On foodgrain stock forecasts, the IGC and USDA are both tentative

Foodgrain exports forecasts for 2012-13 by the USDA’s WASDE. These are the major exporting countries, exports in million tons.

In this late February capsule of the foodgrain forecasts from the International Grains Council (IGC) and the US Department of Agriculture’s WASDE (world agriculture supply and demand estimates) we see estimates for slightly higher production, but also somewhat lower consumption. The question is: what about stocks, on which there is never enough knowledge distributed as to who holds them (government or private, traders or bankers) and how they are used by food markets or agricultural commodities markets?

Still, here is what the IGC has said:

Following minor revisions to the 2012-13 forecasts, the estimate for total grains end-season stocks (excluding rice) has been revised up by 4mt to 326m, including increases for both wheat and maize. Overall, however, they remain down 40mt year-on-year at a six-year low, or a 17-year low for the major exporters.

IGC’s 2013 February grain market report presented the first forecast for the 2013-14 supply and demand balance for wheat. “While world output is tentatively projected up 4% year-on-year, much is expected to be absorbed by higher demand and end-season stocks are likely to rise by just 2mt, following a 21m decline in 2012-13. The forecast for 2012-13 end-season maize stocks has been revised 1.7mt higher this month, but major exporters’ end-season inventories are still put at a 16-year low,” said the 2013 February report.

Here are the major foodgrain forecasts for wheat, rice, coarse grain and maize:

Wheat
According to the IGC – Major exporters’ stocks for 2012-13 are revised down by 1.5mt, to 49.9mt, but upward revisions for China and India raise the global total to 176mt, which is still down 21m from last year. Increases for Brazil, Iran and Russia help to lift the 2012-13 world trade forecast by 0.8mt this month, to 137.4m. World output for 2013-14 is tentatively projected up 4% year-on-year, but much is expected to be absorbed by higher demand leaving little room for stock building.
According to WASDE – Global wheat supplies for 2012-13 are nearly unchanged with a small increase in beginning stocks more than offsetting a small decrease in production. Global wheat output is projected 0.7 million tons lower. Production is lowered for Kazakhstan and Brazil, but raised for Ukraine, South Africa, and Belarus. Global wheat consumption is virtually unchanged at 673.4 million tons; however, global consumption is projected down 24.6 million tons year to year, mostly reflecting lower feed and residual use in 2012-13. World wheat ending stocks for 2012-13 are also nearly unchanged this month at 176.7 million tons.

Rice
According to the IGC – At 466mt, world rice production is forecast to be little changed year-on-year, as smaller harvests in Asia, particularly in India, are offset by gains elsewhere. World use is expected to rise by 2% year-on-year, to a fresh record, underpinned by increases in Asia’s leading consumers. Global ending stocks are forecast to fall marginally, but supplies in the major exporters are expected to rise to a new record. World trade in 2013 is projected to decline by 5% as key importers in Asia and Africa reduce purchases from last year’s highs.
According to WASDE – Global 2012-13 projections of rice production and consumption are raised from last month, but trade and ending stocks are lowered. Global 2012-13 rice production is forecast at a record 465.8 million due to increases for Bangladesh, Bolivia, and Nepal partially offset by reductions for Argentina and Laos. Global consumption is raised 0.7 million tons to a record 469.3 million as relatively small changes are made to several countries including Bolivia, Iraq, and Nepal. Global exports for 2012-13 are lowered slightly due mainly to reductions for Argentina and China. Imports are reduced for Bangladesh, Cuba, Egypt, and Indonesia. Global 2012-13 ending stocks are reduced 0.5 million tons to about102.0 million due mostly to decreases for Egypt and Indonesia.

Coarse grain
According to WASDE – Global coarse grain supplies for 2012-13 are projected 2.1 million tons higher as a decrease in beginning stocks is more than offset by a 2.9-million-ton increase in production. Lower 2012-13 beginning stocks mostly reflect an increase in 2011-12 corn exports for Brazil and revisions to the Paraguay corn series that lower 2011-12 corn area and yield. Global 2012-13 production is also higher this month for sorghum, barley, oats, and rye. Sorghum production is raised 0.4 million tons for Mexico with higher area and yields for the summer crop, but lowered 0.2 million tons for Australia with reduced prospects for area and yields. Global barley, oats, and rye production are up a combined 0.6 million tons on larger reported crops for the FSU-12 countries.

Maize (corn)
According to the IGC – Global production is forecast to decline by 3% year-on-year, with sharp falls in the US and EU offsetting rises elsewhere, including in China and the southern hemisphere. Despite some less than ideal weather in recent months, Brazil and Argentina are still set to harvest record crops. Due to tighter supplies, world use is expected to dip by 1% year-on-year, led by reduced demand from the US ethanol sector. With total use again expected to exceed production, closing stocks will decline for a fourth consecutive year, including a sharp drop in the major exporters.

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Black Sea questions, South Asian rice, the ethanol effect – IGC on grains in 2012 February

IGC's supply and demand graphs for; top row - total grains, wheat, maize; bottom row - rice, soyabean, and IGC freight index

The International Grains Council (IGC) has released its grains market report for February 2012. In its market commentary, which is a cogent 250-word summation of 1,840 million tons of produce and where it will go, the IGC has said:

Grain and oilseed markets mostly strengthened in the past month, the IGC daily index (GOI) up 6% to near four-month highs. The upturn reflected concerns in early February about maize and soyabean crops in South America, as well as the impact of the recent severe cold spell in parts of Europe and the CIS.  Moreover, after a very high rate of shipments from the Black Sea region in the first half of the season, sales activity declined, with US grain, in particular, attracting much more buying interest.

Wheat export prices in Europe climbed by some 8%, in somewhat tighter markets, with reports of logistical problems and possible future export restrictions in the Black Sea region (though denied), seen as potentially bullish. However, global supplies appear ample, with the likelihood that a portion of upcoming large South Asian wheat harvests will be offered for export. US maize (corn) values remained firm, supported by reports of crop losses in South America and active export interest for remaining old crop supplies, although forecasts of a further rise in US plantings this spring added a bearish element.

Oilseed prices rallied strongly in the past month, reflecting worries about the final outcome of soyabean crops in Argentina and Brazil, good demand for US supplies, including a new trade deal with China, and rising crude oil values. International rice market trends were more mixed, with Thai prices supported by domestic support measures but those in Vietnam, especially broken grades, easing to compete with South Asian offers.

[The IGC 2012 February grains market report is here. The data files as excel spreadsheets are available in this zip archive.]

The IGC’s sectoral advice is:

Grains: The world production estimate is lifted by 11m. tons, to 1,841m., largely because of upward revisions in Australia, Kazakhstan, Ukraine, India and Brazil, the latter because losses of its main maize crop will likely be more than compensated by a larger second crop. These upward revisions outweigh a reduced maize figure for Argentina. To an extent, the forecast of world consumption is adjusted higher to reflect the bigger crop estimates, with total use of grains placed 5m. tons above the January forecast, at 1,836m. The change is mainly for feed use, now put at 775m. tons, 4m. more than before and 4% higher than in 2010-11.

