World Grain Situation

Six of the last seven years world grain production has fallen short of world use. World carryover of grain stocks are down to 57 days of consumption. Now with huge profits in converting grain into ethanol fuel there will be even less grain available for exports to other countries. Importing countries like Japan, Egypt, and Mexico are concerned that U.S. corn exports, which are 70 percent of the world total, will disrupt their poultry and livestock industries.

Other countries are also experiencing a decline in corn available for export. Argentina recently suspended export permits because of concerns over their domestic supply of corn. Exports from China are forecast to decline, and because of this, domestic prices are beginning to rise more rapidly throughout the country which could result in even less exports then currently expected.

The U.S. corn price for no.2 yellow corn in November averaged $164 per ton, up US $67 per ton, or 70 percent, from 2005. The Argentine export prices have also increased sharply in the recent months, to almost $170 per ton, up US$78 per ton from 2005. Other coarse grains have also been keeping a more firm market tone in recent months party because of the spill over effect of corn. Sorghum in the U.S. has become less available and barley and oats supplies in Australia are down sharply. Canada also reports reduced barley production.

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