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IGC Grain Market Report


02 July 2013

IGC Grain Market Report - July 2013IGC Grain Market Report - July 2013


International Grain Council Grain Market Report

Prospects for bumper crops in 2013/14 have weighed on grains and oilseeds prices over the last month, although tightening old crop supplies have provided some support to spot export quotations and near-term futures. The IGC Grains and Oilseeds Index (GOI) fell by 2% m/m, as a 7% decline for wheat and a 3% fall for rice were more than offset by small increases in maize and soyabeans.

Total grains (wheat and coarse grains, excluding rice) output is set to rise by 8% y/y in 2013/14, and end-season stocks are expected to increase by 11%, just exceeding 2011/12 levels.

The forecast for world 2013/14 wheat production has been raised slightly this month, by 1m t to 683m, but the 4% y/y increase is still expected to be largely absorbed by demand. End-year stocks are forecast up by just 2m t y/y.

Projected maize output for 2013/14 has also been raised by 1m t since the last GMR, on higher expected output in the Black Sea region. Despite strong demand growth, stocks are likely to rise sharply, by an estimated 25% to a 13-year high.

This month’s report includes tentative 2013/14 projections for rice and oilseeds. World rice production is expected to expand slightly, to 476m t, underpinned by increases in Asia. Aggregate end-season stocks are set to rise for the ninth consecutive year, led by 8% growth in major exporters’ inventories to a fresh record, mainly reflecting expectations for further increases in Thailand. At around 44m t they would again exceed annual traded volumes.

Global soyabean production is expected to rise to a new record of 284m t in 2013/14, up 6% y/y on bumper crops in leading producers. Aggregate end-season inventories are consequently set to increase by 28% y/y to a three-year high, while global trade could expand by as much as 8% on larger deliveries to Far East Asia, predominately China.

In contrast, the rapeseed/canola market is likely to remain extremely tight in 2013/14, with world carryovers seen declining marginally, including a fall in key exporters.


Summary Outlook for Key Grains and Oilseeds

Wheat

  • The IGC GOI wheat sub-Index fell by 7% m/m on prospects for a large world wheat harvest, and a large maize harvest that could potentially limit feed demand for wheat in some countries.
  • The forecast for world wheat production in 2013/14 is lifted by 1m t this month, to 683m, up 4% y/y.
  • Higher than previously forecast feed and industrial use boosts world consumption and only a modest 2m t rise in end 2013/14 carryover stocks is expected.
  • World trade is forecast to show little y/y change, at 137.7m t; since last month, import forecasts for China and Iran are raised, while India’s projected exports are cut.

Maize

  • The IGC GOI maize sub-Index is up 3% m/m, underpinned by tight spot availabilities, but new crop futures were pressured lower by the prospect of a sharp increase in supplies.
  • Maize production is expected to rise by 11% y/y in 2013/14, to 946m t; the forecast is raised by 1m this month on higher projected output in the Black Sea region.
  • Year-end stocks are projected to rise quite sharply, by 25% to 149m t, a 13-year high.
  • Larger harvests in some countries will restrict gains in 2013/14 trade, but China is expected to be a much larger buyer.

Rice

  • The IGC GOI rice sub-Index fell by 3% m/m to a 17-month low, led by declines in Thailand.
  • The world 2012/13 carryover is expected to be broadly unchanged y/y, but is seen at a record of 41m t for the major exporters, exceeding global trade.
  • Global 2013/14 output is tentatively projected to expand slightly to 476m t, with end-season stocks increasing for the ninth consecutive year, including an 8% rise in the major exporters.
  • World trade is projected to increase marginally in calendar 2014, including larger deliveries to markets in Near East Asia and Africa.

Oilseeds

  • The IGC GOI soyabeans sub-Index rose by 1% m/m as gains in the US, on tight old crop availabilities, and Brazil, more than offset declines in Argentina.
  • World output in 2013/14 is tentatively projected to expand by 6% y/y to 284m t, led by the major producers.
  • 2013/14 world carryovers are tentatively expected to increase by 28% y/y to a three-year high, with much of the rise in the major exporters, while trade is expected to rise by 8%.
  • The global rapeseed/canola market is set to remain extremely tight in 2013/14 with a further marginal fall in end-season stocks, following a forecast 22% decline in 2012/13.

July 2013

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