Of particular interest is the marked slowdown in the annual increase in industrial use, expected to rise by only 2% this year, with ethanol use of maize in the US set to recede slightly from its peak in 2011. While the latest statistical forecasts of supply and demand suggest that, nominally, global carryover stocks will rise slightly in 2011-12 from last year’s low figure, to 378m. tons (373m.), the total carryover in the eight major grain* exporters is still expected to dip by 6m. tons, to 131m., the smallest figure since 2007-08.

As this pair of charts shows, the Baltic Dry Freight Index has dropped not only to a one-year low, but is at a three-year low. Charts: Bloomberg

Wheat: A further increase in the global wheat production estimate for 2011-12, to 695m. tons (653m.), boosts total availabilities to 892m., their highest ever. Projected food and industrial consumption are both revised lower this month, but attractive prices, particularly compared with maize, lift the forecast of feed use by 2m. tons, to 131m. (115m.), the most since the early 1990s. Strong feed wheat demand is reflected in the global trade figure, helping to lift total wheat trade to match the 2008-09 peak, at 136.8m. tons (125.7m.). Even though total consumption is growing at a faster than average pace, world stocks are projected to rise to 211m. tons (196m.), eclipsing the previous record in 1999-00.

Maize (Corn): Maize production in 2011-12 is expected to increase by 4%, to a record 864m. tons. The US crop, while disappointing, was slightly above average, and bumper harvests were collected in China, Ukraine and the EU. A severe drought has reduced yield prospects in South America, especially in Argentina, but Brazil remains on track to produce a record crop. Improved supplies in some countries are boosting consumption, with overall use forecast at a record high. Feed use of maize is expected to increase at a faster than average pace but, with US ethanol production likely to decline slightly, the rise in industrial demand will be below trend. With demand outpacing the increase in supplies, ending stocks are forecast to tighten further, including in the US. Amid solid buying by a number of importers, world trade is forecast to rise to a four-year high.

Barley: Better than expected 2011-12 harvest results, including in Argentina and Australia, lift the estimate of world barley production by 1.1m. tons compared with last month, to 134.7m. World consumption is expected to remain steady, contained by uncompetitive prices in the feed sector, especially in the EU, and by sluggish growth in brewing demand. While higher than previously forecast, carryover stocks are set to remain tight, particularly in the EU and North America. The projection of world trade is raised by 1.2m. tons, to a three-year high of 17.8m., with a steep upturn in buying by Saudi Arabia.

Rice: Due to increases in Asia’s biggest producers, China and India, global rice output is projected to rise by 3% in 2011-12, to 463m. tons. The record outturn will be accompanied by a further expansion in demand, to 460m. tons (449m.), but the 2011-12 carryover is still expected to increase by 4%, to 99m. Much of the forecast rise in global stocks will be due to increases in the major exporters, notably in India and Thailand, seen 14% higher, at a record 32.7m. tons. World trade in 2012 is forecast to contract by 7%, to 32.2m. tons, owing to significantly reduced purchases by key Asian buyers, including Bangladesh and Indonesia.

Ocean freight rates between major export-import regions.

IGC’s 2011 wrap-up – Eurozone crisis has affected crops, barring rice

The International Grains Council has released its grain market report for November 2011. As this will be the IGC’s last report for the year, grain traders in the major exporting countries and buying countries will use this as their end-2011 reference. Here are the main forecasts by the IGC for major crops:

Market commentary – After showing some strength in early November, global grain export prices were again in retreat, though with rice once more the exception. Overall, IGC’s GOI index fell by 16 points, or 6%, to a 13-month low. The recent market downturn can be partly ascribed to bearishly perceived market fundamentals, as harvests neared completion in the northern hemisphere and work started south of the equator. But it was also in reaction to deepening financial uncertainties, notably in Europe, affecting nearly all commodities. Heavy supplies of wheat amid strong export competition, including from new crop grain out of Argentina and Australia, mostly reduced fob values by between $20 and $30 over the past month, narrowing the gap with Black Sea quotations.

Despite initial support from US cash markets and a smaller official crop estimate, CME maize futures in Chicago saw major speculative selling, partly due to increased competition from other exporters but with sentiment considerably dented by worries about the global financial crisis and the collapse of a major brokerage firm. Similar pressures were evident in oilseed markets, led by a decline in US soyabeans, values of which dipped to their lowest since October 2010. As measured by IGC’s sub-index for rice, export prices of this cereal remained firm in the past month: within this measure, quotations in Thailand saw further gains, attributed to the country’s severe floods, while those in Vietnam and South Asia weakened.

Grains – Reduced grain crop estimates for some major producers, including for maize in the US, are only partly offset by increases in the CIS and elsewhere, trimming the global production total for 2011-12 by 3m. tons from October, to 1,816m. This would still represent an increase of 64m. tons over last year, largely due to sizeable recoveries in output in Russia, Ukraine and Kazakhstan. Production of all crops except sorghum will rise this year, with the biggest increases in wheat and maize. Southern hemisphere prospects remain favourable, with rains in South America and Australia mostly boosting yield expectations for wheat and helpful for plantings of maize and sorghum. Consumption of grains will also increase in 2011-12, especially in the feed sector, including a marked rebound in Russia after the previous year’s drought.

At 1,826m. tons, world use is expected to show a rise of 2.2% from the previous year. However, a feature this year will be the marked slowdown in the expansion of industrial use, set to rise by only 1.7%, to 303m. tons. Within this figure, the use of grains in fuel ethanol, which has displayed huge growth in the past decade, is expected to stay close to last year’s 147m. tons, assuming the use of maize for this purpose in the US declines slightly. With the reduction in the global grain crop estimate largely balanced by an upward adjustment in the opening stocks figure and a slight cut in the use forecast, the projection of world carryover stocks is unchanged from last month, at 360m. tons.

[ Data – here are the IGC’s data files (all Excel): Total grains supply and demand ; Total grains trade ; Rice supply and demand ; Rice trade ; Soyabean trade ; IGC’s grains and oilseeds index ]

However, the total for the eight major exporters is trimmed by 3m. tons, largely because of a reduced stocks projection in the EU. World trade in grains in 2011-12 (July-June) is expected to climb by 11m. tons to a record 254m., 4m. more than forecast previously, reflecting larger than anticipated wheat purchases after this season’s marked upturn in medium and lower grade supplies, especially from the Black Sea region, whose total grain shipments are set to total 55m. tons, up from only 22m. last year.

