Corn stocks set to hit five-year low on Chinese fuel demand: IGC

Global stocks of corn are expected to hit a five-year low at the end of the 2017/2018 harvest as ethanol demand for China drives down its state-held stocks, according to data from the International Grains Council (IGC).

Global corn carryover stocks are forecast to fall to 203 million mt, down 27 million mt on the 2016/2017 harvest year, the IGC said in its October Grain Market Report.

The fall in stocks comes despite an overall estimated rise in corn production to 1.034 billion mt, up 5 million mt on the IGC’s previous estimate and 1% higher than the 2013/2014 figure.

However, consumption is expected to rise to 1.067 billion mt, up 70 million mt over the same three-year period with global trade reaching 149 million mt.

“Much of the rise in maize consumption is in China, where government measures are stimulating demand in order to curb stocks,” the IGC said.

In 2016, China said it would aim to double ethanol production by 2020 in an attempt to whittle down corn stocks, increase self-sufficiency in motor fuel and solve its pollution problems.

The news comes as farmers in the US, the world’s biggest producer of corn, is grappling with a sluggish corn harvest that has been beset by rain.

According to data from the USDA, the corn harvest was 38% complete, a chunky 21 percentage points behind historical averages.

Despite this, the IGC, which produces monthly forecasts of global grain production, said it expects total grain production to reach 2.075 billion in the current harvest year, up 6 million mt on last month’s September estimate, with consumption to hit 2.104 billion, up 8 million mt from the September report.

Virtually all of the increases in both production and consumption were due to adjustments in corn forecasts.

Wheat production is estimated to be stable at 748 million mt, with consumption at 741 million mt and stocks at 249 million mt.

Soybean production is estimated at 348 million mt, trade at 151 million mt and consumption at 353 million mt, broadly in line with the previous estimate.