(Agrimoney) – Benchmark forecasts for world grain supplies at the close of next season may prove “less bearish than initially thought”, Australia & New Zealand Bank said, terming “surprisingly low” figures for rice and wheat demand.
The US Department of Agriculture last week, in its first forecasts for world grains supply and demand in 2015-16, showed a largely balanced picture, in estimates viewed as largely bearish for feed grain prices, ANZ noted.
However, these forecasts were “premised on very slow growth in grains consumption”, well below average levels.
“Surprisingly low”
“We would question this [growth assumption] in a lower price environment that should support demand,” Paul Deane, senior agricultural economist at ANZ said.
For wheat and rice, consumption growth forecasts of 0.2% and 0.9% respectively in 2015-16 look “surprisingly low by historical standards”, given that population growth alone should imply expansion of about 1.0% a year.
ANZ forecast wheat consumption growth of 1.6%, implying consumption of an extra 10m tonnes of wheat.
For all grains, it forecast that the USDA had underestimated demand by some 24m tonnes.
Prices to “find support”
The assessment implies that investors may be being too bearish in their price forecasts.
“Grain consumption projections for 2015-16 are likely to be revised higher over the next 12 months,” said Mr Deane.
“Grain prices should find some support as consumption is slowly revised higher.”
The comments come at a time when, with northern hemisphere spring sowings near an end, and winter crops approaching harvest, much market attention has been focused on production potential.
