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IGC Grain Market Report


03 February 2014

IGC Grain Market Report - 30 January 2014IGC Grain Market Report - 30 January 2014


International Grain Council Grain Market Report

Highlights

The IGC Grains and Oilseeds Index (GOI) has fallen by 5% since the end of November 2013. While strong export demand has been supportive at times, wheat prices have been pressured by heavy global supplies, and soyabeans by improved weather conditions and the start of Brazil’s harvest. Both sub-Indices are down 8% since November. Maize, meanwhile, has particularly benefited from strong export interest out of South America and the Black Sea region, and the sub-Index is up 4%. Asian rice prices have generally weakened, but a move preventing access to old crop government inventories has lifted prices in Thailand more recently.

Since the last GMR, the forecast for total grains (wheat and coarse grains) output for 2013/14 has been revised up by 18m t to 1,964m. If realised, this would be a 10% y/y increase, including an 8% rise for wheat and 11% for maize. Notably, as a result of exceptional yields, Canada’s grains harvest estimate has been raised by 7m t in this report. However, there have been logistical problems in transporting the crops to export markets and inventories are expected to rise sharply (see Market Focus). Overall global grain stocks are seen rebounding by 54m t, or 16%, to 387m t, equivalent to 20% of global demand.

Despite logistical difficulties in Canada and elsewhere, the projection for global grains trade has been raised to 284m t, surpassing the previous high in 2011/12. Wheat trade is expected to increase by 4% to 147m t, including, despite the issues, a 15% increase in Canada’s shipments. While the forecast for China’s maize imports has been lowered, given recent rejections of US shipments by quarantine authorities, the projection for global trade has been increased to 108m t, up 13% y/y, on solid demand elsewhere.

The soyabean output forecast is revised yet higher, to a record 288m t, with bumper crops in all major exporters. Trade is seen rising by 12% to an all-time high, driven by an expected rebound in China’s demand. A Market Focus on US export commitments concludes that a significant portion of outstanding sales to China are likely to be cancelled and switched to other origins.

This report also includes a review of Saudi Arabia’s rice market, a key buyer of high quality, especially basmati, varieties.

Looking ahead to 2014/15, global wheat output is tentatively projected to fall by 1%, despite a 2% increase in area, as yields are likely to return to more average levels following some outstanding results this season.


Summary Outlook for Key Grains and Oilseeds

Wheat

  • The IGC GOI wheat sub-Index is down by 8% since the end of November, pressured by heavy global supplies.
  • The forecast for 2013/14 world wheat production has been revised up by 9m t to a record 707m; consumption is placed 1m lower, but at 691m would be up 3% y/y.
  • The global carryover figure is raised by 7m t, to 188m, with larger projections for the major exporters and India, and trade is now forecast to reach a record 147m.
  • In 2014/15, the total wheat harvested area is forecast to increase by 2%, but production is tentatively expected to fall by 1% y/y to 697m t, on a return to average yields.

Maize

  • The IGC GOI maize sub-Index is up by 4% since the end of November, lifted by strong export interest.
  • Despite forecast declines in South America, global output is forecast up 11% y/y in 2013/14, led by a major yield recovery in the US.
  • Amid strengthening demand from feed and industrial users, global consumption is expected to rise by an unusually strong 7% y/y, but aggregate world closing stocks are still forecast to return to much more comfortable levels.
  • Trade is on course to break all previous records, with Jul/Jun shipments placed at 108m t, an increase of 13% y/y.

Rice

  • Asian prices have generally weakened over the last two months, but a move preventing access to old crop government inventories has lifted prices in Thailand.
  • Global rice output is forecast broadly unchanged y/y in 2013/14, as declines in the world’s leading producers, China and India, are offset by gains elsewhere.
  • The 2013/14 world carryover is expected to fall fractionally y/y, with major exporters’ inventories likely to decline by 4%, as an expansion in Thailand only partly offsets a decline in India.
  • World trade is projected to recover by 4% in 2014, boosted by expectations for larger shipments to Far East Asia.

Oilseeds

  • The IGC GOI soyabean sub-Index is down 8% since the end of November, pressured by improved weather and the start of Brazil’s harvest, with declines limited by strong export demand.
  • Global soyabean output is forecast up 6% y/y in 2013/14, to a record 288m t, with bumper crops in major exporters; closing stocks are set to increase for the second consecutive year.
  • Global soyabean trade in 2013/14 (Oct/Sep) is forecast to rise by 12% y/y, driven by an expected rebound in China’s demand.
  • Reflecting a sharply higher figure for Canada, global rapeseed/canola production is seen rising by 11% y/y in 2013/14, allowing a 58% increase in end season stocks.

February 2014

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