Grain supplies dip further

By Catherine Boal

- Last updated on GMT

Related tags Food and agriculture organization European union

The International Grains Council (IGC) has been forced to lower
grain estimates announced last month as conditions in the worldwide
grain market worsen.

IGC wheat output predictions were further lowered from 596m tonnes to 593m tonnes and overall grain production was cut from 1577m tonnes to 1575m tonnes - a total fall of 51m tonnes from the previous year.

This spells more bad news for bakers already feeling the squeeze as falling supplies prompt several companies to warn of mounting flour costs.

Earlier this month, two of the UK's biggest millers, ADM Milling and RHM, announced they were increasing flour prices by nearly £30 (€44) per tonne.

Given the increased costs, industry experts have warned that shoppers could have to pay between 4p (€0.06) and 10p (€0.14) more for a loaf.

According to the IGC report, "the deterioration in prospects in the EU"​ are to blame for the revised forecast.

And these rising costs in the EU market are attributable to a number of unfavourable factors such as the recent summer heatwave.

"In the EU, internal grain values were boosted by greater than anticipated yield losses after an unusually hot early summer, coupled with strong feed demand and reluctant farmer selling."

In terms of wheat, the organisation predicts: "World wheat production will likely fall with a reduced figure for the EU and some other countries only partly offset by a higher estimate for China. The early summer hot spell in the EU has led to significant yield reductions."

And other industry bodies have been making similarly gloomy predictions, last month the Food and Agriculture Organisation (FAO) predicted that world wheat could decline by as much a 10m tonnes throughout the year.

In addition, the US Department of Agriculture cut its global wheat forecast to around 116m tonnes last week - its lowest level in 24 years.

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