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IGC Grain Market Report


28 November 2014

IGC Grain Market Report November 2014IGC Grain Market Report November 2014


International Grain Council Grain Market Report

The IGC Grains and Oilseeds Index (GOI) ended November unchanged month-on-month (m/m). Outlooks for heavy global supplies resulted in a softer tone in soyabean, maize (corn), wheat and rice export markets at times, although daily movements were sometimes volatile, particularly for soyabeans. Despite the near completion of record soyabean and maize harvests, tight pipeline availabilities in the US contributed to occasional rallies.

Wheat values were underpinned by worries about 2015 crop prospects in the US and Black Sea region. Mainly because of an upward revision for maize in China, the world total grains (wheat and coarse grains) production forecast is 2m t higher than before, at 1,990m, virtually matching the previous season’s record. The increase in supply from last time is entirely absorbed by higher anticipated consumption, with this month’s gains mostly in the feed and industrial use sectors.

The global end-2014/15 carryover is seen reaching a 15-year high of 429m t, unchanged from the October GMR. World rice output in 2014/15 is projected fractionally lower, at 475m t, but little changed year-on-year (y/y). With growing demand in Asia set to underpin increased consumption, world carryovers are expected to contract by 6%. The projection is cut by 1.7m t, mainly on a reduction for the major exporters, seen declining by 14% y/y. The outlook for trade in 2015 is lifted marginally, to a record of 41m t, up slightly y/y.

Thailand is anticipated to reclaim its position as the world’s largest supplier. An increased US figure more than offsets a reduced projection for Argentina, as world soyabean production is placed fractionally higher than before, at 308m t, up 8% y/y. Consumption is forecast little changed from previously, resulting in a marginal upward revision to carryovers, seen rising by almost two-fifths y/y. The forecast for China’s 2014/15 imports is lifted slightly, to a peak of 73.5m t, but annual growth is still expected to slow markedly after last year’s large purchases boosted domestic availabilities.

WHEAT

  • The forecast of world wheat production is trimmed slightly but, at 717m t, is still seen at a record high, with a near 1% annual increase mainly tied to a larger harvested area.
  • Planting of northern hemisphere 2015/16 winter crops is almost finished. Based on tentative assumptions for spring sowings and for the southern hemisphere, total area is projected to rise by 1% y/y.
  • With demand stimulated by lower prices, food use in developing countries is seen growing faster than average. Forecast feed consumption is raised by 2m t from the last GMR, placed 7% higher y/y, at a three-year peak.
  • Average wheat export prices were slightly firmer m/m, with weather concerns contributing to modest gains. Durum markets remained strong on tight availabilities.

MAIZE

  • The bulk of the 2014/15 northern hemisphere crop is now harvested and, with better than average yields in many countries, the world production forecast is increased by 3m t from before, only slightly down from last year’s record.
  • Seeding in South America has so far progressed at a slower than average pace. While output in Brazil and Argentina is expected to decline, much will depend on final planting decisions and weather during the coming months.
  • World demand is forecast to increase to record highs, driven by a 3% gain in feed consumption. ? Export values increased slightly in November and, with stiff competition for business, price spreads narrowed between the main origins.

RICE

  • Mostly due to a smaller main crop in India, world 2014/15 production is forecast to fall fractionally y/y. With demand expected to increase to new highs, end-season stocks are placed at their lowest in four years.
  • Global trade in 2015 is forecast to edge higher, with larger purchases by China and sub-Saharan Africa. Forecast exports by Thailand are increased for both 2014 and 2015.
  • Rice prices fell comparatively steeply, the IGC GOI sub-Index down by 3% m/m, on ample supplies and sluggish demand.

OILSEEDS

  • Soyabean planting weather in South America was more favourable and, with potentially large 2014/15 outturns in Brazil and Argentina, as well as a bumper US harvest, world production is forecast to reach a new peak, up 8% y/y.
  • The IGC GOI soyabeans sub-Index was slightly lower m/m, mainly reflecting a drop in US prices, which weakened on heavy supplies and seasonal factors.
  • Rapeseed/canola forecasts are similar to a month ago. Owing to strong consumption growth and a smaller crop, closing stocks are forecast to tighten, especially in major exporters.

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