IGC Grain Market Report
30 April 2012
IGC Grain Market Report - 27 April 2012
Global grains and oilseeds markets were heavily
influenced by a raft of production assessments during
April, with uncertainty about crops helping to sustain a
period of increased volatility. Market Commentary
Mostly good prospects for the next US wheat and maize crops weighed on markets, but outcomes were more uncertain elsewhere, with the impact of adverse weather still being assessed in Europe and the CIS. The soyabeans complex remained notably strong as crop figures in South America were progressively revised lower. The IGC’s daily prices index (GOI) showed a net gain of 1%, with stronger soyabeans and rice sub-indices outweighing declines for wheat and maize. For wheat, heavy price falls in the US were triggered by mostly favourable crop conditions, but bearish sentiment was tempered by downgrading of production prospects in the EU and by strong old crop demand, especially for feed. A steep rise in maize values at the end of last month was eroded by increasing optimism that the next US harvest would be very large. Falling production expectations in South America continued to lead the soyabean market higher, with nearby US futures approaching four-year highs. Firmer prices in Thailand supported IGC’s sub-index for rice, underpinned by ongoing government support measures and by solid export demand but, in Vietnam, seasonal harvest pressure saw a slight fall in values. Ocean freight rates rallied sharply, boosted by strong commodities demand and tight spot tonnage, the average of three grains-carrying sectors up by 36%.



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Supply and Demand in 2011/12
Grains*
Due to a larger carry-in and a further increase in the
global production figure, the forecast of 2011/12
world grain supplies is slightly higher than before
and, with estimated use lower, ending stocks are
now seen 1% above the previous year’s total. World
grain production, at 1,842m. tons, is up by 5% yearon-
year. The crop estimate is raised by 1m. tons,
reflecting good prospects for the second maize crop
in Brazil. Global consumption is forecast to rise by
54m. tons, to a record 1,838m., including 778m. tons
(744m.) for feed. Growth in industrial use will be
constrained by slowing demand from the US fuel
ethanol sector. World stocks are forecast to
increase to 379m. tons (375m.), but the carryover in
the eight major exporters is projected to dip to 131m.
(138m.), due to a contraction in US maize
inventories. Total grains trade in 2011/12
(July/June) is forecast at a record 260m. tons, up 7%
on last year.
* Wheat and coarse grains
Rice
World rice output is forecast to rise by 3% in 2011/12, to a record 462m. tons, due to increases in Asia’s key producers. Along with expanded world use, to 459m. tons (448m.), the world 2011/12 carryover will increase, with inventories in major exporters, notably in India and Thailand, moving higher. World trade in 2012 is forecast to fall by 7%, to 32.8m. tons, on smaller deliveries to Far East Asia.
Oilseeds
Reflecting further downgrades to South American crops, the world soyabean production forecast for 2011/12 is reduced to 238.4m. tons, a fall of 11% from the previous year’s record. After the dramatic growth of earlier years, global soyabean trade is expected to decline for the second successive year, albeit marginally, as increased deliveries to Asia – notably China – are outweighed by reduced purchases by other countries, including the EU. World soyameal trade is expected to increase by around 1%, to an all-time high of 57.6m. tons.
Outlook for 2012/13
Grains*
The 2012/13 wheat and coarse grains harvested
area is forecast to increase by 1.6%, to 539m. ha.,
the highest in 16 years. With some winter wheat in
the EU and Ukraine to be replanted, all-wheat area is
unlikely to show much change compared to 2011/12,
but area seeded to maize and barley will increase,
especially in North America and the CIS. Based on
the latest planting figures and taking into account
worse than expected damage to some winter wheat
crops, the 2012/13 grains production forecast is
lowered by 7m. tons, to 1,869m. tons, up 1.5% year-on-year. Wheat output is expected to decline, but
production of coarse grains, including maize, barley,
sorghum, oats and rye, is forecast to rise.
World consumption of grains is projected 1.5%
higher than last year, at a record 1,865m. tons, with
grain used for livestock feeding projected to rise at a
comparatively faster pace than food or industrial
processing. Rising meat demand in developing
countries is expected to lift feed use, but there may
be a slight shift away from wheat to maize. Global
demand for industrial products such as starch is
expected to rise, but the US fuel ethanol sector may
shrink. Carryover stocks at the end of 2012/13 are
forecast to increase slightly, to 383m. tons (379m.), a
second successive yearly rise. Those in the major
exporters are projected to climb to 139m. tons
(131m.), mainly because of higher US maize
inventories.
World trade is projected to gain 1%, to 263m. tons,
due to strengthening milling wheat and feed grains
demand. With some global feed demand expected
to shift back to maize, trade in that grain is set to
increase for a fourth year, including increased
purchases by China. Stiffer competition from maize
is expected to restrict world trade in low/medium
grade wheat. After a strong rise in 2011/12, trade in
barley is projected to show little change.
WHEAT: The forecast of world wheat production in
2012/13 is cut by 5m. tons, to 676m., some 19m.
below the previous year’s record. The EU crop
forecast is reduced sharply due to reports of worse
than expected winter damage and recent dry
conditions. Growth in food and industrial use is
expected to be outweighed by a fall in feed, but total
world consumption is forecast to show only a limited
decline. The forecast of world stocks at the end of
2012/13 is cut by 2m. tons, to 206m. (210m.).
Having reached a new peak of 140m. tons in the past
year, reduced imports for feed could see global
wheat trade slump by about 5m., but much will
depend on the level of feed wheat prices relative to
maize.
MAIZE (CORN): An increase in 2012 plantings is
forecast to lift world maize production by 4%. World
supplies could top 1bn. tons for the first time, with
exportable availabilities more comfortable due to
bigger crops in the US and Ukraine. Demand is
forecast to increase by around 3%, led by higher
feed use. Little change in industrial use is expected
due to a slowdown in the US ethanol sector. End-ofseason
stocks may increase for the first time in four
years, including a rebound in the US. World trade is
projected to increase by around 6%.
* Wheat and coarse grains
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