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IGC Grain Market Report


01 November 2013

IGC Grain Market Report - 31 October 2013IGC Grain Market Report - 31 October 2013


International Grain Council Grain Market Report

Highlights

The IGC Grains and Oilseeds Index (GOI) rose 2% m/m, including a 3% increase for wheat, 2% for maize and 1% for soyabeans. Rice was virtually unchanged. However, the index is down 16% y/y as the supply outlook for grains, rice and oilseeds markets is significantly more comfortable than last year. Volatility in CME maize and soyabean futures has steadily declined from elevated levels in August and September, as forecasts for bumper crops have mostly been realised.

The output forecast for total grains (wheat and coarse grains) in 2013/14 has been lifted by 10m t this month, to 1,940m, up 8% y/y. While demand is also expected to rise, by 5% y/y, inventories are seen recovering by 39m t to a four-year high at the end of 2013/14. The global trade forecast is raised by 3m t, to 273m, exceeding the previous record in 2010/11.

Gains in wheat prices over the past month stemmed from crop concerns in Argentina and the Black Sea region. Overall, however, wheat output is expected to rise by 6% y/y in 2013/14 and closing stocks are seen up by 7m t, at 182m, although this would still be below the level seen in 2011/12. The 2013/14 forecast for the global maize harvest has been raised by 5m t this month to a record 948m, and stocks are seen recovering to a 13-year high of 152m. Price activity has been mixed in a relatively tight range, with US prices declining on the good supply outlook and better than expected yields, while Black Sea export prices gained on harvest delays and tight logistics.

Rice markets were also mixed, with good export demand and weather-related crop worries underpinning values in Vietnam, but Thailand’s prices fell further on limited buying interest and pressure from heavy intervention reserves. Rice output is forecast up 1% y/y in 2013/14, with world ending stocks expected to rise for a ninth consecutive year. Strong export demand partly lifted soyabean prices this month, but gains were capped by good harvest progress and yields in the US, together with recently improved weather in South America. The global soyabean crop is seen up 4% y/y in 2013/14, with a 12% rise in aggregate stocks.

A market focus on the prospects for India’s grain and rice exports highlights the expansion seen in 2012/13, resulting from ample supplies. Export volumes are expected to decline in 2013/14 but remain at relatively high levels, with the outcome hinging on relative prices. A proposed cut in the floor price for exports from centrallyheld wheat stocks is expected to be approved at the beginning of November. While this could stimulate increased export demand for milling wheat, sales for feed will likely remain low due to competition from cheaper maize.


Summary Outlook for Key Grains and Oilseeds

Wheat

  • The IGC GOI wheat sub-Index increased by 3% m/m, led by concerns about crop prospects in Argentina and the Black Sea region.
  • The forecast for world wheat production in 2013/14 is 4m t higher than last month, at 696m, and up 6% y/y with a substantial recovery seen in the CIS.
  • Higher food and feed use is expected to lift world consumption by 2% to 690m, and end-season stocks are put at 182m, up by 7m y/y.
  • The world trade forecast for 2013/14 is raised by 1m t to 142m; a small increase y/y as demand from China and Egypt outweighs declines elsewhere.

Maize

  • The IGC GOI maize sub Index ended up 2% m/m, as gains in spot export prices in the Black Sea region and South America more than offset a drop in US quotations.
  • The forecast for world maize output in 2013/14 has been raised by 5m t to a record 948m, driven by a rebound in the US.
  • Led by expanding global feed use, world consumption is expected to show strong 6% growth, and trade is also forecast to increase by 6% y/y, to a new record.
  • After recent tightening, global ending stocks are set to rebound sharply, with carryovers in the major exporters seen at a 26-year high.

Rice

  • While the IGC GOI rice sub-Index was broadly unchanged m/m, markets were again mixed, with values in Vietnam underpinned by export demand and crop worries, but weaker in Thailand on limited buying interest and heavy intervention reserves.
  • World production is projected to expand by 1% y/y, to an all-time high in 2013/14, with larger crops in Far East Asia, notably India; global demand is set to rise by 1%, led by Asia.
  • The 2013/14 world carryover is likely to increase for the ninth consecutive year, with major exporters’ stocks at a new record.
  • Global trade is tentatively expected to rise in 2014, with higher sales to Far East Asia, though China’s needs remain uncertain.

Oilseeds

  • The IGC-GOI soyabeans sub-Index was up by 1% m/m, as good US crop prospects and recently improved planting weather in South America were offset by strong export demand.
  • Global soyabean output is projected to expand by 4% y/y in 2013/14, to a record 282m t, on expectations for bumper crops in South America.
  • End-season stocks are set to increase by 12% in 2013/14, led by major exporters, and global trade (Oct/Sep) is set to expand by 10%, driven by a rebound in import demand from China.
  • Based on ample supplies in Canada, the world rapeseed/canola carryover is expected to grow by 27% y/y, to 6.1m t.

November 2013

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