Wheat – The second largest world wheat crop ever and ample carry-in stocks from last year, have sharply boosted global availabilities in 2011-12. While use is rising at a faster than normal pace, world stocks at the end of the season are still expected to climb to their highest level in a decade. Compared with last month, the estimate of world production is 1m. tons lower, at 683m., including a slight downward revision in the US, where the spring wheat crop was even smaller than expected.

Stronger than previously projected feed use adds another 2m. tons to the global consumption forecast, at 679m., boosting the annual percentage increase to about three times the longer-term trend. Because of the increased demand figure, the forecast of global carryover stocks is 2m. tons lower than last month, at 200m., but these would still be the largest since 2001-02. The world trade forecast is lifted by 3m. tons from before to nearly 135m., only slightly below the 2008-09 record. Rather than reflecting a supply shortfall in any one country or region (as it did in 2008-09, when Iran’s imports were higher than usual), import demand appears strong in a wide range of countries, aided by competitive pricing in the major exporters, especially for lower and medium grades.

Maize (corn) – While the US crop was slightly smaller than last year’s, larger outturns elsewhere are expected to lift world maize production to a new record of 853m. tons (826m.). With harvests in North America and Europe entering their final stages, attention is switching to the southern hemisphere, where farmers in Argentina, Brazil and South Africa are set to plant more maize than in 2010-11. Due to strong competition from feed-grade wheat and projected sluggish growth in industrial demand, world use is forecast to increase at a slower than average pace. However, with the total still expected to exceed output, 2011-12 ending stocks are forecast to fall to a five-year low. Trade in the year to June 2012 is forecast to increase by 1% due to strong demand from buyers in parts of Latin America, Asia and North Africa.

Rice – Flooding in parts of Asia has negatively affected crop prospects in some key exporters. Nevertheless, bigger outturns in China and India are expected to lift global production by 2% in 2011-12, to a record 459m. tons. Total rice use is also forecast to expand by 2%, with a further small increase projected in the global carryover, to 100m. tons (98m.). Within the total, inventories in the five major exporters are forecast to increase by 8%, to an all-time peak of 32m. tons. World trade in calendar 2012 is forecast to contract by 0.8m.tons, to 32.5m., on reduced imports by Far East Asia, especially by Bangladesh and Indonesia.

Agricultural supply and demand estimates show impact of US heatwave

The heatwave of mid-2011 is reflected in the latest World Agricultural Demand and Supply Estimates (WASDE), from the US Department of Agriculture, for 2011 September. The numbers and the accompanying commentary show just how badly this year’s scorching temperatures and insufficient rainfall has affected the outlook for corn, soybeans and cotton, as Worldcrops has observed.

Worldcrops has said that the most serious supply-demand tightness of these three agricommodities will be felt in corn, with a stocks-to-use ratio by the end of August 2012 now put at 5.3%. The national average yield in the US is forecast to be 148.1 bushels/acre, 4.9 bushels less than last month’s report and a massive 16.6 bushels below the record set in 2009-2010. Nevertheless this would still be the third biggest crop ever.

The USDA has slashed projected corn use for 2011-2012 by 100 million bushels – but only cut expected corn-for-ethanol usage by a meagre 50 million bushels. By August next year the US ending stocks will be, according to the report, 672 million bushels. That’s a drop in the bucket and by rights – and barring a global macroeconomic disaster – we ought to see $8/bushel corn futures sooner rather than later. Not least because the later the corn matures in the ground, the greater the risk of early frost damage.

We turn to the WASDE 2011 September commentary direct:

Wheat – Global wheat supplies for 2011-12 are projected 7.6 million tons higher mostly on larger beginning stocks in Canada and increased production for Canada, EU-27, and Ukraine. Beginning stocks for Canada are raised 1.3 million tons and production is raised 2.5 million tons, both reflecting the latest estimates from Statistics Canada. EU-27 production is raised 2.3 million tons with increases for Germany, Romania, France, Spain, and Bulgaria as harvest reports and revisions to official estimates continue to indicate higher yields. Production for Ukraine is raised 1.0 million tons based on the latest harvest reports. Other smaller production changes include 0.2-million-ton increases for both Brazil and Morocco, and a 0.2-million-ton reduction for Uzbekistan.

World wheat trade is raised slightly for 2011-12 with increased imports projected for the United States and Uzbekistan. Global exports are also raised as higher expected shipments from Canada and EU-27 more than offset reductions for the United States and Turkey. Global wheat consumption is increased 1.9 million tons with higher expected wheat feeding in Canada, China, Morocco, and Turkey more than offsetting a reduction for Russia. World wheat ending stocks for 2011-12 are projected 5.7 million tons higher at 194.6 million. At this level, global stocks would be up from 2010-11 and the second largest in the past decade.

Conversion Factors
1 metric ton = 45.9296 bushels
1 metric ton = 19.68 cwt
1 cwt is a hundredweight of 112 pounds or 45.35 kilogram

Coarse grain – U.S. feed grain supplies for 2011-12 are projected lower this month with reduced corn production as summer heat and dryness continue to be reflected in survey-based yield forecasts. Corn production for 2011-12 is forecast 417 million bushels lower with expected yields down from last month across most of the Corn Belt. The national average corn yield is forecast at 148.1 bushels per acre, down 4.9 bushels from August and 16.6 bushels below the 2009-10 record. As forecast, this year’s yield would be the lowest since 2005-06. Despite the lower yield, production is forecast to be the third highest ever with the second highest planted area since 1944. Total corn supplies for 2011-12 are lowered 442 million bushels with a 20-million-bushel reduction in carryin and a 5-million-bushel reduction in expected imports. Beginning stocks for 2011-12 drop with small increases in 2010-11 exports and use for sweeteners reflecting the latest available data. lmports for 2011-12 are reduced with the smaller forecast corn crop in Canada. Supplies for 2011-12 are projected to be the lowest since 2006-07.

USDA corn stocks-to-use ratio. Graphic: Worldcrops

Total corn use for 2011-12 is projected 400 million bushels lower with tighter supplies. Projected feed and residual use is reduced 200 million bushels mostly reflecting lower expected residual disappearance with the smaller forecast crop. Corn use for ethanol is projected 100 million bushels lower with higher expected corn prices and continued weakening in the outlook for U.S. gasoline consumption as forecast by the Energy Information Administration. Corn exports for 2011-12 are projected 100 million bushels lower with increased supplies and exports expected from Ukraine, Argentina, and Brazil. U.S. ending stocks are projected 42 million bushels lower at 672 million. The stocks-to-use ratio is projected at 5.3 percent, compared with last month’s projection of 5.4 percent. The season-average farm price is projected 30 cents per bushel higher on both ends of the range to a record $6.50 to $7.50 per bushel.

