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Grain Supply Update: Nov. 24



Grain Supply Update: November 24, 1996

       Grain Supplies: Where Are We Now, Where Are We Headed?
                    (c)  Geri Guidetti, 1996
      May be reprinted if copyright and Sig. File remain intact.

The ’96 growing season  has certainly been an interesting one for grain 
growers and traders.  At no other time in modern agricultural history 
have global grain supplies been so low, a good harvest so important, and 
the potential impact on the global food supply so great.  At one point 
this summer, it actually appeared that the United States faced the very 
real prospect of running out of corn to feed poultry and livestock, and 
to supply the corn syrup and ethanol production industries.  Tight 
supplies, high prices and the potential for running out of grain led to 
a hurried reduction in the size of cattle herds, much higher prices for 
dairy products and the temporary closing of sweetener and ethanol 
production facilities.

Though the final harvest figures are not completely tallied at this 
writing, they are sufficiently complete to say that it appears we have 
ducked the bullet this season insofar as this year’s food supplies are 
concerned.  This is not to say that we have replenished our national 
stockpiles to comfortable levels.  We haven’t. We MUST have a good 
harvest next year to prevent a critical shortages. There is no room, no 
substantial cushion, for  widespread crop failures.  We continue to live 
essentially from field to mouth.  Yet, considering how close a call we 
had this year, we have much to be thankful for this Thanksgiving.

If you have been watching the volatile grain markets these past few 
weeks, you know that the estimates of the final sizes of the corn, wheat 
and soybean crops and the projections for demand -- demand at home and 
for exports to meet global needs—have risen and fallen almost daily, and 
so have the prices. How reliable are the harvest and supply estimates 
that come out of the Agriculture Department, the official source for 
agricultural data in the United States? Where, exactly, are we right now 
on the food front, and where are we headed?

When analyzed over the past 15 years,  grain and other food supply 
projections released by the USDA in November differ from the final 
figures by small percentages.  The November projections for world wheat 
production, for example, have differed from  the final estimate by only 
1.1%.  U. S. wheat production estimates were only off by 0.4%. Ending 
stocks, those in the granary at the end of a growing season before the 
new harvest is in, have been off 4.6% for global wheat stores, and 9.9% 
for U.S. stockpiles.  In a nutshell, we could say that this month’s 
figures are fairly reliable and worth paying serious attention to.  
Let’s take a look at some of them with respect to the past two years’ 
supplies.

Definitions: Coarse Grains are corn, sorghum, barley, oats, rye, millet 
and mixed grains.  Total Grains are wheat, coarse grains and milled 
rice. 

World Total Grain Supply  (all in million metric tons):

1994/95—total supply   2075.48        Ending stocks:  301.21
1995/96 (est.)         2003.04    	              242.69
1996/97 (Nov.  Proj.)  2084.00         		      274.54


World Wheat Supply:

1994/95—total supply   666.88     Ending stocks:      118.00
1995/96  (est.)        654.88			      103.22
1996/97  (Nov. Proj.)  682.28                         110.79
 
Coarse Grains Supply:
1994/95—total supply    991.52         Ending stocks:   133.78
1995/96  (est.)         928.33                           90.72
1996/97  (Nov. Proj.)   974.32                          114.29

Milled Rice Supply:          
1994/95—total supply  417.08          Ending stocks:  49.43
1995/96  (est.)       419.84           	              48.75
1996/97  (Nov. Proj.) 427.40                          49.46
			**************
United States Total Grain Supply

Total Grains:
1994/95               404.44       Ending stocks:      60.17
1995/96  (est.)       339.55                           25.50
1996/97  (Nov. Proj.) 365.54                           46.25

Wheat:
1994/95               81.14          Ending stocks:  13.79
1995/96  (est.)       75.04                          10.23
1996/97  (Nov. Proj.) 74.24                          11.83

Coarse Grains:
1994/95               315.66          Ending stocks:    45.34
1995/96  (est.)       257.56                            14.45
1996/97  (Nov. Proj.) 284.56                            33.58

Milled Rice:
1994/95                7.64           Ending stocks:      1.04
1995/96 (est.)         6.95                               0.82
1996/97 (Nov. Proj.)   6.74                               0.84


These are the latest available figures in these grain categories.  It is 
becoming inaccurate to look at U.S. grain stocks independent of world 
supplies, as the grain market, like it or not,  is rapidly evolving into 
one global marketplace.  A great harvest in  the U.S. one year is no 
guarantee of a replenishment of our national stockpiles anymore, because 
excess grain that drives down prices makes our grain all the more 
attractive for import by foreign countries.  A poor harvest or two in 
the U.S. would quickly turn us into net importers of grain.

Since 1987, grain carryover stocks have trended downward.  USDA data 
since 1980 show that 1994/95 had the lowest carryover stocks on record. 
Yet, if you look carefully at the data above, you’ll see that  1995/96 
were even lower, and  projections for 1996/97 do not even make it back 
to 1994/95 levels.  With global population increasing at a net gain of 
1.7 million people/week, it is likely that carryover stocks will never 
again be sufficient to protect against natural or man-made agricultural 
catastrophes.  Growing shortages are inevitable. Within our lifetimes, 
food will increasingly become a bargaining chip in national and 
international politics and a persuasive one at that...
Geri Guidetti, The Ark Institute
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