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IGC Grain Market Report


27 July 2012

IGC Grain Market Report - 26 July 2012IGC Grain Market Report - 26 July 2012

Maize (corn) and soyabean prices have soared to new highs on deteriorating output prospects in the US following the worst drought since 1956. Unfavourable weather conditions have also led to a scaling back of grains output and exportable surpluses in the Black Sea region, supporting gains in wheat and barley values.
International Grain Council Grain Market Report

In contrast to the steep weather-driven gains in grains and oilseeds markets, rice prices declined marginally, mainly on supply-side pressures in Thailand.

The IGC Grains and Oilseeds Index (GOI) reached an all-time high on 20 July, and, despite some recent easing, is still up 14% month-onmonth (m/m).

The world 2012/13 total grains harvest (wheat and coarse grains) forecast has been revised lower to 1,810 million tons (m t) this month and is now expected to fall year-on-year (y/y).

OUTLOOK FOR 2012/13

GRAINS

The forecast for the US maize crop has been cut by 50m t, to 300m and the soyabean harvest has been reduced by 8.3m t to 79m. Wheat output has also been revised lower in both Kazakhstan and Russia.

Global carryover grains stocks are expected to fall by 29m t by the end of 2012/13, led by a 15m drop in wheat and 14m fall in maize; maize stocks are forecast at a six-year low.

World soyabean production is expected to recover sharply in 2012/13, rising by some 9% y/y, although the forecast hinges on a strong rebound in output from South America where planting begins in the fourth quarter of 2012.

Rice output in 2012/13 is forecast up 1%, compared to 3% growth in the previous year, due to less rapid expansion in Asia, but consumption growth is also likely to be lower.

This report includes a market focus on the progress of India’s monsoon and the potential impact on kharif crops, especially rice. It concludes that, despite the possibility of further downgrades to crop estimates, food supplies remain ample and exports are likely to continue.

WHEAT: The world wheat production forecast for 2012/13 is unchanged from the last GMR at 665m t, down 4.5% y/y

China and India output is revised higher; but the combined forecast for the eight major exporters is again lower, as prospects in the Black Sea region have deteriorated.

Export potential is shrinking in the CIS, suggesting a shift to other origins, especially the US and EU

World consumption is forecast to contract by about 2% y/y as lower feed use outweighs food and industrial growth.

Global stocks are forecast to fall by 15m t to a four-year low by the end of 2012/13.

MAIZE: The 2012/13 outlook for maize production has generally worsened, especially in the US, where high temperatures and severe drought have reduced prospects

The world crop is now forecast down y/y at 864m t, exporter availabilities are tightening and global carryover stocks are now expected to decline to the lowest level in six years

World demand is projected to rise about 1% y/y, but forecasts for feed use are trimmed, due to higher prices and lower supply

Industrial use is expected to decline, with US fuel ethanol production likely to fall y/y.

RICE

World rice output is tentatively forecast to rise by less than 1% in 2012/13, to 467m t, following an expected 3% rise in 2011/12, due to a more limited increase in Asian output Following strong output-led growth of 3% in 2011/12, consumption growth is set to expand by a more modest 1.3%, to 466m t Stocks should edge higher by 1.1m t in 2012/13 following a 3.5m t rise in 2011/12, with major exporters seeing a more modest y/y increase World trade in 2013 forecast to rebound slightly, to 34.7m t (34.3m), following an expected 4% decline in 2012.

OILSEEDS

World 2012/13 soyabean production is forecast at 259m t, up 9% on last year, mostly reflecting prospects for a sharp recovery in output in South America Strong demand from Far East Asia, particularly China will underpin growth in world soyabean trade At 57.5m t, global soyameal trade is expected to be broadly unchanged on 2011/12 Forecast rapeseed/canola 2012/13 output is broadly unchanged y/y as Canada offsets for declines elsewhere World rapeseed/canola trade is seen at a record 12.5m t, up 7% y/y, boosted by larger shipments to the EU and Asia.

July 2012

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