Global coarse grain supplies for 2011-12 are projected 3.1 million tons lower with larger barley, sorghum, millet, and oats supplies only partly offsetting the reduction for corn driven by the U.S. changes. Global corn supplies are reduced 4.5 million tons as increases in foreign beginning stocks and production partly offset the reduction in U.S. supplies. Projected global corn production for 2011-12 is lowered 5.9 million tons as a 4.8-million-ton increase in expected foreign output is outweighed by the 10.6-million-ton U.S. reduction. Brazil and Argentina production for 2011-12 are raised 4.0 million tons and 1.5 million tons, respectively, on higher expected area with rising returns for corn in both countries. Ukraine corn production is raised 1.5 million tons based on indications for higher yields. Production is raised 1.0 million tons for EU-27 with higher expected yields in France and several countries in Eastern Europe. Production is lowered 1.0 million tons for Canada based on the latest Statistics Canada estimates. Production is also lowered 2.1 million tons for Egypt as lack of government restrictions on planting resulted in a sharp shift in acreage away from corn and into rice.

Global coarse grain trade for 2011-12 is raised slightly with increased foreign trade in barley and corn more than offsetting the reduction in U.S. corn shipments. Barley imports are raised for Saudi Arabia and Syria with larger shipments expected from Ukraine and Russia. Corn exports are raised for Ukraine, Argentina, Brazil, and EU-27. Corn exports are lowered for Canada and Paraguay. Global corn consumption for 2011-12 is lowered 7.3 million tons, mostly reflecting lower expected use in the United States. Foreign corn feeding and consumption are nearly unchanged. World corn ending stocks are projected up 2.9 million tons with increases in South America, Ukraine, and EU-27 more than offsetting the reduction projected for the United States.

Rice – All rice beginning stocks for 2011-12 are lowered 2.7 million cwt from last month to 48.4 million (rough-equivalent basis) based on USDA’s Rice Stocks report released on August 26. The import projection is raised 1.0 million cwt to 19.0 million as it is expected that more long-grain rice will be imported due to tighter domestic supplies.

Exports for 2011-12 are projected at 93.0 million cwt, down 4.0 million cwt from last month, and down 18.6 million from the revised 2010-11 estimate. Long-grain exports are lowered 5.0 million cwt from last month to 61.0 million, and combined medium- and short-grain exports are raised 1.0 million to 32.0 million. The decrease in the export projection is due mostly to a much tighter supply situation, but additionally to an expected increase in competition from South American exporters in Western Hemisphere long-grain markets. Long-grain exports to Iraq are also expected to be lower. Increased competition principally from Egypt is expected to reduce medium-grain exports to Libya. All rice ending stocks for 2011-12 are projected at 38.3 million cwt, up 5.1 million from last month, but down 10.1 million from the revised 2010-11 stocks.

Projected global 2011-12 rice supply and use are increased from last month. Global rice production is projected at a record 458.4 million tons, up 2.1 million tons from last month, primarily due to larger expected crops in Brazil, China, the Philippines, and the United States. China’s 2011-12 rice crop is increased 1.0 million tons to 139.0 million, due mainly to an increase in the early rice crop. Brazil’s rice crop is raised nearly a million tons due to both an increase in area and expected yield. The recent surge in global prices accounts for the increase in planted area in Brazil from last month’s forecast. Global 2011-12 trade is nearly unchanged from last month. Global consumption is raised 0.7 million tons from a month ago due mostly to China. Global ending stocks for 2011-12 are projected at 98.7 million tons, up 0.7 million from last month, and the largest stocks since 2002-03. Stocks are raised for Brazil, China, the Philippines, and the United States.

Worldcrops has said that for soybeans. Ending stocks by end-August 2012 are put at 165 million bushels, 29 million higher than the August report but still tight. The US will have a reduced capacity to export soybeans and the futures price in our opinion will climb inexorably to $15/bushel and go significantly higher, if the weather outlook for the all-important South American soybean crop is unfavourable later this year. All in all this report has nothing which will astonish the markets immediately but lays the foundation for a significant bull-run in corn and, to a lesser extent, soybean futures in the coming months.

IGC on world grains in August: stocks down, maize down

The International Grains Council (IGC) in its end-August 2011 Grain Market Report has said that world grains production is expected to rise significantly from last year’s reduced outturn, but the forecast is lowered from July due to a sharp cut in the US maize crop estimate.

IGC 2011 August - total grains

While a downward adjustment is also made to the 2011-12 consumption forecast, global end-of-season grain stocks are nevertheless placed lower than before, projected to decline by 4% from their estimated level at the start of the season. Total production is now forecast at 1,808m. tons, down by 9m. from the previous month but still significantly higher than in 2010-11 (1,748m.). While the wheat crop figure is raised by 3m. tons, to 677m. (651m.), the world maize production forecast is reduced by 10m. tons, to 849m. (824m.) because of the further decline in US yield prospects.

In view of the tightness in the US maize market, with prices likely to stay firm, also in relation to wheat, feed use of grain is placed 3m. tons lower than before, at 766m., but still up from the past year’s 749m. Global feed use of maize is trimmed by 4m. tons, but that of wheat is placed slightly higher than before, at a twenty-year peak of 125m. tons, reflecting ample availabilities of lower quality grades. With the reduction in the global production total only partly absorbed by a cut in the consumption forecast, the projection of world carryover stocks in 2011-12 is reduced by 5m. tons, to 342m. This would represent a drop of 16m. tons from the estimated carry-in level, mainly due to the expected decline in maize inventories.

[Tables: total grains supply and demand ; total grains trade ]

In particular, end-season stocks in the eight major exporters are projected to fall to 112m. tons, down from 128m. at the start of 2011-12 and from 170m. the year before. These would be the smallest since 2003-04. The global trade forecast for grains in 2011-12 is almost unchanged at 244m. tons, up 1m. from the year ended this June. Bigger than previously projected imports lift the wheat figure by 1.5m. tons, to 128.2m., but this is balanced by a reduction for maize trade, now placed at 92.7m. tons. The substantial recovery in Black Sea region supplies will result in a major shift back to this origin, especially for wheat, with the downturn in US maize exports also partly offset by expected record Ukraine shipments of this grain.

IGC wheat 2011 August

WHEAT: World wheat supply and demand are forecast to be broadly balanced in 2011-12, with a rise in production matched by higher use. With winter wheat harvests nearing completion in the northern hemisphere, better than expected results in the EU, CIS and China outweigh the somewhat reduced prospects in the US and Australia, and the forecast of world production is raised by 3m. tons, to 677m. (651m.).

[Table: Grains and oilseeds index ]

Much of the rise in supply compared with last month is absorbed by a further increase in projected feed wheat demand, contributing to a larger than normal year-on-year upturn in total world wheat consumption, to 678m. tons (657m.). The global carryover is expected to be broadly unchanged, placed 1m. tons higher than in the last Market Report, at 191m. However, stocks of the highest-protein milling wheats are expected to tighten, especially in the US and Canada, contributing to a 3.9m. ton fall in the combined carryover in the eight major exporters, to 64.6m. This is up by 2.0m. tons from last month’s figure, including larger projections for the EU, Kazakhstan and Ukraine.

