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IGC Grain Market Report


02 December 2013

IGC Grain Market Report - 28 November 2013IGC Grain Market Report - 28 November 2013


International Grain Council Grain Market Report

Highlights

The IGC Grains and Oilseeds Index (GOI) was broadly unchanged m/m as a 3% decline for wheat, and a 1% fall for maize, were offset by a 2% increase for soyabeans. Weakness in world wheat prices was despite crop concerns in some areas, and led by the US on slowing export demand and mostly favourable conditions for the next crop. Maize quotations remain close to three-year lows, as firmer export prices in the US and Brazil were outweighed by slight falls in Argentina and the Black Sea. While the rice sub-Index was virtually unchanged m/m, underlying trends were mixed across origins, with prices in Thailand easing, but some renewed strength in Vietnam on prospects for fresh sales to the Philippines. Soyabean markets benefited from firm export demand, more than offsetting pressure from bearish crop outlooks in major exporters.

The output forecast for global total grains (wheat and coarse grains) has been revised 5m t higher this month to 1,946m, including increases for wheat, maize and other coarse grains. So far this year, harvests have generally been better than expected, with the global total now placed up 9% y/y. While some of the output increase is set to be absorbed by higher use, a substantial surplus is expected and end-season stocks are seen up by 41m t y/y at a four-year high.

The total grains world trade forecast has also been raised to 277m t, a 10m increase from last year. Maize trade is expected to surge by 10%, with China’s projected imports particularly strong at 7m t (3.7m last year), but, with competitive prices, purchases are also likely to rise elsewhere, notably in Mexico where it is displacing sorghum.

The global rice output forecast is 3m t lower in this report, but would still be a record, and supplies are set to remain ample, especially in the major exporters. Trade is likely to rise with larger sales to Far East Asia, including the Philippines, where the National Food Authority (NFA) has approved an additional 0.5m t of rice imports to boost reserves and support relief operations in the aftermath of Typhoon Haiyan. A Market Focus highlights how tight stocks in the Philippines had become, even before the current emergency.

Global soyabean 2013/14 output is projected up 5% y/y, at 285m t, with end-season stocks expected to rebound by 13%, boosted by improved availabilities in the major exporters. As buying interest from China strengthens, world trade is forecast to expand by 10% y/y.

Looking ahead to 2014/15, winter wheat planting is nearly complete in the northern hemisphere, and the global wheat harvested area is projected to expand by 1.4%, to about 223m ha. The condition of the US crop appears to be much improved y/y, although analysis of the relationship between November winter wheat ratings and prospective yields illustrates that this is not necessarily a reliable indicator of ultimate results.


Summary Outlook for Key Grains and Oilseeds

Wheat

  • The IGC GOI wheat sub-Index fell 3% m/m, led by slowing export demand and good winter wheat conditions in the US, but contained by limited CIS export availability and quality concerns.
  • Increased figures for China and the US boost the forecast for world wheat production to 698m, up 7% y/y, while total use is anticipated at 692m t, 3% higher y/y.
  • The end-season stocks projection is slightly lower than last month, at 181m t, including a small reduction in the aggregate for the major exporters, but is still up 6m y/y.
  • World trade is seen at 142m t, a small y/y increase, boosted by higher demand from China.

Maize

  • The IGC GOI maize sub-Index was down 1% m/m at close to three year lows, as firmer export prices in the US and Brazil were offset by slight falls in Argentina and the Black Sea.
  • Global production is expected to expand by 10% y/y to a record 950m t, mainly due to a rebound in the US.
  • Amid strengthening demand for meat and industrial products, world maize consumption is forecast to rise to unprecedented levels, but stocks should still recover, rising by 21% y/y.
  • Import demand appears strong and, with low prices and large exportable supplies, world trade is forecast to surge by 10% y/y.

Rice

  • The IGC rice sub-Index was broadly steady over the month, as a further easing in Thailand was balanced by higher quotations in Vietnam on prospects for fresh sales to the Philippines.
  • The projection for world rice production in 2013/14 is downgraded, mainly owing to reduced expectations for India’s main crop, but would still be at a new record.
  • Led by increases in Asia, global demand is set to grow by 1% and the 2013/14 world carryover is projected to decline y/y, but supplies are set to remain ample, especially in major exporters.
  • Total trade is expected to expand in 2014, with larger deliveries to Far East Asia, including the Philippines.

Oilseeds

  • The IGC GOI soyabeans sub-Index increased by 2% m/m as seasonal US harvest pressure and improved conditions in South America were more than offset by strong export demand.
  • Global soyabean output is projected up by 5% y/y in 2013/14, with bumper or record crops expected in all major exporters; consumption is also likely to rise by 5% y/y, but aggregate endseason stocks should recover.
  • With buying interest from China expected to strengthen, world soyabean trade is forecast to expand by 10% y/y.
  • Global rapeseed/canola production is seen up 7% y/y in 2013/14, and the carryover is likely to increase by 26%.

December 2013

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