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IGC Grain Market Report


03 June 2013

IGC Grain Market Report - May 2013IGC Grain Market Report - May 2013


International Grain Council Grain Market Report

Highlights

The IGC Grains and Oilseeds Index (GOI) is unchanged m/m as gains in soyabeans were offset by declines in wheat and rice.

Although there is continued uncertainty about harvest prospects in some major producers, global wheat availabilities are still set to be ample over the year ahead. Delays to planting due to overly wet weather in the US have heavily influenced trade in maize and soyabeans markets, with speculation over potentially lower yields and the possibility of some area switching. However, the prospect for still bumper US crops remained a mild underlying bearish influence for both markets.

World Estimates

Figures may not add due to rounding a) Wheat and coarse grains b) Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, US c) Argentina, Brazil, Ukraine, US d) India, Pakistan, Thailand, US, Vietnam e) Argentina, Brazil, US

Old/new crop futures spreads for maize and soyabeans have declined recently, but continue to highlight the market’s need for increased supplies. Current maize stocks appear particularly tight, especially among major exporters. Thin old crop soyabean availabilities have also boosted nearby fob prices, along with delays in shipments from South America.

IGC Grains & Oilseeds Index (GOI)

Forecasts for 2013/14 indicate a 7% increase in total grains output to 1.9bn tonnes (t). With a 4% rebound expected in consumption, end-season stocks are likely to increase by around 33m t to 367m, just exceeding 2011/12 levels. The majority of the stock recovery is expected to be for maize, with inventories forecast to rise by 27m t. Wheat carryovers are expected to be up by just 2m t as demand is likely to absorb increased supplies.

Rice markets have weakened slightly over the month as limited export demand has weighed on Thai export quotations, despite continued government intervention buying. Reduced buying by Asian and African importers is expected to result in a 4% y/y fall in world trade in 2013. A market focus on Nigeria’s rice market highlights the impact of recent policy changes on the country’s imports.

Croatia will become the 28th member of the EU on 1 July. At 5% of GDP, Croatia’s agricultural sector is relatively large compared to 2% for the rest of the EU, and it is a net exporter of grains. However, the absolute levels are relatively small and will have limited impact on the enlarged EU-28 grains balance sheet (see market focus).

Summary Outlook for Key Grains and Oilseeds

Wheat

  • While concerns remain over harvest prospects in some major producers, wheat prices have softened over the last month, as supplies are still expected to be ample in the year ahead; the IGC GOI wheat sub-Index is down by 4% m/m.
  • 2013/14 production is forecast up 4% y/y at 682m t, on higher area and yields.
  • Given low opening stocks only a small gain in total supplies is expected and is likely to be mostly absorbed by higher use; consumption is expected to rise by 1% to 680m t.
  • A small fall in world trade to 137m t is forecast; trade in feed is expected to be capped by higher maize supplies.

Maize

  • Maize export prices in the US and Argentina were firmer, but, with the resumption of some nearby quotations in Brazil, there was little m/m change in the IGC GOI’s maize sub-Index.
  • Despite record South American crops and a drop in overall consumption, closing stocks at the end of 2012/13 will be very tight, especially among the leading exporters.
  • World output is forecast to rebound by 10% in 2013/14; with gains in feed and industrial use, demand is set to rise by 6%.
  • Carryovers in 2013/14 will be much more comfortable compared to the previous year, especially in the US, where stocks are expected to more than double.

Rice

  • The IGC GOI rice sub-Index is down by 1% m/m, led by declines in Thailand, where limited export demand weighed, despite support from continued government intervention buying.
  • Global rice production is forecast to rise by 1% y/y in 2012/13, boosted by larger outturns in Asia, Africa and the Americas.
  • The global rice carryover is forecast unchanged y/y, but well above average, with major exporters’ inventories especially ample.
  • Reduced buying by Asian and African importers is likely to result in a 4% y/y fall in world trade in 2013.

Oilseeds

  • Spot soyabean prices have risen on thin old crop supplies and shipping delays in Argentina, but were capped by forecasts for a bumper US crop; the IGC GOI sub-Index is up 3% m/m.
  • World 2012/13 soyabean output is set to increase by 12% y/y on a recovery in South America; for 2013/14 a record crop is officially forecast for the US on a rebound in yields.
  • Soyabean carryover stocks are forecast 7% higher y/y in 2012/13, at around 25m t, while world trade is seen at an alltime high of 96m t, boosted by larger deliveries to Asia.
  • In contrast, given tight availabilities and high prices, 2012/13 world rapeseed/canola trade is set to fall by 13% y/y, to 11.4m t.
* Soyabeans

June 2013

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