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Summary

HIGHLIGHTS

Led by downward revisions for wheat, maize and oats, the forecast for world total grains (wheat and coarse grains) production in 2019/20 is lowered by 2m t m/m (month-on-month), to 2,157m, up by 1% y/y (year-on-year). Adjustments to wheat output include m/m cuts for Australia and Argentina, but increases for the EU and Russia. Outlooks for maize harvests in the EU and Argentina are reduced from before, while oat crop prospects are trimmed for the EU, Australia and the US. The projection for total consumption is down by 2m t m/m, to 2,184m, mostly for wheat (lower feeding) and maize (lower industrial use). Taking into account smaller than previously estimated opening inventories, the figure for world carryover stocks is reduced by 9m t m/m, to 592m (-27m y/y). The outlook for trade is lifted by 4m t, to 374m (+3% y/y), owing to raised import figures for wheat (including for Turkey and Kazakhstan) and maize (the EU, Japan and South Korea).

Based on early indications from autumn planting in the northern hemisphere, the Council projects world all-wheat harvested area to be little-changed in 2020/21. Seeding has been hampered by overly dry soils in parts of the EU, Russia and Ukraine, and despite some rains recently, more is needed for planting and crop establishment in some areas. Elsewhere in the EU, fieldwork in the UK is being hindered by wet weather. Conditions have also been challenging for rapeseed sowing in the EU and while 2020/21 acreage may expand, it is still expected to remain below average.

With a further downgrade to US crop prospects only partially offset by increases for other producers, world soyabean output in 2019/20 is forecast 1m t lower m/m, at 341m, a 5% y/y contraction. Consumption is placed marginally higher than before and, together with a reduced estimate of opening stocks, global inventories are cut by 6m t, to a below-average 32m, down by 18m y/y and the smallest in six seasons. Both the m/m and y/y reduction is linked to the US, where carryovers are seen halving, to 11m t. The projection of trade is lifted by 1m t, to 151m, little changed y/y.

The outlook for global rice production in 2019/20 is unchanged m/m and matches the prior season’s record of 500m t as smaller crops in some exporters are offset by gains elsewhere. However, due to a higher figure for opening stocks, world carryovers are predicted 1m t higher m/m, at a peak of 179m, including a nominal 114m in China. With the current lull in global import demand likely to continue into early 2020, the projection of trade in that year is cut by 0.6m t, to 45.9m, a 3% y/y increase.

Propelled higher by uncertainty about crop prospects in some regions and, at times, by optimism about a US/China trade agreement, the IGC Grains and Oilseeds Index (GOI) increased by 4% since the last GMR.

(see chart)

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OVERVIEW

World total grains (wheat and coarse grains) production is expected to climb by 1% y/y in 2019/20, to 2,157m t, the second largest on record. Bumper harvests of wheat (+29m t y/y) and barley (+14m) are seen being partially offset by a smaller maize outturn (-32m). In spite of the overall increase in grains output, global total supply is seen slightly decreasing y/y because of the smallest opening stocks in three seasons. All-grains consumption is forecast to edge higher, to a new peak of 2,184m t, with y/y increases for wheat and barley, but a decline for maize. A third successive y/y drawdown of world grains stocks is predicted, to a five-year low of 592m t (-27m y/y), entirely because of a contraction of maize inventories to their least in six seasons; this is largely linked to reductions in the US and China. The wheat carryover could grow to a record level, but with accumulation concentrated in China and India, while stocks in the major exporters are seen showing little change. World trade (Jul/Jun) is projected to expand by 3% y/y, to 374m t (+9m), including larger shipments of wheat (+4m), barley (+2m) and maize (+3m), the latter to an all-time high.

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Global soyabean production in 2019/20 is seen falling by 18m t y/y, to 341m, as a plunge in US output is only partly offset by gains elsewhere. However, prospects for South American producers remain tentative given that seeding has been underway for only a few weeks, with Brazilian fieldwork progressing slowly. Tied to modest gains in local use in Asia and the three majors in particular, world uptake is expected to rise by 2% y/y, to a peak of 360m t. Consequently, global inventories may contract by nearly 40% y/y, to a six-year low, with a sizeably reduced harvest resulting in a heavy drawdown in US carryovers. As potentially larger deliveries to markets in Asia, Africa and North and Central America compensate for a scaling back of Argentine imports, trade could edge up to 151m t.

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Reflecting prospects for reduced shipments to Asia, world rice trade in 2019 (Jan/Dec) is set to fall to 44.5m t (46.4m). While combined dispatches by the five majors may contract by 2m t y/y, China’s exports are seen rising strongly, to more than 3m, on bigger deliveries to sub-Saharan Africa. Despite tentative prospects for smaller harvests in the largest producers, gains elsewhere should compensate as world output matches the previous year’s peak of 500m t. Led by accumulation in China and key exporters, global stocks are predicted at a record of 179m t, up 4m y/y. Trade is anticipated to recover in 2020 on firmer African demand.

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MARKET SUMMARY

Including solid gains in average export prices of maize, soyabeans and wheat, the IGC GOI strengthened by a net 4%, to around a three-month high.

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Underpinned by solid export demand and deteriorating crop prospects in some major producers, the IGC GOI wheat sub-Index gained 4% m/m.

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The IGC GOI maize sub-Index rose by 4% m/m, supported by much tighter than anticipated US stocks and uncertainties about the size of this year’s Midwest harvest.

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The IGC GOI rice sub-Index was broadly unchanged m/m. Declines in Thailand and India, linked to weak demand, were broadly offset by firmer values in Vietnam, where availabilities tightened.

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Tied primarily to a resurgent US market, which strengthened on a dwindling production outlook and positive developments in trade talks with China, the IGC GOI soyabeans sub-Index posted a net m/m gain of 6%.