IGC corn 2011 August

MAIZE (CORN): The US crop forecast is cut sharply from last month, but production prospects in the southern hemisphere have improved and the 2011-12 maize crop is still projected to be the largest on record at 849m. tons (824m.). Demand is expected to increase, but at a slower pace. Growth in feed use will be limited mainly to developing countries, with meat output in most industrialised nations likely to increase relatively slowly due to high feed prices and flat demand.

Growing supplies of competitively-priced lower grade wheat will limit demand for maize, while use of distillers dried grains (DDG) will also remain high. After rising sharply in recent years, maize used for the manufacture of fuel ethanol is forecast to show very little growth, with the figure for the US projected to be unchanged from 2010-11. EU import needs are seen lower than before and, with some buyers in Asia likely to further boost feed wheat purchases, the 2011-12 world trade forecast is trimmed by 1.4m. tons, to 92.7m., almost unchanged from last year.

IGC rice 2011 August

RICE: World rice production (milled basis) in 2011-12 is projected to increase by 2%, to a record 457m. tons. This assumes larger outturns in Far East Asia, including in India, where prospects for this year’s kharif crop are generally favourable. Increased supplies should also enable a further rise in that country’s consumption, with world use forecast to expand to an all-time peak of 457m. tons. With global production and consumption expected to be broadly in balance, the 2011-12 carryover is set to show little overall change, at a nine-year high of 99m. tons. Within the total, inventories in the five major exporters are expected to climb to 30.9m. tons (29.2m.). World trade in calendar 2012 is projected to expand by 1%, to a record 32.2m. tons, with larger shipments to several countries in Asia and sub-Saharan Africa.

[Tables: rice supply and demand ; rice trade ]

IGC soyabean 2011 August

SOYABEANS: World soyabean production in 2011-12 is projected at 258.1m. tons, a decline of 3% from last year, mostly reflecting prospects for a smaller US outturn. Solid demand from Asia (China) will spur further growth in world trade in 2011-12, forecast to rise to a record 96.4m. tons (92.5m.). Global soyameal trade is placed at 60.3m. tons (58.3m.), the year-on-year expansion resulting from bigger purchases by the EU and Far East Asia.

[Table: soyabeans trade ]

The IPCC speaks, on renewable energy and climate change

Demand for energy services is increasing. GHG emissions resulting from the provision of energy services contribute significantly to the increase in atmospheric GHG concentrations. Graphic: IPCC-SRREN

The Special Report on Renewable Energy Sources and Climate Change Mitigation (SRREN), agreed and released by the Intergovernmental Panel on Climate Change (IPCC) on 09 May 2011, has assessed existing literature on the future potential of renewable energy for the mitigation of climate change. It covers the six most important renewable energy technologies, as well as their integration into present and future energy systems. It also takes into consideration the environmental and social consequences associated with these technologies, the cost and strategies to overcome technical as well as non-technical obstacles to their application and diffusion.

The chapters are dense, but there is a Summary for Policy Makers which provides an overview of the SRREN. It summarises the essential findings concerning the report`s analysis of literature on and experiences with the scientific, technological, environmental, economic and social aspects of the contribution of six renewable energy sources to the mitigation of climate change.

The IPCC has said that on a global basis, it is estimated that renewable energy accounted for 12.9% of the total 492 Exajoules (EJ) of primary energy supply in 2008. The largest RE contributor was biomass (10.2%), with the majority (roughly 60%) being traditional biomass used in cooking and heating applications in developing countries but with rapidly increasing use of modern biomass as well.

Hydropower represented 2.3%, whereas other RE sources accounted for 0.4%. In 2008, RE contributed approximately 19% of global electricity supply (16% hydropower, 3% other RE) and biofuels contributed 2% of global road transport fuel supply. Traditional biomass (17%), modern biomass (8%), solar thermal and geothermal energy (2%) together fuelled 27% of the total global demand for heat. The contribution of RE to primary energy supply varies substantially by country and region.

Deployment of RE has been increasing rapidly in recent years. Various types of government policies, the declining cost of many RE technologies, changes in the prices of fossil fuels, an increase of energy demand and other factors have encouraged the continuing increase in the use of RE.

The current global energy system is dominated by fossil fuels. Shares of energy sources in total global primary energy supply in 2008. Graphic: IPCC-SRREN

Despite global financial challenges, RE capacity continued to grow rapidly in 2009 compared to the cumulative installed capacity from the previous year, including wind power (32% increase, 38 Gigawatts (GW) added), hydropower (3%, 31 GW added), grid-connected photovoltaics (53%, 7.5 GW added), geothermal power (4%, 0.4 GW added), and solar hot water/heating (21%, 31 GWth added). Biofuels accounted for 2% of global road transport fuel demand in 2008 and nearly 3% in 2009. The annual production of ethanol increased to 1.6 EJ (76 billion litres) by the end of 2009 and biodiesel to 0.6 EJ (17 billion litres).

Of the approximate 300 GW of new electricity generating capacity added globally over the two-year period from 2008 to 2009, 140 GW came from RE additions. Collectively, developing countries host 53% of global RE electricity generation capacity. At the end of 2009, the use of RE in hot water/heating markets included modern biomass (270 GWth), solar (180 GWth), and geothermal (60 GWth). The use of decentralized RE (excluding traditional biomass) in meeting rural energy needs at the household or village level has also increased, including hydropower stations, various modern biomass options, PV, wind or hybrid systems that combine multiple technologies.

Climate change will have impacts on the size and geographic distribution of the technical potential for RE sources, but research into the magnitude of these possible effects is nascent. Because RE sources are, in many cases, dependent on the climate, global climate change will affect the RE resource base, though the precise nature and magnitude of these impacts is uncertain. The future technical potential for bioenergy could be influenced by climate change through impacts on biomass production such as altered soil conditions, precipitation, crop productivity and other factors. The overall impact of a global mean temperature change of less than 2°C on the technical potential of bioenergy is expected to be relatively small on a global basis. However, considerable regional differences could be expected and uncertainties are larger and more difficult to assess compared to other RE options due to the large number of feedback mechanisms involved.

For solar energy, though climate change is expected to influence the distribution and variability of cloud cover, the impact of these changes on overall technical potential is expected to be small. For hydropower the overall impacts on the global technical potential is expected to be slightly positive. However, results also indicate the possibility of substantial variations across regions and even within countries. Research to date suggests that climate change is not expected to greatly impact the global technical potential for wind energy development but changes in the regional distribution of the wind energy resource may be expected. Climate change is not anticipated to have significant impacts on the size or geographic distribution of geothermal or ocean energy resources.

