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IGC Grain Market Report


31 March 2014

IGC Grain Market Report - 28 March 2014IGC Grain Market Report - 28 March 2014


International Grain Council Grain Market Report

Highlights

The IGC Grains and Oilseeds Index (GOI) is up 1% m/m, but underlying performance was mixed with increases for wheat, maize and barley partly offset by declines for soyabeans and rice. The potential impact of political tensions in the Black Sea region remains uncertain, but with Russia and Ukraine significant exporters of wheat, and Ukraine the third leading supplier of maize to world markets, both prices and volatility have risen.

The preliminary projection for the 2014/15 total grains balance places output at 1,949 million tons (m t), down 1% y/y as yields either retreat from the previous year’s highs or, for maize, remain unchanged. Wheat output is seen down 1%, but a small increase is anticipated for maize. Consumption is expected to continue to rise, but end-season stocks (aggregate of respective local marketing years) are seen up 4%, including a 14% expansion in major exporters. The majority will likely be in maize, where a sharp rise in the US has the potential to lift world closing stocks to the highest level in 15 years. In contrast, wheat carryovers are expected to be little changed.

The forecast for 3% growth in global rice trade is based on higher sales to Far East Asia, and has been strengthened by the recent announcement of a large tender by the Philippines, where stocks as at 1 February were at the lowest level since 2008.

With harvesting underway in Brazil and beginning in Argentina, this month sees a further downgrade to the forecast for global soyabean production, mostly as a result of less than favourable weather in Brazil. However, it is still seen at an all-time high of 282m t and inventories are seen rising by 4% in 2013/14. Prices have moved lower with the onset of South American harvests, but remain supported by firm demand and tight nearby supplies.

A number of meteorological forecasters have indicated the possibility of an El Niño weather event developing this year, but, as always, these remain tentative and the implications for crops are not definitive (see Market Focus).


Summary Outlook for Key Grains and Oilseeds

Wheat

  • Despite ample nearby supplies and generally favourable crop prospects, US weather concerns and political tensions in the Black Sea region have lifted the wheat GOI sub-Index 9% m/m.

  • World stocks are seen up 17m t by the end of 2013/14, and trade is raised by 4m t this month, to a record 150m, with stronger than expected demand in Near East Asia and Africa.

  • Projected 2014/15 global production has been lifted by 4m t, to 700m, but this would still be slightly lower y/y.

  • Growth in food and feed demand are expected to entirely absorb output, with carryover stocks forecast to be little changed in 2014/15.

Maize

  • Driven mainly by a strong rise in Black Sea export prices, the IGC maize sub-Index is up by 4% m/m.

  • A bumper crop in 2013/14 should allow for some stock building, with a sharp rise in supplies more than offsetting strong gains in use.

  • Preliminary projections for 2014/15 indicate a slight expansion in area and, assuming yields at similar levels to the previous year, output is forecast up 0.3% at 961m t.

  • Strong demand growth is also expected, but, led by a steep increase in the US, world closing stocks are forecast to expand again in 2014/15, potentially to the highest level in 15 years.

Rice

  • The IGC GOI rice sub-Index fell 3% m/m, mostly reflecting a weaker tone in Thailand following the end of paddy intervention buying and ongoing efforts to release state reserves.

  • The world crop is forecast to be marginally larger y/y in 2013/14, centred on increases in Asian and South American producers.

  • The 2013/14 world carryover is projected to be broadly unchanged from the year before, with ample supplies in the major exporters.

  • Larger shipments to markets in Far East Asia, namely Indonesia and the Philippines, are forecast to underpin a of 3% rise in world trade.

Oilseeds

  • The IGC GOI soyabean sub-Index fell 3% m/m as the advancing harvest in Brazil, and the switch to new crop prices, contrasted with firmer old crop values in the US.

  • The forecast for global soyabean output in 2013/14 is lowered this month, but is still seen rising by 4% y/y, to an all-time high.

  • A 4% expansion in 2013/14 end-season stocks is expected, but availabilities are less ample than initially anticipated; trade is seen up 11% y/y, almost entirely due to strong China demand.

  • Following a record crop in 2013/14, global rapeseed/canola output is tentatively projected down 3% in 2014/15 as yields retreat, but it would still be the second highest crop ever.

March 2014

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