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IGC Grain Market Report


29 April 2013

IGC Grain Market Report - April 2013IGC Grain Market Report - April 2013


International Grain Council Grain Market Report

Highlights

The IGC Grains and Oilseeds Index (GOI) is down by 4% m/m, led by steep declines in maize following a quarterly US stocks report at the end of March that suggested more comfortable old crop supplies than previously thought. Volatility in US maize and wheat futures has increased sharply, with the 20-day historical measure rising above 35%.

The forecast for world use of total grains in 2012/13 has been revised 5m t lower, led by declines in maize (2.5m) and wheat (0.5m) consumption in the US. With projected supplies unchanged, the 2012/13 carryover is raised by 5m t to 330m, though this is still a six-year low. Preliminary projections for 2013/14 indicate a rise in output to 1.9bn t and a 31m rise in total end-season stocks, although these would still be below 2011/12 levels. Inventories in major exporters are seen rising by 40% to 136m t, or 7.2% of global use, compared to 5.3% forecast for the end of 2012/13.

The gains are concentrated in maize stocks, where a 10% rise in global output is expected to add 27m t to inventories, restoring them to above average levels. In contrast, higher consumption is likely to absorb much of the forecast increase in wheat production and stocks are expected to increase by a more modest 2m t.

Rice prices have been relatively stable compared to other grains and oilseeds, with the IGC GOI sub-Index down only marginally m/m as firmness in Thailand contrasted with declines at other origins, notably in Vietnam. With values in China still significantly higher than at export origins, another year of above average imports is expected.

The 2012/13 forecasts for soyabeans are largely unchanged, with South America’s exporters driving an 11% increase in global production. While the projected global carryover has been reduced on tightening supplies in China, it is still likely to rise by 8% y/y. Looking ahead to 2013/14 in the US, the USDA Prospective Plantings report indicated a near unchanged area. However, delayed maize sowings and relatively attractive soyabean prices could influence planting decisions in coming weeks.

Wheat

  • Closing stocks for 2012/13 are revised up by 2m t due to lower than expected feed use, but are still sharply lower y/y.
  • Increased plantings and better yields are expected to lift the 2013/14 crop by 4% y/y, to 680m t, led by gains in the EU and CIS.
  • A small fall in feed use in 2013/14 is likely to be outweighed by higher food and industrial use, with total consumption up 1% y/y; only a slight rise in global stocks is forecast.
  • The IGC GOI wheat sub-Index is down 2% m/m, with less than ideal crop conditions supporting a partial recovery from the steep declines after the USDA crop reports at the end of March.

Maize

  • Southern hemisphere harvesting is gathering pace, with record outturns seen in Brazil and Argentina, but due to drought elsewhere, 2012/13 world production will fall by 3% y/y.
  • For 2013/14, output is forecast to increase by 10% y/y, with harvested area and average yields both projected to be higher.
  • Closing stocks will be very tight at the end of 2012/13, but are set to increase sharply, rising to above-average levels in 2013/14.
  • The IGC GOI maize sub-Index is down by 10% m/m, as the USDA’s end-March quarterly stocks report triggered a sell-off.

Rice

  • With larger outturns in China and elsewhere more than offsetting smaller main and secondary crops in India, production is forecast to edge higher, to an all-time peak in 2012/13.
  • Boosted by China and India, world consumption is expected to expand by 2%, but the world carryover is set to rise marginally.
  • Smaller deliveries to sub-Saharan Africa and Far East Asia will result in a 5% fall in world trade in 2013, although China’s imports are likely to remain above average.
  • The IGC GOI rice sub-Index is fractionally lower m/m with firmness in Thailand but slight declines at other origins.

Oilseeds

  • The IGC GOI soyabean sub-Index is down 3% m/m; while tight old stock supplies and logistical difficulties in Brazil provided support, prices were weighed by worries about the impact of avian influenza in China and maize planting delays.
  • Global soyabean output is set to rise 11% in 2012/13; the US sown area in 2013/14 is officially forecast unchanged y/y, but may benefit from delayed maize planting and relatively attractive soyabean prices.
  • Reflecting a reduced figure for China, the forecast for the 2012/13 global soyabean carryover is cut, but is still up 8% y/y, due to a significant rise in Brazil; trade is put at a record 96m t.

April 2013

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