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IGC Grain Market Report


20 February 2013

IGC Grain Market Report - February 2013IGC Grain Market Report - February 2013

The IGC Grains and Oilseeds Index is virtually unchanged month-on-month (m/m) as declines in wheat and maize have been offset by a net gain for soyabeans.
International Grain Council Grain Market Report

Highlights










Slow US export demand
for wheat and maize and, more recently, prospects for improved
conditions for US winter wheat, have weighed on prices.
However, recent concerns over weather in Argentina and
potential shipping delays in Brazil have pushed soyabean prices
higher, reversing some previous losses and raising the sub-Index
3% m/m. Asian rice prices were underpinned by official support
measures.

Following minor revisions to the 2012/13 forecasts, the estimate
for total grains end-season stocks (excluding rice) has been
revised up by 4m t to 326m, including increases for both wheat
and maize. Overall, however, they remain down 40m t year-onyear
(y/y) at a six-year low, or a 17-year low for the major
exporters.

This report presents the first forecast for the 2013/14 supply and
demand balance for wheat. While world output is tentatively
projected up 4% y/y, much is expected to be absorbed by higher
demand and end-season stocks are likely to rise by just 2m t,
following a 21m decline in 2012/13.

The forecast for 2012/13 end-season maize stocks has been
revised 1.7m t higher this month, but major exporters’ endseason
inventories are still put at a 16-year low. Planting of the
2013/14 crop will soon commence in the northern hemisphere
and the global area is tentatively forecast up 0.6% y/y led by an
anticipated further expansion in the US, although spring
precipitation will be crucial in drought-affected areas.

A market focus on rapeseed/canola highlights the extent to
which 2013/14 supply and demand prospects hinge on Canada’s
crop. While output is officially forecast to expand by 17% y/y,
end-season carryovers are expected to show little change and
fundamental tightness is likely to continue to provide sustained
market support.

Summary Outlook for Key Grains and Oilseeds

Wheat

  • The IGC GOI wheat sub-Index is down 5% m/m on sluggish
    export demand and the prospect of improved conditions for the US
    winter crop, only partly offset by firm demand for EU exports.
  • Upward revisions for China and India raise the global stocks
    estimate to 176m for 2012/13, but this is still down 21m y/y.
  • World output for 2013/14 is tentatively projected up 4% y/y, but
    much is expected to be absorbed by higher demand, and stocks
    are forecast to rise by only 2m t.
  • World trade is expected to be unchanged y/y in 2013/14; Black
    Sea region supplies will likely be capped by below-average
    beginning stocks, underpinning demand for other exporters.

Maize

  • Prices were initially supported by overly dry weather in
    Argentina, but then moved lower on soft US ethanol and export
    demand; the maize sub-Index is down 5% m/m.
  • Despite some less than ideal weather in recent months, Brazil
    and Argentina are still set to harvest record crops, but global
    production is forecast to decline by 3% y/y.
  • Due to tighter supplies, world use is expected to dip by 1% y/y,
    led by reduced demand from the US ethanol sector.
  • With total use again expected to exceed production, closing
    stocks will decline for a fourth consecutive year, including a sharp
    drop in the major exporters to a 16-year low.

Rice

  • Rice prices edged up with the IGC GOI sub-Index up 1% m/m,
    mainly supported by government intervention measures in Thailand
    and Vietnam.
  • At 466m t, world rice production is forecast to be little changed
    y/y, as smaller outturns in Asia, particularly in India, are offset by
    gains elsewhere.
  • World use is expected to rise by 2% y/y, and ending stocks
    are forecast to fall marginally, but supplies in the major exporters
    are likely to rise to a new record.
  • World trade in 2013 should decline by 5% as key importers in
    Asia and Africa reduce purchases from last year’s highs.

Oilseeds

  • Recent concerns over weather in Argentina and potential
    shipping delays in Brazil have pushed soyabean prices higher,
    reversing earlier losses; the IGC GOI sub-Index is up 2.6% m/m.
  • World soyabean production in 2012/13 is forecast slightly lower
    than before, but is still up 13% y/y on prospects for bumper South
    American crops.
  • The world carryover is projected to rise by more than 20% y/y,
    but end-season stocks in major exporters are set to remain tight.
  • Global rapeseed/canola output in 2012/13 is forecast to decline
    to a four-year low; a record crop is tentatively forecast for Canada
    in 2013/14, but stocks are nevertheless likely to change little y/y.

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