13 Jun 2017
Grain Market Situation June 2017Grain
Grains production in 2017/18 is expected to retreat by 3% from the previous season’s record.
The first stocks contraction in five years is predicted, with maize likely seeing the biggest fall.
Grains trade will probably stay high in 2017/18; reductions for wheat and barley account for most of the small projected decline.
Global soyabean supplies are likely to stay elevated in 2017/18 but, due to rising uptake, stocks could contract by 9% y/y.
World Production Figures
With changes mainly for maize (corn), the forecast for total grains (wheat and coarse grains) production in 2016/17 is 8m t higher m/m (month-on-month), at a record 2,120m, up by 5% y/y (year-on-year).
However, because of an increased figure for consumption, especially for feed, the projection for carryover stocks is cut by 3m t, to 513m, still the largest ever.
At 2,053m t (-3% y/y), grains production expectations for 2017/18 are only a little lower m/m. Increased consumption from last time is mostly for industrial use, on upward revisions for maize-based ethanol in the USA and starch in China. This contributes to smaller ending inventory figures for those countries and the forecast for world total grains stocks is cut by 12m t from before, to 479m (-7% y/y). Only a small y/y retreat in trade is anticipated, to 346m t.
Upgrades for South America lift the 2016/17 global soybean outturn forecast by 5m t m/m, to a record of 350m, up by 11% y/y and more than 60m above the prior five-year average. The Council’s projection for 2017/18 production is unchanged from April, at 348m t, a fractional y/y fall. However, a higher figure for opening stocks results in an upward revision to total supplies, which is channelled to increased consumption and carryovers. Nevertheless, inventories are still expected to tighten, mainly in some exporters. Trade is seen rising by 4% y/y, to a fresh peak.
The incorporation of official data for India raises the forecast for world rice output in 2016/17 to a record of 484m t (+2% y/y). The 2017/18 crop outlook is maintained at a high of 487m t. But, due to increased total use m/m, aggregate end-season stocks are predicted fractionally lower than previously, at 119m t, albeit steady y/y. Within the total, major exporters’ inventories could fall by 9% y/y. Traded volumes in 2018 are projected little changed from April, at 41m t.
The IGC Grains and Oilseeds Index (GOI) rose by 2% m/m, including net gains for all the sub-Indices.
The following is a summary of the International Grain Council’s Market report on the outlook for 2017/2018 published on the 25th May 2017.
Total grains production in 2017/18 is expected to decrease by 3.2% to 2,053m t (-1m t m/m) from the record harvest of 2016/17 (2,120m t, +8m t m/m).
World total consumption was raised by 7m t to 2,086m t (-1mt y/y) including
• 692m t for food (+1.3%). 927m t for feed (-0.3%)
• 349m t for industrial use (+1.0%)
• Reflecting larger consumption, ending stocks estimate was reduced to 479m t (-12m t m/m; -6.6% y/y)
World wheat production is projected to reach 736m t (≈ m/m; -2.4% y/y), an above average level.
Small reductions m/m to the US and EU estimates were offset by an increase for India (+1m t to 96.5m t; +12% y/y, a new record). Harvest neared completion in India with improved yields and quality vs. past 2 years.
Wheat consumption is projected at 738m t (≈ both m/m and y/y), matching last year’s record level, incl. 504m t for food use (+1.6%) and 144m t for feed (-5.3%).
World ending stocks are seen at 239m t (-2m t y/y), slightly below the record of 2016/17. While stocks would decrease by nearly 11m t to 68m t in the major exporters, inventories would further accumulate in China reaching 99m t (+8.8%; i.e. 41.6% of world total).
Assuming average yields, world production is forecast at a 5-year low of 143m t (-4.6% y/y) as higher output in North Africa would only partly offset losses elsewhere, incl. Australia (9m t, -35%).
The EU crop is estimated at 60m t (+0.5%), UKR at 8m t (-21%) and RUS at 17m t (-2.5%).
With somewhat tighter supply barley consumption is seen decreasing to 145m t (-1.5%), incl. 98m t for feed use. Uptake by the animal sector is projected at a record of 11.8m t in Saudi Arabia, while feed use would decline to below 2m t in China.
EU Cereals Trade 2016/2017 (as of 24th May 2017)
15.6m t imported to date (18.9m t last year; 13.9m t two years ago)
• 2.99m t soft wheat
• 1.59m t durum wheat
• 10.5m t maize
• 0.39m t barley
33.7m t exported to date (44.2m t last year; 45.1m t two years ago)
• 22.8m t soft wheat
• 4.8m t barley
• 1.34m t durum wheat
• 2.03m t maize
So far, the EU is a net cereal exporter of 18.1m t, against 25.3m t last year and 31.2m t two years ago.