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IGC Grain Market Report


20 September 2013

IGC Grain Market Report - 26 September 2013IGC Grain Market Report - 26 September 2013


International Grain Council Grain Market Report

Highlights

The IGC Grains and Oilseeds Index (GOI) is down by 2% m/m, as the prospect of adequate supplies has weighed on sentiment. Maize led the declines, the sub-Index dropping by 7% on continued expectations for a large crop in the US and good availabilities in Brazil. The soyabean and rice sub-Indices also moved lower m/m, by 1% and 2% respectively. In contrast, the wheat sub-Index rose by 1% m/m, underpinned by quality issues and export demand, but remained around the lowest levels seen since June 2012.

The total grains (wheat and coarse grains) output forecast for 2013/14 has been revised up by 1m t to 1,930m, an 8% increase from the previous year’s low, due to more favourable weather conditions in key producers, particularly the US and CIS.

With a more modest 4% rise in consumption expected, stocks are set to increase by 38m t y/y. End-season wheat inventories have been raised by 4m t this month, following revisions to major exporters and China, and are now seen up 5m y/y at 180m. The maize carryover is forecast to increase by 26m t, driven by a 9% recovery in output, and with major exporter stocks at a 26-year high.

With an upward revision to maize, the world trade forecast has been lifted by 1m t to 270m, now exceeding the previous high in 2011/12. A Market Focus on China’s grain and rice imports highlights a projected increase in purchases of wheat, maize, barley and sorghum from the international market this year, due to a combination of quality issues, domestic output growth not keeping pace with demand, relative pricing, and the level of tariff rate quotas.

World rice supply and demand are both expected to rise by 1% in 2013/14, led by gains in Asia, with inventories seen increasing for the ninth consecutive year, although the outlook hinges on the Thai government’s attempts to offload reserves. A small expansion in trade is tentatively forecast, but China’s needs remain uncertain and will likely depend on relative pricing.

Soyabean and rapeseed/canola output are also seen at new peaks in 2013/14. Soyabean trade is projected to expand particularly strongly, led by a 14% rise in China’s imports. While the aggregate soyabean carryover has been revised down by 3m t this month, including a reduced forecast for the US, they would still be at a three-year high of 29m. Rapeseed/canola major exporters’ stocks are also set to increase, for the first time in four years, but at 1.6m t would remain 25% below the previous five-year average.


Summary Outlook for Key Grains and Oilseeds

Wheat

  • While there are some quality issues, the prospect of adequate supplies overall in 2013/14 weighed on price; the IGC GOI wheat sub-Index was up by 1% m/m, but remained around the lowest levels since June 2012.
  • World wheat production in 2013/14 is placed 2m t higher than last month, at 693m, up 6% y/y on larger crops in the CIS and EU; global consumption is seen up by around 2% y/y, at 687m t.
  • End-season stocks are forecast to rise by 5m t to 180m, up by 4m from last month on increases in major exporters and China.
  • Trade is forecast at 141m t in 2013/14, unchanged y/y as rising sales to China, to an 18-year high, offset declines elsewhere.

Maize

  • A generally bearish supply outlook weighed on US and South American maize export prices and the IGC GOI maize sub- Index ended down 7% m/m.
  • The maize output forecast for 2013/14 has been lowered by 2m t to 943m, but this is still a 9% y/y increase and a new record.
  • Amid generally strong demand for animal feed and industrial products, maize consumption is expected to rise by 5%, and trade is also set to expand by 5% y/y to a five-year high.
  • The projection for world stocks is trimmed from before, but, at 148m, carryovers will be well above average, and major exporter stocks are now placed at a 26-year high.

Rice

  • The IGC GOI rice sub-Index fell by 2% m/m, although prices in Thailand were generally firm on improved international demand, currency movements and the approach of main crop intervention buying.
  • Global output and consumption are forecast up by 1% y/y to new highs in 2013/14, stemming mainly from increases in Asia.
  • With accumulation in key exporters, including Thailand, the world 2013/14 carryover is projected to expand for the ninth consecutive year.
  • World trade is tentatively expected to rise in 2014 on small increases to sub-Saharan Africa and Far East Asia, but China’s future needs continue to add a degree of uncertainty.

Oilseeds

  • After initial support from worries about US yield potential, beneficial rains weighed on sentiment and the IGC GOI soyabean sub-Index posted a net decline of 1% m/m.
  • Global soyabean output in 2013/14 is projected to rise for the second consecutive year, by 4% to a record high.
  • World carryovers are seen increasing by 12% y/y in 2013/14, led by the major exporters; global trade (Oct/Sep) is expected to expand by 9% y/y driven by strong demand from China.
  • Global rapeseed/canola production is forecast to rise by 5% y/y in 2013/14, to a record 66.5m t, and the world carryover is set to grow by 17% y/y, the first increase in four years.

September 2013

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