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IGC Grain Market Report


02 September 2013

IGC Grain Market Report - September 2013IGC Grain Market Report - September 2013


International Grain Council Grain Market Report

Highlights

The IGC Grains and Oilseeds Index (GOI) is up by 4% m/m, led by a 10% rise in soyabeans, as doubts have emerged over prospects for the US crop. Nevertheless, the harvest is still expected to be 8% ahead of last year. With a substantial global crop likely, the soyabean sub-Index and the overall index are still down by 20% y/y. The wheat sub-Index was up slightly, by 1% m/m, while maize and rice fell by 2% and 7% respectively.

Following upward revisions to 2013/14 crop forecasts for both wheat and coarse grains, projected total grains output is raised by 9m t this month to 1,929m, an 8% y/y recovery from the previous season’s drought-damaged results. End-season inventories are expected to rise by 37m t, to 365m, led by a 29m increase for maize.

The wheat market has been relatively stable, with volatility at below average levels (see Market Focus: Update on Volatility in grains and oilseeds futures). While near record global output of 691m t is forecast, export demand has been solid, in part due to quality issues with China’s crop, which has provided some price support.

Global maize production is forecast up 10% y/y, at 945m t, led by the US and despite a pullback in South America, in part in favour of soyabeans. A Market Focus on maize in Paraguay highlights how the country has emerged as the third, albeit distant, largest producer in South America, benefiting from inflows of expertise and a favourable climate.

An update on India’s rice trade highlights how its exporters have gained market share following the removal of the ban on shipments of non-basmati rice at the end of 2011, also reflecting competitive pricing relative to the main exporters. World rice trade is expected to rise marginally in 2014 on increased shipments to sub-Saharan Africa and Far East Asia, although China’s needs remain uncertain and will hinge on the relationship between local and international prices.

A bumper crop in South America is expected to raise global soyabean production by 4% to a new record of 280m t in 2013/14. Planting in Brazil is still some weeks away, but it appears increasingly likely, given current prices relative to maize in particular, that the area sown to soyabeans will expand y/y (see Market Focus: Soyabean planting prospects in Brazil).


Summary Outlook for Key Grains and Oilseeds

Wheat

  • The IGC GOI wheat sub-index rose by 1% m/m, as initial declines on good output prospects were reversed with solid export demand and gains in maize and soyabeans.
  • The 2013/14 world wheat crop forecast is lifted by 4m t to 691m, with increases for Canada, the EU, Kazakhstan and Ukraine.
  • Only a small increase in carryover stocks is expected in 2013/14, to 176m t, including a slight recovery in the major exporters; those in the US could shrink to a six-year low.
  • Small upward revisions for a number of countries, including Brazil, China and Iran, help to boost the world trade forecast marginally y/y, to 141m t.

Maize

  • Led by weakness in spot US quotations, global export prices were mostly lower during the past month, with the IGC GOI maize sub-Index down 2% m/m.
  • World maize output is expected to increase by 10% y/y to 945m t, led by a rebound in the US, while global demand growth is forecast at 5%, up sharply compared to the 2% recent average.
  • Against a backdrop of strong underlying demand and lower prices, trade is seen rising to a six-year high.
  • Including a steep recovery in the US, world closing stocks are forecast to increase by 24% y/y; exporter stocks look set to be ample.

Rice

  • The IGC GOI rice sub-Index declined by around 7% m/m, to its lowest in about three years.
  • Global rice output is projected to rise by 1% to a new record in 2013/14, with larger outturns in China and India, and increases in those countries should boost world use by a similar amount.
  • Aggregate end-season stocks are forecast to expand moderately, with further accumulation in leading exporters, notably Thailand.
  • World trade is set to rise marginally in 2014 on small increases in sales to sub-Saharan Africa and Far East Asia, but prospects are tentative as China’s import needs remain uncertain.

Oilseeds

  • The IGC GOI soyabeans sub-Index rose by 10% m/m, as initial declines on bearish fundamentals were more than offset by increasing worries about the impact of hot and dry weather on US crops.
  • Global soyabean output is projected to rise by 4% y/y, to a new high in 2013/14; while the US forecast is reduced by 4.5m t to 88.6m, it would still be up 8% y/y and the highest since 2010/11.
  • 2013/14 world soyabean stocks are likely to expand for the second consecutive year, up by 22%, and trade (Oct/Sep) is set to rise by 9% y/y, mainly due to robust demand from China.
  • World rapeseed/canola output is forecast up 4% y/y in 2013/14; but tight supplies are likely to limit demand; end-season stocks are set to rise only modestly, and for the first time in four years.

September 2013

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