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IGC Grain Market Report


01 October 2012

IGC Grain Market Report - 28 September 2012IGC Grain Market Report - 28 September 2012

The IGC Grains and Oilseeds Index (GOI) is down by almost 9% from the high it revisited on 4 September. However, it remains up 17% y/y reflecting the generally tight market conditions.
International Grain Council Grain Market Report

Highlights

Maize and soyabean markets have retreated amid seasonally rising supplies and suggestions of better than previously expected soyabean yields. Wheat has bucked the trend, with the GOI sub-Index almost unchanged m/m as continued concerns about export availability from the Black Sea region and overly dry growing conditions in Australia have provided support.

World Estimates

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

IGC Grains & Oilseeds Index (GOI)

The forecast for 2012/13 world wheat and coarse grains production is cut by a further 9m t this month to 1,767m t, mainly due to downward revisions for Russian and Australian wheat, together with EU wheat and maize. The total is now forecast to be down 4% y/y.

The forecast for world carryover wheat and coarse grains stocks has been reduced by a further 6m t for 2012/13, giving a 40m y/y decline to the lowest level in five years. Maize inventories are projected down by 17m t y/y to a six-year low. The barley market is also particularly tight as stocks have declined for three consecutive years.

Planting of northern hemisphere winter grain is well underway and the wheat area is tentatively forecast 2% higher for 2013/14, driven by both firm prices and a projected recovery from the weather-related damage to crops in 2012/13.

The rice market remains subdued relative to wheat and coarse grains, with production and consumption broadly balanced and stocks expected to rise marginally y/y. Thai export values have weakened, narrowing the differential with other Asian suppliers to an extent, but the state intervention programme remains the key element in price determination.

This month’s report introduces comprehensive supply and demand projections for soyabeans and rapeseed/canola. The forecast for an 8% recovery in soyabean output in 2012/13 hinges on a sharp recovery to record levels in South America for which favourable weather conditions will be critical, and even at this level of output, stock levels are still to fall y/y.

Summary 2012/13 Outlook for Key Grains and Oilseeds

Wheat

  • Wheat prices have outperformed due to concerns over Black Sea exports and dry conditions in Australia.
  • World production for 2012/13 is cut by a further 5m t, to 657m, a 6% y/y decline, and global use is expected to fall by 2%, to 679m t, as high prices reduce feed demand.
  • The projection for end-2012/13 world stocks is down by 5m t from before, to 175m, with the outlook for the major exporters becoming increasingly tight.
  • World trade is placed a little lower this month, at 132m t, down 13m y/y on reduced trade in feed wheat.

Maize

  • Maize prices are down m/m on improved seasonal availability and low US export demand, but the global market remains tight with stocks expected to decline by 12%.
  • Following a further 4.9m t cut to expected EU output, world production is now forecast down 5% y/y at 833m.
  • Large southern hemisphere harvests should add to supplies in the second part of 2012/13, but favourable weather conditions are essential.
  • Demand is likely to fall given tight supplies and high prices, with both feed and industrial use expected to decline.

Rice

  • The IGC GOI rice sub-Index is slightly down m/m as values weakened in Thailand, pressured by large state intervention reserves.
  • A small y/y increase should put global rice output at an all-time high of 466m t (464m previous year) in 2012/13.
  • World rice use is set to rise to a record of 465m t (458m) on increases in Asia’s main consumers.
  • The 2012/13 global rice carryover will likely remain high, including a 3% rise in major exporters’ stocks.

Oilseeds

  • Soyabean prices have weakened m/m on seasonal harvest pressure and indications of higher than previously anticipated yields, triggering fund liquidation.
  • The forecast 8% recovery in world soyabean production in 2012/13 depends on record South American crops.
  • End 2012/13 soyabean stocks are expected to be down 5% y/y and, while inventories in the major exporters are likely to rebound, they will remain historically tight.
  • World rapeseed/canola trade is forecast to rise by 6%, to an alltime high and closing stocks are projected down 18% y/y, with those in Canada at the lowest level in nine years.

October 2012

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