Grain surplus growing with China demand falling
The USDA estimated on Tuesday that global corn and wheat stockpiles are going to be even bigger than analysts were predicting. Futures for both commodities pared gains after the report.
After three straight years of price declines, the outlook for bigger supplies underscores why banks including Goldman Sachs Group, Inc. are still bearish on agriculture. The bumper crops are also helping to keep global inflation in check, with world food costs staying near the lowest since 2009. The slump is hurting demand for seed producers and farm equipment makers, and shares of Deere & Co. have fallen 13% in the past 12 months.
“We are not short of any global crop,” Dale Durchholz, senior market analyst for AgriVisor LLC in Bloomington, Illinois, said by telephone. “We are not going to see much food inflation any time soon. With the current weather forecast we should see most crops in the US get planted in a timely manner.”
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