The levelized cost of energy for many RE technologies is currently higher than existing energy prices, though in various settings RE is already economically competitive. Ranges of recent levelized costs of energy for selected commercially available RE technologies are wide, depending on a number of factors including, but not limited to, technology characteristics, regional variations in cost and performance, and differing discount rates. Some RE technologies are broadly competitive with existing market energy prices.

Renewable energy costs are still higher than existing energy prices, but in various settings renewable energy is already competitive. Graphic: IPCC-SRREN

Many of the other RE technologies can provide competitive energy services in certain circumstances, for example, in regions with favourable resource conditions or that lack the infrastructure for other low-cost energy supplies. In most regions of the world, policy measures are still required to ensure rapid deployment of many RE sources. Monetising the external costs of energy supply would improve the relative competitiveness of RE. The same applies if market prices increase due to other reasons. The levelized cost of energy for a technology is not the sole determinant of its value or economic competitiveness. The attractiveness of a specific energy supply option depends also on broader economic as well as environmental and social aspects, and the contribution that the technology provides to meeting specific energy services (e.g., peak electricity demands) or imposes in the form of ancillary costs on the energy system (e.g., the costs of integration).

Grain market report, February 2011

The International Grains Council has released its monthly grain market report, covering the movements in and events of February 2011. Here are the main observations and forecasts.

Outlook for 2011-12: Although forecasts of production and consumption are tentative at this time, global wheat supply and demand is projected to be broadly in balance in 2011-12. Strong prices will boost plantings in a number of countries in 2011, the global area forecast to increase by 3%, to 224m. ha., the largest since 1998. Although there are concerns about crop prospects in some major producers, world production in 2011 is forecast to increase by 24m. tons, to 672m., second only to the 2008 record.

With 2010-11 southern hemisphere maize harvests only just underway and planting intentions for the next crop still uncertain, forecasts for 2011-12 are largely nominal. Given initial planted area assumptions and, assuming trend yields, larger maize harvests are forecast in several key producers, including the US and China. World production is expected to set a new record but, unless yields are exceptionally high, a second consecutive drop in world supplies is projected. Based on underlying strong demand, maize availabilities are projected to remain tight, with closing stocks set to fall for a third successive year.

Commentary: Grain and oilseed prices continued their upward march in early February, with some values nearing the peaks seen in 2008. However, in renewed day-to-day volatility, markets then fell back sharply, partly on concerns about the impact of political turmoil in parts of North Africa and Near East Asia. There was little fundamental change in this year’s overall global supply and demand situation, although there were still uncertainties about the final outcome of ongoing maize and soyabean harvests in the southern hemisphere, as well as prospects for 2011-12 crops.

In wheat markets, tightening milling grade availabilities and heavy international buying, including of feed wheat, spurred further substantial price gains early in the month, while worries about winter wheat crops in the US and China also featured. Several countries announced they would reduce or remove import duties. In the second half of February, nearly all earlier gains were reversed as the political unrest in some countries triggered a wave of selling in commodity futures. While maize (corn) prices also fell back somewhat, they still registered significant net gains. These reflected more fundamental future supply concerns, with evidence of continued heavy industrial and feed demand and speculation about the additional plantings required in the US to prevent a further decline in stocks.

In contrast, oilseed prices registered a sharp fall despite initial strength, with markets also noting the improved crop prospects in South America. Trends in international rice prices were mixed in the past month, export values in Thailand firming somewhat while those in Vietnam falling back as the main harvest gathered pace. Dry bulk ocean freight markets, especially in the non-grain sector, initially declined further due to excess capacity, but then displayed a firmer trend, with higher bunker fuel prices also a factor.

Grains supply and demand in 2010-11: The latest assessment of the global grain situation in 2010-11 shows little overall change from last month. Mainly due to revisions to the southern hemisphere crop estimates there is a 2m. ton increase in the world grain production estimate for 2010-11, to 1,728m. tons (1,793m.). However, this is accompanied by an increase of 3m. tons in the consumption forecast, mostly because of higher than anticipated use of maize for ethanol (in the US) and of wheat for feed. Total consumption of grains is now placed at 1,790m. tons, up from 1,761m. in 2009-10, therefore exceeding output by 62m. tons. This is reflected in a drop in stocks at the end of 2010-11 which, at 341m. tons, will be the smallest since 2007-08.

Wheat: World wheat production in 2010-11 is placed only marginally higher than before, at 648m. tons, with an increase in the estimate for Argentina balanced by a reduction for Australia. The forecast of consumption is almost unchanged, at 661m. tons (649m.), as a larger feed use estimate is offset by smaller figures for food and industrial use. Feeding of wheat is being boosted by competitive prices relative to maize and by ample lower-grade export availabilities in Australia and Canada. Strong export demand for these supplies contributes to an increased forecast of world trade, up by 0.9m. tons, to 123.6m. The forecast of world wheat stocks at the end of 2010-11 is unchanged from last month, at 185m. tons, down by 13m. from the start of the season.

Maize: World maize production in 2010 is forecast at 811m. tons, 2m. higher than last month but down 2m. from the previous year’s record. Yield prospects improved in Brazil but declined in Argentina and South Africa. The consumption forecast is raised by 3m. tons, to a record 845m., some 30m. higher than last year. Industrial use is up 2m. tons from before, reflecting increased demand from US ethanol and HFCS manufacturers. World closing stocks are forecast to fall by 22%, to a four-year low of 119m. tons. US carryovers are placed at just 17.1m. tons (43.4m.), lowering the stocks-to-use ratio to 5%. Global trade (July-June) is forecast to increase by 8% to 93m. tons.

Rice: At 450m. tons, the forecast of global rice production in 2010-11 is placed slightly lower than in January, but is still 10m. higher than in the previous year, following bigger crops in India and China. Increased use in those countries is expected to result in a 2% rise in consumption, to an all-time high of 447m. tons, while the larger global outturn will also enable an increase in ending stocks, to 96.9m. (93.9m.). At 30.5m. tons, global rice trade in calendar 2011 is forecast to expand by around 1%.

The global transmission of high food prices-World Bank’s February evidence

Higher global wheat prices have fed into sharp increases in domestic wheat prices in many countries, the February 2011 Food Price Watch of The World Bank has said. The transmission rate of global wheat price increases to the domestic price of wheat-related products has been high in many countries, according to the report. “For instance, between June 2010 and December 2010, the price of wheat increased by large amounts in Kyrgyzstan (54%), Bangladesh (45%), Tajikistan (37%), Mongolia (33%), Sri Lanka (31%), Azerbaijan (24%), Afghanistan (19%), Sudan (16%), and Pakistan (16%). Several of these countries have a large share of calories consumed from wheat-based products, particularly for the poor. Global food prices continue to rise, though not uniformly for all grains.”

