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04 / 10 / 2018

Grain Market Report

Grain

The grain prices released from the main coops last week have set the level for current green grain prices. For growers with solely winter crops the price is reasonable however those with spring crops along the eastern seaboard in particular, will be nursing losses again this season. Although trade in grain is quiet at the moment,prices have steadied this week having eased a little last week. Most merchants are offering somewhere in the region of €200-€205 for green wheat and barley. Wheat and barley continues to trade at a significant premium to maize due to the greater availability of maize on world markets. For the 2019 harvest some merchants are reported to be offering prices in the region of €175/t for green barley.

On international markets futures prices on grains and soya jumped sharply earlier in the week at news of a newly negotiated U.S.-Mexico-Canada Agreement (USMCA), a replacement for the North American Free Trade Agreement, offsetting pressure from big supplies and forecasts for a bumper harvest in the US. Prices were further bolstered by worries about a possible suspension of grain loading in two Russian export regions and rains in the US mid-west which would delay the harvest. In general it is encouraging to see that after the decline in futures prices from the August highs they have steadied and found support throughout September. For the first time in 6 years world consumption of wheat and barley has exceeded production and while maize production has not suffered to the same extent an increase in consumption has also sustained prices. Soya futures are still at 10 year lows, however, continuing trade wars and another bumper harvest may ensure that US growers reduce cropping in the coming season.

Meanwhile weather continues to have an effect around the world with Australia recording its driest September on record and the country is expecting its smallest wheat crop in a decade. While in France the autumn drought has severely affected the establishment of the 2019 oilseed rape crop.

19 / 07 / 2018

Grain Market Update

Grain

Irish merchants are actively canvassing for green grain supplies due limited availability of grain and a reduction in projected yields.

Prices for green barley at between 13% -16% moisture are being quoted at €190 per tonne (ex VAT).

Oats between 13% -16% moisture are being quoted at €180/t (ex VAT).

This mirrors the global picture where indications continue to point to a reduced global grain output in 2018.

World cereal production prospects trimmed and stocks heading sharply lower in 2018/19

Latest indications from the Food and Agriculture Organisation (FAO) continue to point to a reduced global cereal output in 2018. This will lead to negative prospects for the cereal supply outlook for the forthcoming 2018/19 marketing season.

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According to the International Grains Council latest grain market report, the total grains supply and demand outlook for 2018/19 has tightened. A 12m t cut for world grains production is due to adverse weather conditions in the EU and Russia and the EU, which has damaged prospects for barley, wheat and maize. Although global consumption is reduced, projected carryover stocks are down by 12m t m/m, with the year-on-year decline now seen at 54m, including a drop of 34m in the major exporters.

Total Grains Supply & Demand Summary – figures in millions of tonnes (m t)

 2015/20162016/20172017/20182018/2019Y/Y Change
Opening Stocks531561618598-3.1%
Production2,0152,1382,0902,077-0.6%
Total Supply2,5472,6982,7082,675-1.2%
Total Use1,9862,0802,1102,131+1.0%
Food675696704713+1.4%
Feed868915929932+0.4%
Industrial329344358369+3.1%
Closing Stocks561618598544-9.1%
Major exporters *150181173139-19.8%
Trade346353365369+1.1%

(*Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, USA)

Total grains production in 2018/19 is expected to be a three-year low, as bigger outturns of maize and sorghum only partially compensate for poorer wheat and barley crops. Although total supply will be smaller, consumption is seen reaching a third successive record, with the largest gains for food and industrial uses.

(Source: International Grains Council, Grain Market Report GMR 489 2nd July 2018)


Grain Futures

World Markets Overview May – June 2018

A marginal decline in world total grains production is predicted in 2018/19 with supplies are down 1% due to tighter opening stocks.

Global total grains (wheat and coarse grains) production in 2017/18 was 2% short of the previous year’s record, but heavy stocks at the start of the season saw overall supply rise for the fifth year in succession. However, given sustained consumption growth set to be at a new high, the first world stocks contraction since 2012/13 is predicted. Trade (Jul/Jun) will be the highest ever, including record shipments of maize and barley.

Total grains production in 2018/19 is projected to be below the season before as a reduced wheat harvest is almost balanced by better out-turns of maize, barley and sorghum. But taking account of reduced opening stocks, total supply is set to decline to a three-year low.

The global carryover is therefore seen coming down for a second year, taking inventories to a four-season low.

(Source: International Grains Council, May 2018 Report & GMR 488 21st June 2018)


Wheat

EU prices have remained stable/supported on the week as the trade continues to focus on new crop prospects. Egypt issued another August tender that secured 120,000t of Russian wheat, but with almost 1mln t offered between Russia and Romania, it is likely these origins will still be there when Egypt comes seeking any top-ups.

Weather is still providing some issues, with dry conditions across much of Western Europe, while rains are seen in the Ukrainian and Russian spring crop areas, where the ministry expects Russia to harvest up to 100mln t of grain. That is lower than many analysts’ forecasts and is due to adverse weather and delayed sowings. However, the French crop is now being talked up to around 39mln t, and this will compensate lower production in Scandinavia, Denmark and some of the Balkan states.

(Source: Gleadell Market Report 28th June 2018: http://www.gleadell.co.uk/report/)

(Wheat Production Forecast, International Grains Council, May 2018 report)

(Source: DG AGRI)


Barley including malting barley

The French winter malting barley harvest is underway. First reports are of average yields and normal nitrogen. Screenings levels are reported to be higher than usual. The hot dry weather conditions are continuing through the EU, which is keeping malting barley prices high. Traders are getting concerned about the impact on yields and quality, but so far, the brewing industry has not reacted and are waiting for the spring harvest. The winter malting harvest should start in the UK next week, which will be extremely early.

(Source: Gleadell Market Report 28th June 2018: http://www.gleadell.co.uk/report/)


Rapeseed

The global oilseeds market continues to be dominated by the ongoing trade discussions between the US and China. The retaliatory imposition of tariffs on US soybeans imported in China has sent the CBOT soybean market into steep declines, as US traders try to work out how to price the 30mln t of Chinese demand that now attracts a 25% tariff.

Rapeseed harvest is underway in the Black Sea, with yields being described as average. First cuts on crops in eastern Poland are poor, and in France the crops harvested so far have been very variable.

In Ireland and the UK, the ongoing, hot, dry, weather is pushing crop maturity, and some growers have been desiccating crops this week. Harvest 2018 isn’t far away if it hasn’t already begun already.

(Source: Gleadell Market Report 28th June 2018: http://www.gleadell.co.uk/report/)

Winter Rapeseed Crop Stage

(Source: European Union Joint Research Centre, June 2018)


Soyabean

Despite record crops in Brazil and the USA, 2017/18 world soyabean output is forecast to fall by 4% y/y, to 336m t. This is almost entirely linked to a plunge in production in Argentina, but with falls, too, in India, Paraguay, Ukraine and Uruguay.

Most of the anticipated contraction stems from a heavy reduction in Argentina, outweighing stock building in the USA. Acreage gains are likely in 2018/19, especially in South America, as production recovers to a peak of 356m t, up by 6% y/y.

(Source: International Grains Council, Grain Market Report GMR 488 21st June 2018)


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