Global wheat production should rebound in 2011- 12 but still fail to match demand, leading to a further drawdown in stocks and rising prices, Societé Generale analyst Emmanuel Jayet said in a report Feb. 7.
“The continuing trend of decreasing global stocks, the possible failure of the U.S. harvest, the poor crop prospects of the Middle East and the possibility of China importing wheat all support wheat prices,” Jayet said.
The report is among the first to look at the global supply balance for wheat, corn and soybeans in 2011-12.
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Jayet forecast a world wheat crop of 670 million tonnes in 2011-12 ( July/June), up from 644 million in the prior season “thanks mostly to a rebound in Russia and the EU.” A severe drought reduced Russia’s wheat crop in 2010.
That compared with a 2011- 12 global consumption forecast of 673 million tonnes, up from 663 million.
Jayet forecast wheat prices could rise to $9.50 per bushel in the fourth quarter, up about 10 per cent from current prices for the benchmark Chicago Board of Trade contract.
CORN PRODUCTION EXPANDS
He expected growth in corn production to be steeper and outstrip demand with a crop of 874 million tonnes for 2011- 12, up from 801 million in the prior season. Consumption was seen at 848 million versus 831 million.
“Given the persistent tightness in the grain complex, and that the U.S. corn market in particular should remain tight, we believe this fundamental outlook does not justify a sharp decrease in prices,” the report said.
Jayet forecast corn prices in the fourth quarter at $5.90 a bushel, down about 13 per cent from current prices for the CBOT benchmark contract.
Soybeans were forecast in deficit in 2011-12, even with the global crop edging up to 261 million tonnes versus 255 million in the prior season. He saw demand rising faster to 269 million from 255 million.
“Global stocks will decrease to 18.5 per cent of demand, their tightest level in almost 15 years,” Jayet said, forecasting a fourth-quarter price of $16 a bushel, up 11 per cent from current CBOT prices.
