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Agrimoney.com – http://www.agrimoney.com/news/news.php?id=1626
World corn stocks to fall, despite record harvest
By Agrimoney.com – Published 22/04/2010

Stronger demand for corn from ethanol plants and livestock farmers will reduce world stocks of the grain to their lowest in three years, despite a record harvest.

World corn production will rise by 6m tonnes to 809m tonnes in 2010-11, helped by higher plantings in the Americas and the Black Sea states, the International Grains Council said.

“Global yields may not match last year’s record,” the intergovernmental group added, in a report revealing its first corn forecasts for the marketing year.

However, demand will rise faster, by 13m tonnes to a record 818m tonnes, lifted by rises in corn use both as an animal feed and as a raw material for bioethanol plants.

Rival feed crops

The shortfall in production, for a second successive year, will depress inventories by 8m tonnes to their lowest since 2007-08.

IGC corn forecasts, 2010-11 (year-on-year change)

Production: 809m tonnes (+0.7%)

Consumption: 818m tonnes (+1.6%)

Year end stocks: 140m tonnes (-5.4%)

Source: USDA attache report
However, the IGC flagged challenges to its forecast from the use of other crops by livestock farmers, noting that “large availabilities of distillers dried grains and high-protein oilseed meals could restrain maize incorporations”.

It also noted that its forecast of a rise of 8m tonnes to 214m tonnes in use of corn by biofuels plants represented the smallest growth rate in a decade.

‘Stressed by heat’

For wheat, the council noted a series of challenges to production in 2010-11, including conditions in North African countries which were “not as favourable as last year”, when strong harvests allowed the region to cut its reliance on foreign grain.

IGC wheat forecasts, 2010-11 (year-on-year change)

Production: 658m tonnes (-2.6%)

Consumption: 654m tonnes (+1.4%)

Year end stocks: 199m tonnes (+1.5%)

Source: USDA attache report
Crops in India, the second largest producing country, had been “stressed by heat”, while in the US, spring plantings may be limited by the “expected great profitability of winter crops”.

Nonetheless, the IGC kept its forecast for world wheat production unchanged at 658m tonnes, representing a decline of 17m tonnes year on year.

With consumption expected at 654m tonnes, world stocks would rise for a third successive season, to a nine-year high of 199m tonnes.

Informa forecasts

The report came shortly before Informa Economics, the analysis group, forecast that America, the world’s biggest corn producer, would achieve a record corn harvest this year, narrowly beating last year’s 13.1bn-bushel crop.

The soybean harvest would come in at 3.342bn bushels, 17m bushels behind last year’s production, with cotton output jumping by 30% to 15.9m bales.

The following chart presents the median single-family home price divided by the price of one ounce of gold.
This results in the home/gold ratio or the cost of the median single-family home in ounces of gold.
For example, it currently takes 153 ounces of gold to buy the median single-family home.
Considerably less that the 601 ounces it took back in 2001.
When priced in gold, the median single-family home is down 75% from its 2001 peak.