Droughts, Ukraine war push global grain stocks toward worrying decade low

Poor weather in key agricultural regions from the United States to France and China is shrinking grain harvests and cutting inventories

The world is heading toward the tightest grain inventories in years despite the resumption of exports from Ukraine, as the shipments are too few and harvests from other major crop producers are smaller than initially expected, according to grain supply and crop forecast data.

Poor weather in key agricultural regions from the United States to France and China is shrinking grain harvests and cutting inventories, heightening the risk of famine in some of the world's poorest nations.

Importers, food manufacturers and livestock producers had hoped crop availability would improve after war-torn Ukraine resumed shipments from Black Sea ports this summer and US farmers planted large crops.

But the United States, the world's top corn producer, is now expected to harvest its smallest corn crop in three years. Drought also punished European harvests and is threatening South America's upcoming planting season.

By the end of the 2022/23 crop year, the world's buffer stocks of corn will be enough for just 80 days' worth of consumption, down 28% from five years ago and the lowest level since 2010/11, according to figures compiled for Reuters by the International Grains Council, an intergovernmental organization.

That would be fewer days of corn stocks than the world had in 2012, when the last global food crisis spurred riots.

Policymakers are worried.

The World Bank has earmarked $30 billion to help offset food shortages worsened by war, and U.S. President Joe Biden last week announced nearly $3 billion in additional funding to combat global food insecurity.

Half a million Somali children face hunger in the worst famine anywhere this century, according to the United Nations, as a severe drought grips the Horn of Africa.

Thousands of miles away in the United States, South Dakota corn grower Mark Gross expects to harvest as few as 20 bushels per acre on some fields this autumn, down more than 80% from the local average last year, after drought and fierce winds ravaged his land.

Gross said the weather remained too dry in the spring and then two derecho windstorms brought destructive 160-kph-per-hour gusts across fields in Hutchinson County and southeastern parts of the state.

"It's lining up to be like 2012," Gross said. "No one wants to admit it, but it's true."

Tight grain supplies reflect the impact of climate change on crop production as well as growing global demand for livestock that feed on corn, eating away at stockpiles. Inventories of all harvested grain on hand globally will reach an eight-year low at the end of this crop year, the International Grains Council said on Thursday.

More poor weather could further reduce global inventories, particularly if the current dry weather in South America continues into the main planting season, as the crop cycle shifts to the southern hemisphere.

Crop forecasts in Argentina, the world's No 3 corn exporter, are already being scaled back due to dry weather.