The World Bank’s Food Price Watch is produced by the Bank’s Poverty Reduction And Equity Group, Poverty Reduction And Economic Management Network. The World Bank’s food price index rose by 15% between October 2010 and January 2011, is 29% above its level a year earlier, and only 3% below its June 2008 peak. A breakdown of the index shows that the grain price index remains 16% below its peak mainly due to relatively stable rice prices, which are significantly lower than in 2008. The increase over the last quarter is driven largely by increases in the price of sugar (20%), fats and oils (22%), wheat (20%), and maize (12%).

Maize prices have increased sharply and are affected by complex linkages with other markets. In January 2011, maize prices were about 73% higher than June 2010. These increases are due to a series of downward revisions of crop forecasts, low stocks (U.S. stocks-to-use ratio for 2010-11 is projected to be 5%, the lowest since 1995), the positive relationship between maize and wheat prices, and the use of corn for biofuels.

Ethanol production demand for corn increases as oil prices go up, with sugar-based ethanol less competitive at current sugar prices. Recent United States Department of Agriculture (USDA) estimates show the share of ethanol for fuel rising from 31% of U.S. corn output in 2008-9 to a projected 40% in 2010-11. Increased demand for high fructose corn syrup from countries such as Mexico, as they substitute away from higher priced sugar, also contributes to higher demand for corn. Prospects of easing in this market depend partly on the size of the crops in Latin America, particularly Argentina, which has been affected by unusually dry weather due to the La Nina effect, and the extent of import demand from China in 2011 as well as oil and sugar price trajectories.

Domestic rice prices have risen sharply in some countries and remained steady in others. The domestic price of rice was significantly higher in Vietnam (46%) and Burundi (41%) between June–December 2010. Indonesia (19%), Bangladesh (19%), and Pakistan (19%) have increased in line with global prices. These Asian countries are large rice consumers, especially among the poor. Rice prices have increased in Vietnam despite good domestic harvests. This is primarily due to the depreciation of the currency, which has fuelled overall inflation and expectations of higher demand from large importers and led  to the minimum rice export price being raised by the Vietnamese government. Rice price increases in Sri Lanka (12%) and China (9%) have been relatively moderate in the second half of 2010, while in Cambodia and the Philippines the retail price of rice remained largely unchanged during this period.

Largest Movers in Domestic Prices, June to December 2010
Wheat
Kyrgyzstan (retail, Bishkek) 54%
Bangladesh (retail, national average) 45%
Tajikistan (retail, national average) 37%
Mongolia (retail, Ulaanbaatar) 33%
Sri Lanka (retail, Colombo) 31%
Azerbaijan (retail, national average) 24%
Afghanistan (retail, Kabul) 19%
Sudan (wholesale, Khartoum) 16%
Pakistan (retail, Lahore) 16%

Rice
Vietnam (retail, Dong Thap) 46%
Burundi (retail, Bujumbura) 41%
Bangladesh (retail, Dhaka) 19%
Pakistan (retail, Lahore) 19%
Indonesia (retail, national average) 19%
Mozambique (retail, Maputo) 14%

Beans
Burundi (retail, Bujumbura) 48%
Cameroon (retail, Yaounde) 43%
Uganda (wholesale, Kampala) 38%
Kenya (wholesale, Nairobi) 22%

Maize
Brazil (wholesale São Paulo) 56%
Argentina (wholesale, Rosario) 40%
Rwanda (wholesale, Kigali) 19%

Food production and grain trade, Jan 2011

The International Grains Council (IGC) has released its Grain Market Report for 2011 January. The IGC said that world grains supplies are forecast to tighten in 2010-11 but the outlook is little changed from two months ago. World production is expected to decline by 3.8%, to 1,726m. tons: the wheat estimate is lifted on better than expected southern hemisphere crops but the maize total is cut.

A serious drought has developed in eastern China over the past few months. Total precipitation has been scarce since October 2010, with some locations on the North China Plain receiving less than 10 percent of normal precipitation through December 2011. A lack of snow cover has deprived the dormant winter wheat crop of valuable moisture and protection from frigid temperatures and winds. Seasonably dry and cold weather is expected to continue for the next two weeks. USDA's WASDE said the impact of the drought has been mitigated by the widespread availability of water for irrigation, but crop stress could become serious if the drought continues after the winter wheat emerges from dormancy in February/March 2011.

By far the biggest fall in grains output was in drought-affected Russia, with big reductions too in the EU, the US, Kazakhstan and Ukraine. A further rise in world grains consumption is forecast in 2010-11, to 1,787m. tons. However, at 1.4%, the rise is flatter than in recent years. The expansion in industrial use has slowed markedly, especially in the US ethanol sector, although recent use there has been higher than anticipated. Total feed use will only rise moderately this year.

The forecast fall of 62m. tons in global carryover stocks mirrors the reduction in the major grain exporters, with big declines in Canada, the EU, Russia and the US. World trade in grains is expected to rise by 2m. tons, to 242m., only marginally more than before, with bigger imports by the EU and Russia expected to outweigh reductions in Near East and Far East Asia. Because of the fall of 29m. tons in Black Sea shipments, exports by Argentina, Australia, the EU and the US are expected to climb steeply.

IGC said that international grain and oilseed prices advanced strongly in December and again in January, with some values at their highest for two years. However, export prices remained below the peaks recorded early in 2008. While there has been little fundamental change in the overall supply and demand balance in the past two months, markets were driven higher by concerns about supplies of quality milling wheat and the tightening outlook for maize and soyabeans.

The influence of other commodities, including crude oil, also featured regularly on the major exchanges. For wheat, reports that the extremely wet conditions in eastern Australia would render at least one-third of the country’s large wheat crop unfit for flour milling were especially bullish. More recently, better prospects for US exports and a winter wheat acreage report showing a smaller than expected rise in Hard Red Winter wheat plantings further triggered buying.

USDA Crop Explorer, south India rice coverage, 2011 forecast

IGC said that China was among several recent customers for Australian feed grade wheat. For maize, there were worries about a reduced official US carryover forecast as well as about whether plantings for the next crop would be sufficient to prevent stocks falling further in 2011-12. The impact of dryness, attributed to the La Niña event, on Argentina’s upcoming harvest added to the market’s nervousness. Similarly, despite quite ample current stocks, US soyabean prices moved higher, initially because of continued heavy demand from China but more recently due to a lower official US supply estimate and strength in crude oil. Rice export prices also increased, but while Thai values in late-December climbed to a ten-month peak, they subsequently fell back as the main crop harvest advanced. After mostly declining since June, ocean freight rates for grains firmed slightly in recent months, despite a further slide in the Capesize sector.

