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Near-record year despite drop in production

19 September 2017

Global forecasts for the 2017/18 season are expected to yield the second-largest crop ever

, despite the production of agricultural commodities decreasing by 2.4 per cent from last year’s record crop.

World stocks, particularly in corn and barley, are predicted to decline for the first time in six years, according to an early season report from the United States Department of Agriculture (USDA) released in August.

While six months ago, the world was flush with grain and had huge stockpiles, in contrast it is predicted that own-consumption will draw down on most of these stocks over the coming year.

This will cause a slight 2 per cent decline in global exports, however the 2017/18 season is still forecast to be the second largest year for international trade on record with 530mmt of key commodities set to be exported.


Wheat production globally is expected to be down 1.6 per cent to
743mmt in 2017/18, caused mainly by the United States sowing its lowest wheat acreage in decades as Americans look to corn and beans for higher profits.

The Australian wheat crop is forecast to drop by 33 per cent from last year to 23.5mmt following a poor start to the season in most states. This brings Australia down to a slightly below- average wheat production compared to last year’s all-time record of 35mmt.

Wheat crops in Canada and Brazil are also expected to decline, while India and North Africa are two of the few regions set to grow in 2017/18.

Compounding lower production are the dry conditions being experienced in North America, bringing concerns around low protein and the availability of quality wheat.

High protein wheat is highly sought after by buyers, with low-protein making up the majority of global stocks.

The global wheat stocks-to-use ratio is at a high 36 per cent, but when India and China are excluded, this drops to below 20 per cent. This is the first time the stocks-to-use ratio for the major export regions has dipped below 20 per cent since 2007/08.


Corn is presenting a similar story with production forecast to be down by 3.5 per cent globally, but still at near- record levels of 1.033 billion tonnes.

Interestingly, corn consumption will reach 1.061 billion tonnes, exceeding production for the first time in seven years. As a result, corn stocks will be drawn down for the first time in a decade and are forecast to fall 12 per cent to 200mmt.

Likewise, demand for barley is strong with consumption (145mmt) likely to exceed production (140mmt) this year. This will cause barley stocks to drop to extremely tight levels with a stock-to- use ratio of 12.5 per cent, compared to 16 per cent last year.

The stocks-to-use ratio for corn is at 19 per cent, a drop of 2.5 per cent, creating some nervous feed markets. As the world’s population moves towards eating more protein and demand for animal feed increases, supply will need to keep pace.


The 2017/18 season will see world soybean production at its second highest level ever, dropping 1 per cent from last year’s record of 352mmt down to 347mmt.

Soybean supply and demand is well balanced, with consumption also at 343mmt. Stocks are stabilising at 97mmt following a huge lift in stocks in 2016/17.

Canola is the one commodity which is forecast to grow by 5 per cent globally, despite a tough year in Australia with local crops tipped to be down 23 per cent to 3.2mmt.

All eyes are on the Eyre Peninsula and the Kwinana and Geraldton zone to see what size crops these regions yield this year, following dry conditions in April and May hampering sowing efforts and crop establishment.