IGC Grain Market Report
30 November 2012
IGC Grain Market Report - November 2012
Grains and oilseeds markets have been mixed over the last month.
While the IGC Grains and Oilseeds Index is down by 2% monthon-
month (m/m), this masks divergent underlying trends.
The soyabean and rice sub-Indices have declined by 7% and 1%, respectively, offsetting gains in maize (up 7%), and a modest rise in wheat (up 1%).
World Estimates
The grains supply and demand forecasts for 2012/13 have been
revised slightly as harvests have been completed in some
countries, but the outlook is largely unchanged. Total grains
production is expected to fall by 5% year-on-year (y/y), and despite
a contraction in consumption for the first time in 14 years, stocks
are set to fall by 45m t to 324m.
In the wheat market, speculation about dwindling Black Sea
supplies and the prospect of export curbs in Ukraine have
dominated, yet flows from the region have defied expectations.
This has limited price upside from weather-related worries for
2012/13 crops currently being harvested in the southern
hemisphere, and conditions for the recently planted winter wheat in
the north. Given high prices, the total wheat harvested area for
2013/14 is set to increase by 2%, although conditions for parts of
the US crop are a concern.
Maize prices have outperformed other grains with improved US
export hopes and less than favourable planting conditions for
South American crops which are critical given tight supplies. In
contrast, rice prices have been relatively stable, but Asian markets
were pressured by new crop supplies and mostly limited activity.
While some gains have been seen over the last week, soyabean
prices have weakened m/m, particularly following upgrades to the
US crop. However, while end-season stocks are set to recover, this
hinges on record crops in South America, against a background of
persistently strong import demand from China - the main factor
behind a forecast 5% increase in global trade.
The rapeseed/canola market remains very tight, with output
projected at a four-year low and 2012/13 stocks forecast to decline
23% y/y. Looking to 2013/14, high prices are expected to
encourage a rebound in larger winter rapeseed planting in the EU,
particularly in Germany.
Summary 2012/13 Outlook for Key Grains and Oilseeds
Wheat
- Wheat prices have stayed firm, with crop concerns offset by higher than anticipated exports from the Black Sea region.
- Following slight revisions for Australia and the EU, the forecast for world wheat production is trimmed by 1m t, to 654m, a 6% y/y decline.
- While global consumption is also expected to fall 2% y/y, stocks are still set to contract by 23m t y/y.
- Stronger than anticipated early season imports by China and Iran contribute to a 2m t increase in the world trade forecast, but it is still sharply lower than last season.
Maize
- Maize prices have rallied m/m on revived export hopes in the US, combined with tightening old crop supplies and adverse planting weather in South America.
- The northern hemisphere harvest is almost complete, with sharp y/y declines in the US, Ukraine and EU, but output in the southern hemisphere is still expected to reach a new record.
- Smaller world supplies will cap feed and industrial demand, with total use forecast to decline for the first time in 19 years.
- Stocks will be tight in 2012/13, especially in the four major exporters, where carryovers may fall to a 16-year low.
Rice
- Asian rice markets mostly weakened over the last month as limited trade activity weighed on sentiment, along with increased supplies from main crop harvests.
- At 464m t, world rice production is forecast marginally lower than last month, but is still a record, as rises in China and elsewhere more than offset reduced output in India.
- World stocks are set to decline slightly in 2012/13, but supplies will remain comfortable, especially in the major exporters.
- Global trade in 2013 is projected to fall by 4% y/y on lower shipments to China and Nigeria.
Oilseeds
- Soyabean prices weakened during November as better than anticipated US yields and slow export demand outweighed support from South American crop concerns.
- World soyabean ending stocks are forecast to recover in 2012/13, led by inventory accumulation in major exporters, but this hinges on forecasts for record crops in South America.
- Global soyabean imports are set to expand by 5% y/y, mainly on larger shipments to China.
- Global rapeseed/canola output is forecast at a four-year low of 58.9m t in 2012/13,, with high prices likely to deter imports, global trade is set to contract by 15% y/y.
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