The US Department of Agriculture’s World Agricultural Supply and Demand Estimates (WASDE) for 2011 January has said that global 2010-11 wheat supplies are raised slightly this month as increased beginning stocks are mostly offset by lower foreign production. Beginning stocks for Argentina are up 0.9 million tons with upward revisions to 2008-09 and 2009-10 production estimates. Argentina production is also raised 0.5 million tons for 2010-11 as harvest results indicate higher-than-expected yields. Production in Brazil is raised 0.4 million tons as favorably dry harvest weather boosted yields for the 2010-11 crop. EU-27 production is raised 0.3 million tons based on the latest official estimates for Poland. More than offsetting these increases are reductions for Kazakhstan and Australia. Kazakhstan production is lowered 1.3 million tons based on the latest government reports. Australia production is lowered 0.5 million tons as heavy late-December rains and flooding further increased crop losses in Queensland.

According to WASDE 2011 January, world wheat imports and exports for 2010-11 are both raised slightly. South Korea imports are raised 0.4 million tons, mostly offsetting an expected reduction in corn imports. Imports are also raised 0.2 million tons each for Thailand and Vietnam based on the pace of shipments to date and the increased availability of feed quality wheat in Australia. Imports are lowered 0.5 million tons for EU-27 based on the slow pace of import licenses to date. Major shifts among exporters are projected as importers focus on U.S. supplies to meet their milling needs. Australia exports are reduced 1.5 million tons as quality problems limit export opportunities. Kazakhstan exports are reduced 1.0 million tons with lower supplies. While Argentina marketing-year (December-November) exports are raised 0.5 million tons, exports during the remainder of the July-June world trade year are expected to be lower based on the slow pace of government export licensing.

Global 2010-11 wheat consumption is projected 1.2 million tons lower, mostly reflecting reduced wheat feeding in EU-27, the United States, and Kazakhstan. Food use is also lowered for EU-27 and Pakistan. Partly offsetting are increases in feed use in South Korea, Thailand, and Vietnam, and higher expected residual loss in Australia with the rain-damaged crop. Global ending stocks are raised 1.3 million tons with increases for EU-27, Argentina, and Australia, more than offsetting the U.S. reduction.

WASDE 2011 January said that global 2010-11 rice production, consumption, trade and ending stocks are lowered slightly from a month ago. The decrease in global rice production is due primarily to a smaller crop in Egypt, which is down 0.5 million tons (-14%) to 3.1 million. Egypt’s area harvested in 2010-11 is reduced 19 percent from a month ago and is down 30 percent from the previous year. A reduction in the Egyptian government’s support of producer prices has discouraged farmers from planting rice. Additionally, the Egyptian government has imposed water restrictions thus reducing irrigation water availability. Furthermore, government restrictions have reduced exports. Global imports are increased slightly due primarily to increases for Indonesia and Turkey, but partially offset by a reduction for Egypt. Global exports are increased slightly due mostly to an increase for Thailand, partially offset by a decrease for Egypt. World ending stocks are projected at 94.4 million tons, down 0.4 million from last month and last year.

Exposé of false carbon accounting for biofuels

Cover of a brochure on a 'biorefinery' project in Sweden

False carbon accounting for biofuels that ignores emissions in landuse change is a major driver of global natural habitat destruction, incurring carbon debts that take decades and centuries to repay; at the same time, the emissions of nitrous oxide from fertilizer use has been greatly underestimated, says a damning new briefing from the Institute of Science in Society (I-SIS), Britain.

A team of thirteen scientists led by Timothy Searchinger at Princeton University, New Jersey, in the United States, pointed to a “far-reaching” flaw in carbon emissions accounting for biofuels in the Kyoto Protocol and in climate legislation. It leaves out CO2 emission from tailpipes and smokestacks when bioenergy is used, and most seriously of all, it does not count emissions from land use change when biomass is grown and harvested, says the I-SIS briefing.

“The team maintained that bioenergy reduces greenhouse emission only if the growth and harvesting of the biomass for energy captures carbon above and beyond what would be sequestered anyway, and offsets the emissions from energy use. This additional carbon may result from land management changes that increase plant uptake or from the use of biomass that would otherwise decompose rapidly.”

Graph from World Energy Outlook 2010 titled 'Ranges of well-to-wheels emission savings relative to gasoline and diesel'.

“The worst case is when the bioenergy crops displace forest or grassland, the carbon released from soils and vegetation, plus lost future sequestration generate huge carbon debts against the carbon the crops absorb, which could take decades and hundreds of years to repay.”

The work of Searchinger, referred to by I-SIS, has been mentioned in connection with this false accounting as long as a year ago. For instance, the Industrial Biotechnology and Climate Change blog had noted in 2009 November:

The Science Insider blog last week hosted an interesting debate between Tim Searchinger, Princeton visiting scholar, and John Sheehan, of the Institute on the Environment at the University of Minnesota, regarding the recent policy proposal in the pages of Science by Searchinger et al. to ‘fix’ the carbon accounting of biomass for bioenergy and biofuels in U.S. legislation and the successor to the Kyoto protocol, by giving credit only to biomass that can be managed in such a way as to sequester additional atmospheric carbon in the soil. As Searchinger puts it in the recent debate, “bioenergy only reduces greenhouse gases if it results from additional plant growth or in some other way uses carbon that would not otherwise be stored.”

Cover of the World Energy Outlook 2010 report, International Energy Agency

Also pertinent is a short section on biofuels and emissions in the World Energy Outlook 2010, which has recently been released by the International Energy Agency. “Biofuels are derived from renewable biomass feedstocks, but biofuels are not emission-free on a life-cycle basis,” says WEO2010. There is keen debate about the level of emissions savings that can be attributed to the use of biofuels and, more generally, to biomass. Greenhouse-gas emissions can occur at any step of the biofuels supply chain. Besides emissions at the combustion stage, greenhouse-gas emissions arise from fossil-energy use in the construction and operation of the biofuels conversion plant. In addition, the cultivation of biomass requires fertilisers, the use of machinery and irrigation, all of which also generate emissions.”

The short section is part of Chapter 12 – titled ‘Outlook for Renewable Energy’ – of the massive tome, and the section on Biofuels emissions is found in pages 372-374. As the WEO must perforce sound upbeat about all forms and sources of energy, it ventures, “If appropriate feedstocks and process conditions are chosen, biofuels can offer significant net greenhouse-gas emissions savings over conventional fossil fuels”. That’s a big “if” there.

“This is particularly the case with sugar cane ethanol, as much less energy is required to convert the biomass to ethanol.” In a laboratory perhaps, but as there are as many ways of converting sugarcane as there are types of cane, it would be difficult to say, wouldn’t it?  “But variations are large and calculating average emissions savings is complex.” So they are, so it is.

After such kerfuffle, the WEO2010 does get down to brass tacks: “Using land for biofuels production that was previously covered with carbon-rich forest or where the soil carbon content is high can release considerable amounts of greenhouse gases, and even lead to a ‘carbon debt’. In the worst cases, this debt could take hundreds or even thousands of years to recover via the savings in emissions by substituting biofuels for fossil fuels.”

And there you have it, in black and white, from the venerable International Energy Agency itself.