USDA Makes Surprise Cuts to World Corn, Wheat Stockpiles Outlook

Amid indications of growing grain demand, the U.S. Department of Agriculture (USDA) report issued March 10 included surprising reductions to the department’s forecasts for global corn and wheat stockpiles.

After global bumper grain harvests pushed down the Bloomberg Agriculture Index by 27% last year, improving demand for U.S. corn exports, lowering U.S. stocks and growing global use of corn in livestock feeds can help boost flagging prices.

The USDA’s March forecast for world corn stockpiles was lower than the lowest prediction in a Bloomberg survey of 16 analysts, as the department forecasts that world corn stockpiles before this year’s harvest in the Northern Hemisphere will be 185.28 million tons, compared to its previous February estimate of 189.64 million tons.

Corn fell 43% over the past two years as farmers harvested record crops, and even though sales are slow, cheap prices, healthy exports, and a growing livestock herd are supporting better-than-expected demand.

The agency also made its first cut to its forecast for U.S. wheat stockpiles since November 2014 (albeit a small one). The agency expects U.S. wheat inventories to total 691 million tons at the end of May – 0.1% lower than its previous estimate. Global wheat stockpiles will also be lower than last month’s forecast as more of the grain is used in livestock feed, indicating that there may be a small decline in wheat available for human consumption.

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