drought and unusual cold spells in have sparked a grains crisis in Morocco driving barley prices to twice the EU level.

As a result, Morocco will be a high-ranking grain importer in 2012-13, looking for an expected 5.6m tonnes of wheat.


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