Global Grain Supply Crunch Is Set to Get Worse, IGC Says

(Bloomberg) -- Global grain stockpiles could grow even slimmer next season, exacerbating a supply crunch across crop markets already pushing up food prices.

The International Grains Council cut its inventory estimate for the 2021-22 season to 595 million tons, the lowest in seven years, according to a report published Thursday. Rising animal-feed demand and a drought-stricken Brazilian corn crop are outweighing bumper harvests elsewhere, shrinking the world’s grain supply cushion for a fifth straight season.

That’s raised the prospect of further gains for global grocery bills, with a United Nations food-price index at its highest since 2014. Chicago grain futures have recently cooled from a rampant rally, but prices remain near multiyear highs. Good growing conditions are needed across the U.S. and Europe in coming months to replenish silos.

“We have low supplies in grain and oilseed exporters and a lot of weather risk to go before good yields materialize,” Rabobank analysts said in a report this week.

Next season’s supply drawdown comes even as the IGC expects China’s grain imports to ebb from an all-time high, easing 14% from this year’s levels to 47.7 million tons. That figure includes 18.5 million tons of corn and 9 million of wheat, which are still well above its historical purchases. The country has been loading up on foreign crops to feed its hog herd, which is recovering from disease outbreaks.

“While China’s imports of grains are seen remaining elevated, they may not match the record of the season before,” the council said in the report.

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