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Summary

HIGHLIGHTS

The forecast for total grains (wheat and coarse grains) production in 2018/19 is raised by 5m t m/m (month-on-month), to 2,142m, mostly due to upward revisions for maize harvests in South America and South Africa. As consumption is boosted a little from before, the outlook for ending stocks is raised by around 2m t, to 619m, a drawdown of 26m y/y (year-on-year). The figure for trade is 2m t higher than last time, at 368m (369m previous year), mainly linked to larger than predicted maize imports by Canada, the EU, Turkey and China.

The projection for total grains production in 2019/20 is cut by 21m t m/m, to 2,156m (+1% y/y), largely owing to a difficult start to the growing season for US maize. Because of revisions for India, the EU and Ukraine, the forecast for wheat output is 3m t higher m/m, at a record 769m (+5% y/y). With smaller supplies and a cut in demand (-5m t, mostly feed/residual), total grains stocks at the end of 2019/20 are placed 14m smaller m/m, at 588m (-5% y/y). Most of the m/m change is linked to a tighter outlook for US maize inventories. Trade is 1m t up m/m as increased forecasts for wheat and maize shipments are partly offset by a reduced outlook for sorghum.

The 2018/19 world soyabean production estimate is pegged at a record of 363m t. Since total use is trimmed m/m, stocks are forecast marginally higher, at a peak of 54m t, a one-quarter y/y rise. Predicted broadly steady from May, trade is set to fall by 1% y/y. Mainly on a downgrade for the US, where crop weather has been very challenging, global output in 2019/20 is tentatively seen 9m t lower m/m, at 349m, down by 4% y/y. The m/m drop in supplies is largely channelled to a reduced outlook for inventories; at 45m t, carryovers are projected to contract by one-fifth y/y, albeit still slightly above average. Trade is placed at 152m t, up slightly y/y.

The Council’s forecasts for rice supply and demand in 2018/19 are little-changed from before. Trade is seen at 46m t, with reductions for key exporters contrasting with an upgrade for China’s shipments, which are being underpinned by African demand for long-grain varieties. The projection of global trade in 2020 is down slightly m/m, at 47m t (+1m y/y), on lower expectations for China’s purchases.

Bolstered by uncertainties about production prospects in some regions, the IGC Grains and Oilseeds Index (GOI) increased by 2% since the last GMR, mainly on gains in average export prices for maize (+6%) and wheat (+2%).

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OVERVIEW

At 2,142m t, world total grains (wheat and coarse grains) production in 2018/19 is expected to marginally exceed the outturn of the year before, and despite lower opening stocks, overall supplies are estimated to be only slightly tighter y/y. Nevertheless, as consumption continues to grow, another drawdown of carryover stocks is envisaged, to a three-year low of 619m t. Total grains trade is placed a fraction smaller y/y as reduced shipments of wheat, barley, sorghum and oats outweigh increased volumes of maize and rye.

Global total grains production in 2019/20 is projected to expand by 1%, to 2,156m t. The increased outturn does not compensate for tighter opening stocks and overall supply is projected to be the least in four seasons. At the end of 2019/20, total grains stocks are predicted to contract for a third consecutive season, to a five-year low of 588m t, with the rate of decline accelerating to 31m y/y (26m previous year), wholly owing to a third successive decline for maize (-48m). These are seen dropping to a six-year low, with most of the fall in China (-24m t) and the USA (-18m). Wheat stocks could reach a record level, including build-ups in China and India. Some recovery in wheat carryovers is anticipated in the major exporters, although their aggregate total is forecast to remain below the five-year average. Total grains trade is projected at an all-time high, as increased shipments of wheat and barley offset the first fall in maize trade in 11 years.

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With key producers threshing bumper crops, global soyabean output is pegged at a peak of 363m t in 2018/19, a 6% y/y gain. However, only marginal growth in uptake is likely as firmer demand in some markets is mostly outweighed by a contraction in China – stemming from the dual effects of African swine fever and a prolonged trade dispute with the US. Consequently, stocks are set to accumulate to a record of 54m t, including a more than doubling in the US. The 2019/20 supply and demand outlook is tentative. Nevertheless, world output is seen declining by 4% y/y as a difficult growing season results in a significantly reduced US outturn. Accordingly, inventories are predicted to tighten, mainly on a contraction in the major exporters, albeit remaining above average. Trade is projected to edge up, but prospects surrounding China’s needs remain uncertain.

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Gains in key exporters, particularly in India where a record main crop was cut, underpinned 2018/19 rice production at a new peak of 499m t. Despite expanded total use, global stocks are likely to accumulate, including nominal growth in China. In 2019/20, further gains in Asia may see output rise to a fresh high, while ample availabilities and expanding populations could boost consumption. World trade in 2020 is predicted to rise as stronger demand from sub-Saharan Africa offsets smaller purchases by Asian importers, such as China.

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MARKET SUMMARY

The IGC GOI strengthened for a third successive month, increasing by 2% from the May GMR, as various weather worries contributed to gains in maize, soyabeans, wheat and rice export prices.

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Underpinned mainly by weather threats to crops in North America, the EU and the Black Sea region, the IGC GOI wheat sub-Index rose by a net 2% m/m.

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Amid deepening worries about US production prospects, the IGC GOI maize sub-Index raced to a 13-month high, up by 6% compared to late-May.

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The IGC GOI rice sub-Index firmed by 1% on concerns about unfavourable conditions for crops in Thailand and the USA.

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With support stemming from excessively wet US planting weather, the IGC GOI soyabean sub-Index gained by 1% over the past month.