From the Ground Up - "Global Demand for Grain Continues to Grow"

Over the last fifteen or sixteen years global grain consumption per capita has continued to grow steadily. Producers responded to strong demand and the high prices a few years ago with increased grain production. With lower prices for the last few years the question now becomes how long these production levels will be maintained. Mark Welch is an agricultural economist with Texas A&M Agrilife Extension.

“In response to the high prices of 2012, we made a significant leap higher in global grain production. It’s just a complete step up. Thirty-five billion bushels to forty billion bushels in the last several years. With doing that, again that carry over to use ratio has remained unchanged over the last four years.”

Welch says demand remains strong.

“We have an underlying demand base for our grains that continues to expand, whether for food, or for fuel or for feed. They’re not growing at the rate that they were when we first started the ethanol boom and some of those other aspects, but our livestock industry is expanding. We continue to use more gasoline and so that’s increasing our fuel use. There are countries all around the world that have renewable fuel standards, and so the demand for those green energy components continues to grow.”

Welch points out that many economies around the world are continuing to grow their middle class.

“People that want to live better and eat better, so it just creates a demand base for grain. So despite this record production the last several years, we still haven’t seen growth in that carry over level of grain relative to the amount that we’re consuming every year.”

Welch says for the last few years, producers have been able to keep up with demand, partly because of good weather that allowed increased production.

“But the question will be then, given the lower commodity price environment that we’re continuing to have, at what point will that begin to have some impact on the level of grain production, which might be compounded by a change in the weather, something that was less favorable than the good growing conditions we’ve had in the last several years.”