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Grains Piled on Runways, Parking Lots, Fields Amid Global Glut
by P.J. Huffstutter and Karl Plume (Reuters) ... World stockpiles of corn and wheat are at record highs. From Iowa to China, years of bumper crops and low prices have overwhelmed storage capacity for basic foodstuffs.
Global stocks of corn, wheat, rice and soybeans combined will hit a record 671.1 million tonnes going into the next harvest - the third straight year of historically high surplus, according to the U.S. Department of Agriculture (USDA). That's enough to cover demand from China for about a year.
In the United States, farmers facing a fourth straight year of declining incomes and rising debts are hanging on to grain in the hope of higher prices later. They may be waiting a long time: Market fundamentals appear to be weakening as the world's top grain producers ponder what to do with so much food.
The persistent glut is a striking contrast from the panic a decade ago, when severe droughts in Russia and the United States sent prices soaring. The shrinking supply forced big importers such as China to enact policies to encourage more domestic production and increase the volume of storage to improve food security.
China abandoned that policy last year and is now selling off hundreds of millions of tonnes of old stocks.
Russia, too, is looking at exporting from state-held stockpiles, with storage stuffed after a record harvest in 2016.
A surge of Chinese and Russian exports would put even more downward pressure on prices in an oversupplied global market.
On the other side of the globe in Australia, demand for the storage bags has exploded after farmers produced record crops of wheat and barley.
Farmers with mounting bills, tight cash-flow and nowhere to store crops may have to sell them - even if it means taking a loss.
In Goodland, Kansas, where the next wheat harvest begins in late June, farmers holding grain in silos are facing cash wheat prices of about $3.15 a bushel and cash corn prices of $2.90 a bushel - both well below production costs of at least $4 a bushel. READ MORE