Signs Emerge That Pricey Corn Is Starting to Deter Buyers
(Bloomberg) -- There’s an ounce of relief ahead for corn supplies as the blistering run-up in prices begins to shave off demand.
The International Grains Council raised its outlook for inventories in the 2021-22 season to 264 million tons. While that still will be the world’s smallest stash in nine years, it tops the agency’s initial outlook last month as estimates for trade and consumption decline.
Corn prices are in the midst of a relentless rally as global supply shrinks, with Chicago futures more than doubling over the past year. Other grains have followed suit, but the gains in wheat are less dramatic and the IGC raised its consumption estimate in the coming year. Countries like Indonesia are urging feed mills to use more of the crop in livestock rations as corn grows too expensive.
Still, the demand reshuffle isn’t a panacea for the crop sector as overall supplies remain tight. The council maintained its estimate of world grain stockpiles, keeping inventory projections flat versus the current season after a four-year drawdown. All eyes have been on Brazilian corn production in recent weeks as the country’s key winter-crop suffers from an ongoing drought.
“It is Europe that is likely to be the most affected because usually two-thirds of our corn imports from August to October come from Brazil,” Sebastien Poncelet, development director at Paris-based adviser Agritel SA, said Thursday in a press release. The next season may be “just as volatile as the previous one, with many risks for the entire sector.”
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