English | Français | Español | русский
igc logoLog in

Summary

HIGHLIGHTS

The forecast for world total grains (wheat and coarse grains) production in 2019/20 is increased by 11m t m/m (month-on-month), to 2,159m, mainly because of a boost for US maize. This is raised by 8m t from before, to 342m, down by 7% y/y (year-on-year), but with output prospects still uncertain after a less than ideal growing season. The outlook for global consumption is lifted by 2m t m/m, to 2,186m (+1% y/y), as higher numbers for feeding of wheat and sorghum are partly offset by a cut for maize. With larger new crop supply than in the last GMR, and also taking account of bigger opening inventories, the projection for world closing stocks (aggregate of respective local marketing years) is up by 13m t m/m, to 598m, albeit still down by 27m y/y at a four-year low. The trade number is virtually unchanged m/m, at 370m t, as trimmed forecasts for wheat and sorghum are balanced by an upgrade for maize.

With trade data confirming smaller than anticipated shipments to key markets, the Council’s forecast for soyabean trade in 2018/19 is cut by 1m t, to 149m, a 3% y/y fall. The outlook for production in 2019/20 has been downgraded by 4m t from July on diminished prospects in the US, where harvested area is likely to contract by 14% y/y. With only a fractional cut to consumption, the net reduction in supplies is channelled to a lower stocks figure, down by 3m t m/m, to 41m (55m). The projection for global import demand is trimmed to 150m t, a 1% y/y gain.

Reflecting subdued demand from buyers in Africa and Asia, the forecast for rice trade in 2019 is lowered by 1m t, to 45m, a slight y/y contraction. On the basis of reductions for leading exporters, global output in 2019/20 is projected 2m t lower m/m, at 501m, fractionally higher y/y. However, due to historical supply and demand adjustments for China, world ending stocks are raised by 16m t m/m, to 178m, a 3% y/y gain and a new peak.

The IGC Grains and Oilseeds Index (GOI) softened by 4% since the last Grain Market Report, including a particularly steep drop in the maize sub-Index, but with wheat and barley also posting solid declines.

(see chart)

(see chart)

OVERVIEW

World total grains production (wheat and coarse grains) in 2019/20 is forecast to expand by 1% y/y, to 2,159m t, as bumper harvests of wheat and barley are partly countered by a smaller maize crop. The bigger grains outturn nearly compensates for tighter opening inventories, so total supply is placed only a fraction down y/y. However, with increased consumption, world closing stocks are expected to fall for the third successive season, with the pace of drawdown accelerating. At 598m t, down by 27m y/y, the global grains carryover at the end of 2019/20 is placed at a four-year low. This is entirely owing to a decline for maize, with these seen contracting to the least in six seasons, mostly because of anticipated falls in the US and China. In contrast, wheat stocks could reach a record level and, after dropping to their smallest in six years, inventories of barley are expected to post some recovery. Trade in grains (Jul/Jun) is projected to increase to 370m t, fractionally exceeding the previous peak in 2017/18. Larger shipments of wheat, barley, sorghum and rye are foreseen, but trade in maize is forecast to recede for the first time in 11 seasons, albeit only modestly.

(see chart)

Amid record production and relatively modest growth in usage, global soyabean carryovers in 2018/19 could rise by one-quarter y/y, to a fresh high. World output is expected to fall markedly in 2019/20 as a plunge in US production – tied to a heavy reduction in acreage and below-trend yields – is only partly offset by increases elsewhere. And with an expansion of uptake, inventories are predicted to tighten, albeit remaining above average. Much of the drawdown will be due to the US, where stocks are set to drop by about 9m t y/y. Traded volumes are forecast to edge up to 150m t, although demand and policy uncertainties persist.

(see chart)

Despite historical revisions to consumption and stocks for China, the broader fundamental backdrop for rice in 2018/19 is little-changed from before, with production, consumption and stocks set to scale fresh highs. However, amid weak demand from buyers in Asia, world trade could decline by 3% y/y in 2019; smaller dispatches by India and Thailand contrast with bigger exports by China and Vietnam. Output could grow in 2019/20, but with main crop harvests some way off, prospects are highly provisional. Further gains in use and inventories are anticipated, while trade may advance on larger shipments to Africa.

(see chart)

MARKET SUMMARY

Led by a sharp decline in maize values, which fell steeply following the mid-month WASDE report, the IGC GOI slipped to a three-month low, down by 4% compared to late-July.

(see chart)

(see chart)

Against a background of comfortable global supplies and generally slack export demand, the IGC GOI wheat sub-Index dropped by 4% m/m, to levels last seen in June 2017.

(see chart)

The IGC GOI maize sub-Index plummeted by 16% in the five weeks since the last GMR, as speculative funds liquidated long positions in reaction to USDA’s larger than expected area and yield estimates.

(see chart)

Underpinned by production worries in Thailand and India, the IGC GOI rice sub-Index posted a modest m/m gain.

(see chart)

With losses in US prices more than compensating for net gains in dollar-denominated quotations in Brazil and Argentina, the IGC GOI soyabean sub-Index dipped slightly in August.