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IGC Grain Market Report


25 March 2013

IGC Grain Market Report - March 2013IGC Grain Market Report - March 2013


International Grain Council Grain Market Report

Highlights

The IGC Grains and Oilseeds Index (GOI) is down by 4% m/m led by a 6% decline in soyabeans due to mostly beneficial South American weather, bearish US crop prospects and sluggish export demand. The macroeconomic background has also been unsupportive with renewed concerns over global growth prospects and a stronger US dollar. Maize prices have resisted the trend, with the GOI sub-Index rising by a modest 1% m/m, but underlying performance was mixed.

For both maize and soyabeans, expectations for a rebound in 2013/14 supplies have resulted in wide old and new crop futures spreads. Logistical difficulties in South America boosted demand for dwindling supplies elsewhere, particularly in the US. In coming months, southern hemisphere new crop availabilities should help ease pressure on tight US supplies through a marked seasonal shift in buying interest.

This GMR includes tentative 2013/14 supply and demand projections for wheat, maize and barley. While wheat output is expected to rise by 4%, a recovery in global use will leave little room to rebuild stocks, which are forecast to increase by just 5m t y/y. There is the potential for a greater rebound in maize production, which is projected up 9% y/y in 2013/14. Consumption is also likely to recover from this year’s unusual decline, but stocks could still rise by 19% y/y from the 16-year low forecast for end 2012/13. Barley output is forecast up 6% y/y. Strong feed and industrial usage will likely support import demand, underpinned by improved supplies in major exporters.

With ample availabilities in key consumers, rice trade is expected to decline by 5% in 2013 as Asia and Africa buy less. Exports from the leading South American suppliers are expected to again decline y/y, and will be well below the record of two years earlier (see Market Focus).

A Market Focus on China’s grain and rice trade highlights the rise in purchases over the last two years as importers have met higher demand (mostly for maize), addressed quality discrepancies and capitalised on price differentials. While IGC five-year projections suggest net imports will only rise significantly for maize, evolving quality needs and price spreads will add to the annual fluctuations in import needs already caused by variations in growing conditions.

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

 

IGC Grains & Oilseeds Index (GOI)

See: http://www.igc.int/grainsupdate/igc_goi.xlsb

Summary Outlook for Key Grains and Oilseeds

Wheat

  • The IGC GOI wheat sub-Index is down 2% m/m, weighed by improving prospects for 2013/14 output, particularly following precipitation in previously dry winter wheat areas in the US.
  • Forecasts for 2012/13 are little changed since the last GMR, continuing to show sharply lower production and end-season stocks.
  • For 2013/14, the harvested area is put at a four-year high, and a recovery in average yields should boost production by 4% y/y.
  • Some increase in major exporters’ stocks is likely, but the global 2013/14 carryover is expected to rise by a modest 3m t; world trade is seen unchanged y/y at 138m.

Maize

  • While quotations in Argentina drifted lower on seasonal pressure, US and Black Sea prices were firm on tightening spot supplies; overall the IGC GOI maize sub-Index rose 1% m/m.
  • Despite China’s bumper harvest and potentially record-breaking crops in Brazil and Argentina, world output is forecast to fall by 3% y/y in 2012/13 due to drought in the US and parts of the EU.
  • However, assuming normal weather, production is projected to rebound sharply in 2013/14, with US output increasing by as much as 30% y/y.
  • Led by sharp increase in the US, exporter stocks are projected to recover to an eight-year high in 2013/14 from the 16-year low in 2012/13.

Rice

  • The IGC GOI rice sub-Index fell 1% m/m but underlying trends were mixed, with prices easing to 13-month lows in Thailand, while being generally firmer elsewhere in Asia.
  • World rice output in 2012/13 is forecast to edge up on larger crops in Africa and the Americas, and global use, driven by increases in Asia, is seen rising by 2% y/y, to an all-time high.
  • The world carryover is set to rise marginally, with supplies in the major exporters of India and Thailand especially ample.
  • Global trade in 2013 is projected to decline by 5% as importers in Asia and Africa buy less.

Oilseeds

  • The IGC GOI soyabean sub-Index is down 6% m/m, weighed by beneficial weather in South America, forecasts for better US output in 2013/14 and signs of slower international demand.
  • World soyabean output in 2012/13 is revised slightly lower, but would still be up 11% y/y on a rebound in South American crops.
  • The global 2012/13 soyabean carryover is expected to rise modestly; trade is forecast up 5m t y/y, at 97m, centred on larger deliveries to Asia, particularly China.
  • The forecast for global rapeseed/canola production in 2012/13 is lifted slightly, to 60.0m t, but the carryover is still forecast at a nine-year low of just 3.4m, while trade is seen falling by 12% y/y.
* Soyabeans

March 2013

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