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IGC Grain Market Report


03 March 2014

IGC Grain Market Report - 27 February 2014IGC Grain Market Report - 27 February 2014


International Grain Council Grain Market Report

Highlights

Export prices have broadly strengthened this month on weather concerns in some producing regions and logistical issues. Overall, the IGC Grains and Oilseeds Index (GOI) is up by 5% m/m, although prices remain 8% lower than a year ago on generally favourable crop prospects. Soyabean export prices have risen particularly sharply, with the sub-Index up by 8% m/m, lifted by adverse weather conditions in South America. While a record global harvest is still forecast, demand growth is also very robust, and end-season stocks are expected to edge only slightly higher.

Wheat and maize prices have also strengthened, by 2% and 4% respectively, due to a combination of unfavourable weather and logistical issues for wheat, and solid export demand and slow producer selling for maize. Overall, however, the supply outlook remains ample, with total grains production forecast up 10% y/y at 1,966m t, record levels of trade, and stocks climbing by 52m t. Nevertheless, CME oats futures continue to close at unprecedented highs, underpinned by low US inventories and constraints on exporting from Canada. A Market Focus highlights the opportunity for EU exporters, but the market is likely to remain tight near term.

Rice prices have weakened by 1% m/m, pressured by limited buying interest and prospects for plentiful export availability. While Thailand’s exports are forecast to rise, especially with the announcement that the stock procurement programme would cease at the end of February, the potential is likely to be limited by stiff competition from other exporters, notably India and Vietnam (see Market Focus).

A preliminary view of the supply and demand outlook for wheat in 2014/15 suggests that output could decline by 2% y/y, as yields are unlikely to be as high as the exceptional levels the previous year. Stocks are projected slightly lower y/y as firm demand exceeds output, and trade is set to fall from this year’s peak, predominately on lower needs from China. Yields are also expected to retreat from this season’s highs for the 2014/15 maize, barley and rapeseed/canola crops. Maize and rapeseed/canola output are seen down by 1%, and barley by 5%.

Global feed use of distillers dried grains is set to rise by 6% this year. US availabilities have soared with the rapid expansion in maize based fuel-ethanol, and exports have been robust in the year to date, led by strong sales to China, despite higher prices relative to maize (see Market Focus).


Summary Outlook for Key Grains and Oilseeds

Wheat

  • The IGC GOI wheat sub-Index is up 2% m/m, as logistical issues and US weather concerns have outweighed ample nearby supplies and generally favourable crop prospects.

  • While the global wheat area is expected to rise in 2014/15, production is likely to fall by 2% y/y on a return to more normal yields from the previous season’s exceptional results.

  • Large opening stocks will boost total supplies in 2014/15, but consumption is expected to absorb output, leaving carryover stocks at the end of the year almost unchanged.

  • Trade is likely to fall slightly from last year’s high, assuming that the quality of China’s domestic crop is restored.

Maize

  • While maize prices have been lifted 4% m/m on solid international demand and occasionally slow producer selling, the IGC GOI maize sub-Index remains down 23% y/y given the relatively comfortable outlook for world supplies.

  • Owing to strong gains across the main northern hemisphere producers, world 2013/14 output is forecast 11% higher y/y.

  • Consumption is expected to expand by 8% y/y, led by a sharp rise in feed use, but world closing stocks will still likely be up 21% y/y. Trade is forecast to reach record levels.

  • The 2014/15 crop is tentatively projected to contract marginally as yields decline to more normal levels.

Rice

  • The IGC GOI rice sub-Index fell by around 1% m/m, pressured by limited buying interest and prospects for plentiful export availability.

  • World rice production is forecast to rise slightly in 2013/14 to an all-time high, boosted by increased output in Far East Asia.

  • The 2013/14 world carryover is placed marginally higher than last month at 109m t, but is still projected to fall, albeit marginally, for the first time in nine years.

  • Larger shipments to markets in Far East Asia are expected to support a 3% rebound in world trade in 2014.

Oilseeds

  • The IGC GOI soyabeans sub-Index is up 8% m/m to roughly the same level as this time last year, due to adverse crop weather in Brazil and Argentina.

  • Despite recent weather concerns, global soyabean output is forecast to expand by 5% in 2013/14, to a high of 284m t, led by bumper crops in all the major exporters.

  • However, given strong demand, aggregate end-season stocks are projected only slightly higher. Trade is expected to expand by 12% y/y driven by strong demand from China.

  • Following an 11% increase to a record crop in 2013/14, rapeseed/canola production is tentatively projected down 1% in 2014/15, as average yields retreat from this season’s highs.

March 2014

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