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Summary

HIGHLIGHTS

The outlook for world total grains (wheat and coarse grains) production in 2019/20 is lowered by 8m t m/m (month-on-month), to 2,148m, with downgrades for wheat (including for the EU, Russia and Canada), maize (China) and sorghum (USA). Adjustments to consumption (mostly for wheat, maize and sorghum) take nearly 3m t off projected demand, but use is still projected to climb by 1% y/y (year-on-year) to a fresh peak of 2,184m t. The world stocks forecast (aggregate of respective local marketing years) is down by 3m t m/m, as a reduction for wheat is partly offset by an increase for maize. At 370m t (+1% y/y), the trade projection is little changed m/m; a decreased figure for wheat shipments is broadly balanced by an upgrade for maize.

On the basis of a slower pace of deliveries to China, the Council’s forecast for global soyabean trade in 2018/19 is cut slightly, to 150m t, a 2% y/y fall. Reflecting an adjustment for the US, the projection of world output in 2019/20 is marginally lower m/m, at 348m t (-4% y/y). And with consumption placed higher than before, stocks are trimmed to 44.0m t (-20% y/y), including major exporters’ inventories at 26.7m (-26%). Global import demand is tentatively predicted to edge up to 151m t.

The global rice supply and demand situation in 2018/19 is little-changed m/m, with production, use and stocks seen at new peaks. A slightly reduced outlook for India’s main (kharif) crop is mostly offset by adjustments elsewhere, leaving the projection of 2019/20 world production broadly steady m/m, at 503m t, up by 4m y/y. With consumption trimmed fractionally, global carryovers are maintained at a high of 162m t (157m), including 99m in China.

Despite some uncertainties about the outlook for global markets, the IGC Grains and Oilseeds Index (GOI) weakened by 2% since the last GMR, pressured by seasonally rising supplies.

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OVERVIEW

After this month’s downgrade, world total grains (wheat and coarse grains) production in 2019/20 is expected to be only modestly bigger y/y at 2,148m t. Nevertheless, the global wheat outturn is seen at a record, while maize is placed at the second largest ever and barley at the highest in a decade. Because of smaller stocks at the start of the season, overall grains supplies are predicted to be a four-year low. Consumption is seen reaching a new high of 2,184m t (+1% y/y), including gains for food, feed and industrial uses. A third successive contraction of global stocks is forecast at the end of 2019/20, with the rate of drawdown accelerating to 36m t. This entirely reflects tightening maize inventories (-50m t y/y), while carryovers of other grains are forecast to expand, including of wheat (+9m) and barley (+3m). The anticipated drop in maize stocks is centred on China (-26m t y/y), for which supply and demand assumptions are highly tentative. Of more note to the global market, the US maize carryover is projected to shrink by 18m t y/y, to a six-year low. World grains trade is projected to climb by 1% y/y; shipments of wheat, barley, sorghum and oats are expected to rise, but the first fall in maize trade in 11 years is foreseen, led by reduced buying by the EU.

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With heavier crops in Argentina and the US in particular, world soyabean production reached a record of 363m t in 2018/19, a y/y gain of 22m. Despite reduced use in China, increases elsewhere should propel consumption to a new high, while stocks are seen rising sharply, to a peak of 55m t, as depressed export demand results in sizeable accumulation in the US. Global trade is anticipated to fall to 150m t (-2%) as a drop in dispatches to China outweighs bigger purchases by others. Mostly on expectations for a smaller US harvest, world output is tentatively seen down by 4% y/y in 2019/20, at 348m t. With uptake likely to increase further, albeit at a below-trend rate, carryovers could fall markedly, to 44m t (-20%), mainly on a contraction in the major exporters. Trade is predicted to increase marginally y/y, to 151m t.

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Tied to gains in Asia, the 2018/19 global rice outturn is estimated at a peak of 499m t, a 4m y/y increase, with consumption advancing amid plentiful supplies and population growth. However, trade is expected to fall in 2019 as buyers in Asia secure less, with China’s arrivals potentially contracting by 20% y/y, to a six-year low. Output is provisionally placed at a high of 503m t in 2019/20 on expanded acreage in Asia, with the increase in supplies channelled to record use and stocks. Traded volumes may recover in 2020 on growth in shipments to Africa.

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MARKET SUMMARY

After three successive monthly gains, the IGC GOI dipped by 2% in July, pressured by a seasonal increase in supplies and strong competition for exports.

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Weighed by seasonal harvest pressure and overall lacklustre demand, the IGC GOI wheat sub-Index dropped by 5% since the last GMR.

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Amid slack overseas buying interest and ample South American spot availabilities, the IGC GOI maize sub-Index fell by 4% m/m.

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The IGC GOI rice sub-Index rose by 1% since late-June, with markets in Vietnam and the US lightly buoyed by recent export business.

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The IGC GOI soyabean sub-Index edged lower on bearish supply and demand fundamentals, led by weakness at South American origins.