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IGC Grain Market Report


18 January 2013

IGC Grain Market Report - January 2013IGC Grain Market Report - January 2013


International Grain Council Grain Market Report

Figures may not add due to rounding
a) Wheat and coarse grains
b) Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, US
c) Argentina, Brazil, Ukraine, US
d) India, Pakistan, Thailand, US, Vietnam
e) Argentina, Brazil, US

Highlights

Grains and oilseeds markets saw steep declines through December and early January, but have since rebounded on some support from the USDA’s January releases. Despite a recent maize-led recovery, the IGC Grains and Oilseeds Index is down 3% month-on-month (m/m).

Grains supply and demand estimates for 2012/13 have been revised up slightly, but output is still seen sharply lower, down 4% year-on-year (y/y,) at 1,777 million tonnes (m t). Despite an expected contraction in consumption for the first time in 14 years, stocks are set to fall by 45m t to a six-year low.

For wheat, the focus is now on the condition of the northern hemisphere 2013/14 winter crops, particularly in the parts of the US that have experienced drought conditions. Analysis shows little correlation between reported end-November crop conditions and final yields, but as the rating for the current crop is at an historical low, it is uncharted territory. Elsewhere, prospects are generally more promising and global output is tentatively projected up 4% y/y for 2013/14, with a 2% increase in area.

Maize prices have recovered recently following the USDA’s increased estimate of feed use over the Sep-Nov 2012 period. The market is particularly tight with global end-season stocks expected to be down by 20m t y/y at a nine-year low. Among other coarse grains, barley availabilities are also limited, with output forecast down 3% y/y and major exporters’ carryovers placed at the lowest level in 17 years.

Rice markets remain relatively stable with support from tight export availabilities in Thailand and Vietnam mostly offset by pressure from limited export interest. Rice output is forecast unchanged y/y and, while global stocks are expected to show a small decline, major exporters’ inventories are seen rising to a record 37.1m t.

World soyabeans markets have softened over the month as early pressure from improved weather conditions in Argentina and Brazil was only partly offset by recent speculative fund buying, strong export demand and renewed concerns about dryness in parts of South America. Record crops in the region underpin the forecast for a recovery in global inventories.

IGC Grains & Oilseeds Index (GOI)

See: http://www.igc.int/grainsupdate/igc_goi.xlsb

Wheat

  • There has been some rebound in the last week, but the IGC GOI wheat sub-Index is down 2% m/m, given steep falls through December led by weak sentiment in the US.
  • Increased figures for Australia, Canada, China and the EU lift the estimate for world wheat production by 2m t this month, to 656m, but it is still down 40m y/y.
  • Global stocks are placed at 174m t, 1m higher than before, but down 22m y/y with steep declines in the CIS.
  • Strong purchases by Iran and China lift the forecast for world trade by 2.4m t, to 136.6m, albeit still well below the 2011/12 record.

Maize

  • Prices have rebounded from declines through December and early January, lifted by surprisingly high US feed use estimates – the maize GOI sub-Index is now up 3% m/m.
  • Given official upward revisions for China and the US, and brighter prospects for Argentina, forecast global output is increased by 15m t, to 845m, but is still down 4% y/y.
  • World consumption is revised higher, but forecasts for overall declines in both feed and industrial use remain.
  • End-season stocks will be very tight, with carryovers in the four main exporting countries placed 46% below the recent fiveyear average.

Rice

  • The GOI rice sub-Index is only fractionally higher m/m as continued pressure from limited export interest outweighed support from tight availabilities in Thailand and Vietnam.
  • At 464m t, world rice output is forecast unchanged y/y, as increases in China and elsewhere offset a smaller outturn in India.
  • With world use expected to rise by 2% y/y, global ending stocks are forecast to fall slightly, but major exporters’ supplies are set to rise slightly for an eighth successive year.
  • Global trade in 2013 is projected to fall by 6% from last year’s record on reduced shipments to Asia and Africa.

Oilseeds

  • World soyabean markets weakened in the past month with the GOI sub-Index posting a 6% m/m decline.
  • World soyabean production is projected slightly higher, at a record 271m t, with the 14% y/y expansion entirely reflecting a heavy rise in South American output.
  • The projected recovery in global end-season stocks will be led by increases in the major exporters, especially Brazil, while world trade is set to expand by 5%, driven by China.
  • Global rapeseed/canola 2012/13 output is forecast to decline by 3% y/y to a four-year low; high prices and smaller export availabilities are expected to significantly restrict trade.
* Soyabeans

January 2013

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