Wheat, corn stockpiles dwindle as Russia drought curbs output
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The world’s appetite for meat, flour and ethanol is expanding faster than the supply of the crops needed to produce them, eroding inventories and increasing the chance of accelerating food prices.
Wheat stockpiles may slip to a two-year low as demand rises and a drought damages the crop in Russia, whose exports will plunge 84 percent, the U.S. Department of Agriculture said today. Inventories of corn, used to feed livestock and make fuel, will be little changed from a year earlier, even as output rises to a record, the USDA said.
Russia’s worst dry spell in 50 years sent Chicago wheat futures to a 23-month high on Aug. 6. Corn prices are up 24 percent in the past year, as ethanol mills use 35 percent of the grain produced in the U.S., the world’s largest exporter, and rising global incomes lead to more beef and pork consumption.
“The world doesn’t have enough exportable supplies to meet demand” for wheat and feed grains, said John Macintosh, 61, a vice president at Rand Financial Services Inc. in Chicago who has been trading agricultural commodities since he was with Continental Grain in 1973.
Russia, the third-largest wheat exporter last year, will ban shipments starting Aug. 15 after concluding that its grain harvest may plunge 38 percent this year to 60 million metric tons. Dmitry Rylko, a director at the Moscow-based Institute for Agricultural Market Studies, said yesterday that the estimate may be cut further because of the worsening drought.
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Source: Bloomberg
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