IGC Grain Market Report
26 October 2012
IGC Grain Market Report - October 2012
Against a still uncertain macroeconomic backdrop, grains have
remained supported by a tight fundamental outlook. The IGC
Grains and Oilseeds Index (GOI) is down by 2% m/m, but this
largely reflects a 5% m/m decline in soyabeans, driven by fund
liquidation as crop prospects improved. The maize and wheat subIndices rose by 4% and 1%, respectively, while rice was broadly
unchanged. 
A further 6m t has been cut from the 2012/13 forecast for total
global grains production, which is now expected to be 5% lower
y/y, at 1,761m t. The decline includes 39m t of wheat, 46m of
maize, and 4m of barley. Reduced availabilities and higher prices
are expected to ration demand, resulting in the first y/y fall in grains
consumption since 1998/99.
The forecasts show a further tightening in the balance this month,
with 2012/13 end-season total grains stocks revised down by 4m t
to 328m (372m the previous year), the lowest since 2007/08.
Inventories for the major exporters will be even tighter and the
smallest for 17 years. The global y/y decline is forecast to come
from a 24m t reduction in wheat, an 18m decline in maize, and a
1m drop in other coarse grains, notably barley.
Global grains trade is expected to fall by 19m t from last year’s
high, to 249m, with a particularly steep decline for wheat – down by
13m y/y, largely due to a forecast reduction in EU feed wheat
imports against the backdrop of tight Black Sea supplies.
The rice market remains relatively comfortable with stocks
expected to rise by 3% in major exporters, largely reflecting a
projected increase in Thailand due to ongoing government
intervention buying.
The outlook for rapeseed/canola has tightened sharply owing to
reduced crop prospects in Canada. Global ending stocks are
expected to fall by almost one-quarter, including a steep decline in
the two major exporters. Tight supplies and high prices are expect
to constrain world trade, seen falling by 11% y/y. This contrasts
with better prospects for soyabeans, although the forecast
recovery in world production depends on favourable weather for
key South American crops.
SUMMARY 2012/13 OUTLOOK FOR KEY GRAINS AND OILSEEDS
WHEAT
- Wheat sentiment remains generally bullish, underpinned by evidence of very thin export supplies in the Black Sea region.
- Lower yields in the EU and Kazakhstan, as well as deteriorating crop prospects in Argentina and Australia, reduce the forecast for world production to 655m t.
- Global feed use is forecast to fall sharply, and world carryover stocks are placed 3m t lower than before, at 172m, with those in the major exporters at a five-year low.
- Export forecasts have been cut for the US and Australia in favour of bigger shipments by Russia and India.
MAIZE
- Tight fundamentals compounded by bullishly-perceived USDA reports, led to net gains in world export prices during October.
- Northern hemisphere production prospects have mostly worsened. Although sowing is slightly delayed, the outlook for South American crops remains mostly favourable.
- Despite a forecast 3% contraction in demand, the stocks outlook has tightened further - end season inventories in the major exporters could shrink by almost one quarter.
- EU import needs are rising but, with Mexico and China likely to buy less, world trade is forecast to slip to a three-year low.
RICE
- The IGC GOI daily rice price index was largely steady during October, although quotations at major origins were mixed.
- The forecast for 2012/13 global rice production is cut slightly but, at 465m t (463m), would still be a record, and global use is set to expand to an all-time high of 466m t (457m).
- World ending stocks in 2012/13 are projected to remain comfortable, at 102m t, including a 3% rise in major exporters.
- World trade in rice in 2013 is seen falling by 2% – on smaller shipments to Far East Asia and sub-Saharan Africa.
OILSEEDS
- Weighed by improving global production prospects, the IGC GOI soyabean sub-Index is down by around 5% m/m.
- World soyabean output is forecast to rise 11% y/y, due to improved crops in South America, resulting in a near 50% expansion in major exporters’ inventories.
- In contrast, the projection for world rapeseed/canola output in 2012/13 is cut markedly, to 58.8m t (60.4m), while global ending stocks will fall by almost one-quarter, including a steep fall in major world market suppliers.
- World soyabean trade is projected to expand by 5% y/y, but tight supplies and high prices are expect to constrain trade of rapeseed/canola, which is seen falling by 11% y/y.
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