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World Wheat and Maize Ending Stocks

World stocks have been depleted in recent years, and only thanks to a record harvest in 2008 has there been any replenishment to the stock level. Stocks levels and stocks to use ratio's still remain historically tight and therefore the current 2009 crop remains vitally important. Much of the wheat and maize stocks are dominated by the three main producers, China, the US and the EU27.

World Stocks
Over the past decade world ending stocks for both maize and wheat have been falling with maize stocks reaching lows of 108.8Mt in 2006/07 and wheat stocks seeing lows of 120.1Mt in 2007/08. The record world harvest in 2008 of 684.4Mt has led to the world stocks being replenished with 2008/09 maize ending stocks forecast at 144.6Mt (up 11% from 07/08), and wheat ending stocks at 155.8Mt (up 29.7% from 07/08). The low stocks of recent years can be seen as one of the many reasons behind the market's volatility. The world stocks to use ratio (Graph 1) shows the world stocks as a percentage of the world consumption level, a ratio that is below 25% is seen to be in the danger zone whereby markets react more violently to news. The world wheat and maize stocks-to-use ratio has been very low in recent years, with the maize ratio falling to 19.5% in 2007/08 and the wheat ratio falling as low as 15% in 2006/07.

Wheat Stocks
World wheat stocks levels are dominated by the three largest producing regions countries, the US, EU27 and China. Of the 155Mt ending stock for the current season, China is expected to hold approx 33% of this, with the US and EU27 holding 14% and 13% respectively (Pie Chart 1). Of the total forecast 2008/09 world ending stock, China holds 46.31Mt; the US is thought to have a stock of 19.39Mt and the EU27 a stock of 17.66Mt. China, who dominates wheat stocks with a 33% share, has been increasing its stocks over the past three years, with stocks increasing by 20% since 2006/07. US and EU27 stocks have been more changeable with stocks falling in 2007/08 before being forecast to topped up in 2008/09 from the record '08 harvest. With regards to the other main wheat producing countries, in 2008/09 Russia is forecast to hold 9.1Mt of ending stocks (7% of world total), Canada is to hold 6.5Mt (5%) and Australia 5.8Mt (4%).

The recent stock increase following harvest '08 has increased stocks to a more comfortable level, but historically the ending stocks of wheat are still low. Therefore the any changes in production and demand will have large effects upon the market. For example, the International Grains Council estimate that world wheat production will fall to 649Mt this season, a change in wheat availability that could have subsequent effects upon stock levels. As the global wheat stocks are held by the three main producers, any changes in production n these regions will have large effects upon the global stock situation.

Maize Stocks
The USDA forecast 2008/09 world maize ending stock at 144.62Mt 129.96Mt (07/08), again China and the US are the dominant holders of the world stock. China holds a massive 52.49Mt (40%) whilst the US holds 44.21Mt (34%) (Pie Chart 2). In recent years both the US and China's ending stocks have been increasing, since 2006/07 they have increased by 43% and 33%, respectively. To quantify the dominance of the US and China in the holding of world maize stocks, since 2000/01 they have always had at least 62% of the world ending stocks, and on average since 2000/01 they have held between them 70% of the world maize ending stocks. Such is the supremacy of the US and China, the next largest holder of maize stock is Brazil who holds 8.8Mt of ending stock, 7% of the world total.

China is the second largest producer of maize behind the US and is forecast to produce 165.5Mt of maize in 1008/09, the interesting fact about China is that they are self sufficient in using their production as China is projected to consume 110Mt of maize in 08/09, and is only thought to export 500kt of maize in 08/09. Therefore China's estimated ending stock of 52.5Mt for 08/09 represents on third of their total production. China's self-sufficiency means that even though they hold a large proportion of the global ending stocks, as they do not export a great amount, the US, with larger production (307.4Mt 08/09 est.) and being the world's largest maize exporter (43.1Mt 08/09 est.), is seen as the best barometer of the global maize market.

20 March 2009