Agencies

July 27: The world is heading for a record grain harvest in the 2023-2024 season but the market remains under pressure thanks to El Nino and risks due to the war in Ukraine.

The International Grain Council (IGC), which includes both major producer and consumer nations, has forecast production of 2.3 billion tonnes of grains, which is slightly higher than the 2021-2022 season.

AFP reported that maize production continues to rise, with a 5.5 percent rise to 1.2 billion tonnes, thanks to more acreage in the United States and a record harvest expected in Brazil.

The IGC expects the production of rice, the top grain consumed by people, to rise by 2.5 percent to 527 million tones, added AFP.

But the wheat harvest is expected to come in at 784 million tonnes. That is stable in comparison to the last five years, but a reduction of 2.4 percent from last year when Russia and Australia had bumper harvests.

"The pressure on wheat is due to the consumption forecast which is 20 million tonnes more than production," AAFP quoted Damien Vercambre, a trader at Inter-Courtage commodities brokerage, as saying.

Demand for maize is even stronger, with consumption up by 30 million tonnes over the past year, but is covered by production.

“The increase is essentially for animal feed and is a sign of "the return of economic growth in Asia, where people eat more meat when their income permits," said Vercambre.

According to the latest monthly report from the US Department of Agriculture, wheat stocks at major exporters are roughly 55 million tonnes.

This is a ten-year low and output hasn't risen much in the past three years, noted Sebastien Poncelet, a grain specialist at Agritel agricultural information service.

Added to this are concerns about how weather may affect output as well as geopolitical risks, with the grain deal which allowed Ukraine to export grain via the Black Sea having expired and Russia targeting the country's grain exporting infrastructure, including on the Danube, reported AFP.

In Asia, analysts are keeping a close eye on the El Nino weather phenomenon, which is generally associated with a rise in global temperatures but for the moment is not expected to have a major impact on rice.

"The monsoons arrived normally, which allowed planting the crops in good conditions," Patricio Mendez del Villar, an economist who specialises in rice at CIRAD, a French governmental agency for agricultural research and international development, told AFP.

But unexpectedly, India, the world's top rice exporter, banned exports of non-basmati white rice -- which accounts for around a quarter of its total.

The move risks triggering price increases elsewhere when world prices are already up 30 percent from last year and despite the fact that Thailand, Vietnam and Pakistan could compensate for the reduced Indian exports, said Mendez del Villar.

One comforting element is that rice stocks are ample at 37 percent of annual consumption, compared to 25 percent during the 2008 crisis, when prices more than quadrupled in the space of a few months.