Increasing demand for food worldwide is pushing stocks of grains, such as wheat, corn and soybeans, down faster than originally projected.
The U.S. Department of Agriculture cut its forecast of world wheat stockpiles on May 31 by 1.7 percent to 209.6 million metric tons, according to Bloomberg.com. U.S. wheat exports were boosted 2.6 percent from February as demand for meat and grain in Asia is surging. As a result, U.S. stockpiles of wheat will reach a three-year low, which is helping to drive global food prices higher, particularly cereals, cooking oils and sugar.
In addition, wheat for grain feed is expected to reach a record pace of 131.06 million tons, which is an increase from 130.66 million estimated last month, according to the USDA.
As wheat for feed, supplies are going to be tighter as exports are expected to remain robust. As a result, wheat prices are up 8.9 percent after reaching the year’s low on Jan. 18, Bloomberg reported.
While the wheat markets look strong, all eyes are on the South American soybean crops. USDA lowered its outlook for Brazil and Argentina after drought and other factors have reduced both crops. Brazil’s crop was reduced to an estimated 68.5 million tons, which is 4.9 percent less than projected last month. Argentina’s crop was forecasted down 3.1 percent to 46.5 million.
Domestic supplies of soybean are dropping as well. “Soybean reserves on Aug. 31 will drop to a three-year low of 57.2 million tons, while the amount of corn held in the U.S., the world’s top grower and exporter, will slip to the lowest since at least 1996,” Bloomberg.com reported.
Corn supplies are projected to remain tight. World stockpiles were forecasted down 0.7 percent from last month’s estimate.