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IGC Grain Market Report


01 September 2014

IGC Grain Market Report - 29 August 2014IGC Grain Market Report - 29 August 2014


International Grain Council Grain Market Report

Highlights

Global grains and oilseeds production outlooks continued to move higher during August, maintaining a largely bearish tone in export markets. The IGC Grains and Oilseeds Index (GOI) was at around four-year lows, retreating by about 3 per cent m/m (month-onmonth). Further declines were restricted by continued uncertainty about the implications of the conflict in Ukraine and, for wheat, an increasingly tight outlook for premium quality supplies. Shrinking old crop availabilities underpinned rice values.

The forecast for world total grains (wheat and coarse grains) production is up by 17m t this month, to 1,976m, only marginally below the previous year’s record. Most of the monthly rise is for wheat, largely because of better than expected results in China, the EU and Russia. The outlook for maize (corn) is also notably higher, with a record outturn in the US and upward revisions for Brazil, the EU and Ukraine. Increased projections for maize and wheat feeding lift the forecast for total grains consumption by 12m t, to a record 1,952m, still only partly absorbing the upward revision to supply.

The global carryover stocks figure is therefore raised by 7m t from before, to 426m, up by 23m y/y (year-onyear), and the most in 15 years. Grains trade is forecast at 292mt, slightly higher than last time and second only to the 2013/14 record. This month’s report carries the Secretariat’s first formal 2014/15 supply and demand projections for rice. World output is tentatively seen expanding to a fresh record, but the overall increase will be capped by an expected fall in output from India’s kharif crop, owing to a historically weak monsoon. With rice use forecast to exceed output, aggregate end-season inventories are set to decline by 4m t, to 105m. While stocks could edge higher in China, the fall reflects a projected 13 per cent decline in major exporters’ reserves, led by India and Thailand.

Global trade is expected to rise slightly in 2015 as competitively priced availabilities stimulate another year of solid buying.Projected global soyabean output in 2014/15 is broadly unchanged from before, at 304m t, the 8 per cent y/y increase mostly centred on expected record outturns in the major exporters. The forecast of total use is maintained at a record high, while aggregate end-season carryovers are seen rising to around 38mt, up by 29 per cent y/y on a heavy increase in US inventories. World trade is set to grow further, as Chinese processors’ needs expand.

Summary Outlook For Key Grains And Oilseeds

Wheat

  • With larger than expected crops in Russia, the EU and China,world production is forecast at a new record, up by 11m t from lastmonth’s report.

  • The world harvest will include an above average proportion of low/medium grade supplies and, while strong competition from maize is expected in most markets, feed wheat consumption is forecast to rise.

  • Owing to demand growth, carryover stocks are placed only slightly higher than before. Aggregate inventories in the major exporters are seen reaching a three-year peak.

  • While market sentiment remained mostly bearish, concerns about crop quality and the conflict in Ukraine provided underpinning, and the IGC GOI wheat sub-Index was virtually unchanged m/m.

Maize 

  • Northern hemisphere yield prospects continued to improve in August, including in the US, where crops have benefitted from a prolonged period of benign weather. Forecast world production is increased by 4m t compared to July.

  • However, with output in Ukraine, India, Brazil and South Africa forecast to decline, global production may still fall by 1 per cent y/y.

  • The Council’s global ending stocks forecast is increased for a fourth consecutive month, with cumulative carryovers seen at their largest since 1987/88. Major exporter stocks appear ample.

  • Export prices slumped to fresh four-year lows on pressure from bearish fundamentals and strong competition for business.

Rice 

  • Supply and demand forecasts for 2013/14 are little changed from before. World production in 2014/15 is projected to be marginally higher y/y and outpaced by growth in consumption.

  • In contrast to wheat, maize and soyabeans, inventories in the five major rice exporters are projected to fall sharply at the end of 2014/15, marking the second consecutive annual decline, and reflecting contractions in Thailand and India.

  • With price gains in Thailand offsetting weakness elsewhere, the IGC GOI rice sub-Index posted a slight monthly gain.

Oilseeds

  • Abundant rains continued to benefit US soyabean crops, with output forecast slightly higher, at a new record. While southern hemisphere fields are yet to be seeded, output is also projected to increase in Brazil and Argentina.

  • Large harvests should result in stock building, especially in the three major exporters, where cumulative inventories are forecast to rise by nearly 90% y/y. Reflecting the more comfortable new crop supply outlook, export prices moved lower in August.

  • Despite a smaller rapeseed/canola crop, a large carry-in is expected to ensure that world markets are well supplied in 2014/15. With global crush demand to remain strong, end-season exporter stocks are projected to fall to below average levels.

August 2014

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