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Summary

HIGHLIGHTS

With outlooks for production and consumption of total grains (wheat and coarse grains) trimmed, the forecast for world stocks at the end of 2019/20 is raised slightly m/m (month-on-month). At an all-time high of 386m t, the forecast for trade (Jul/Jun) is lifted by 6m m/m, including higher numbers for wheat, maize, barley and sorghum. Increases for maize, barley, oats and wheat boost the projection for production in 2020/21 by 7m t m/m, to a record 2,237m, an increase of 62m y/y (year-on-year). The figure for consumption is the same m/m, as a cut for demand in the industrial sector is offset by upward adjustments for food and feed. Higher opening inventories and larger output add 8m t to the projection for world 2020/21 ending stocks, seen building by 20m t y/y, to a three-season high of 635m. Mostly on an upgrade for wheat shipments, grains trade in 2020/21 (Jul/Jun) is placed 3m t higher m/m, at 390m.

The Council’s 2019/20 world soyabean output estimate is pegged marginally higher m/m and, with uptake trimmed slightly, global stocks are raised by 3m t, to 44m, representing a marked tightening y/y. Linked to heavier than expected shipments to China, the trade outlook is upgraded to a peak of 155m t, a 2% y/y gain. A nominal increase for Brazil lifts the projection for 2020/21 global production to 364m t, up by 8% y/y and a record. Mainly reflecting higher opening stocks, carryovers are boosted to 45m t, a modest y/y expansion. Given assumed firm import demand from China, world trade is placed at a peak of 160m t, up 1m m/m.

With few changes to the 2019/20 global rice supply and demand balance sheet from previously, end-season carryovers are maintained at 176m t, a record level on gains in China and leading exporters. The 2020/21 production outlook is trimmed m/m, with the net reduction in total supplies leading to a modestly lower figure for inventories, placed at 180m t, albeit still a new high. The projection for trade in 2021 is unchanged m/m, at 44m t (+4% y/y).

The IGC Grains and Oilseeds Index (GOI) strengthened by 1% m/m, with gains for maize, soyabean and rice export quotations outweighing falls for wheat and barley.

(see chart)

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OVERVIEW

World total grains (wheat and coarse grains) production in 2019/20 is expected to climb by 37m t y/y, to 2,175m, including record harvests of wheat and barley. Expected increases for food and feed are seen outweighing an anticipated drop in industrial demand, to lift total consumption by 15m t y/y, to 2,181m, leading to a 5m y/y drawdown of stocks. Global trade (Jul/Jun) is predicted at a new high of 386m t (+22m y/y), including record shipments of wheat and maize.

At 2,237m t, total grains production in 2020/21 is projected to be up by 62m y/y, led by a jump in maize output (+55m) to a new peak, but with wheat (+6m) also at a record. While consumption prospects are somewhat uncertain, all components of demand are assumed to rise, taking total use to a fresh high of 2,218m t (+37m y/y). As projected supplies are more than ample to meet anticipated demand, the first build-up of global stocks in four years is expected, placed 20m t higher y/y, at 635m; this includes increases for wheat and barley, but a fourth successive depletion of maize inventories, to a seven-year low. Led by the twelfth annual expansion of maize shipments, total grains trade is seen growing by 5m t y/y, to a record 390m.

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Although Brazilian output reached a new high, world soyabean production fell by 7% y/y in 2019/20 on a significantly reduced US harvest, with declines, too, in Argentina, Canada, India and Ukraine. And with total use edging up, carryovers are seen contracting sharply on a sizeable reduction in the US. Trade is predicted at a high of 155m t on bigger deliveries to Asia. On the basis of a rebound in US production, world output in 2020/21 could reach a peak of 364m t, an 8% y/y gain. With consumption growth likely to quicken, inventories are predicted to increase only marginally, with exporters’ stocks set to tighten. Traded volumes are projected to expand by 3% y/y.

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Despite record production in India, smaller crops elsewhere in Asia and in other regions resulted in a marginal y/y fall in global rice production in 2019/20. Total use is seen at a new high on population growth and efforts to ensure food security in key consumers. Inventories are likely to increase on gains in China and key exporters; linked to accumulation in India, aggregate stocks in the five major exporters are predicted to climb by 10%, to 42.9m t. With elevated international prices and state support seen underpinning expanded acreage, world production in 2020/21 is projected to rise by 2% y/y, to a record of 505m t, while uptake and carryovers may scale fresh peaks. Trade is forecast to recover to 44m t in 2021 on stronger demand from buyers in Africa in particular.

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MARKET SUMMARY

The IGC GOI gained by a net 1% m/m, as firmer rowcrop and rice export prices more than compensated for declines in wheat and barley, which eased partly on seasonal factors.

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A 4% m/m drop in the IGC GOI wheat sub-Index was mainly driven by the switch to new crop quotations for some origins. Light pressure stemmed from a broadly comfortable world supply outlook and uncertain demand prospects.

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The IGC GOI maize sub-Index rose for a second successive month, up by 3% from late May, mostly on firmer US values, with price support tied to solid buying interest and tight spot Gulf loading capacity.

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Underpinned primarily by gains in Thailand, linked to tighter supplies and currency movements, the IGC GOI rice sub-Index firmed slightly m/m.

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The IGC GOI soyabeans sub-Index strengthened by 5%, to a five-month peak, boosted by dwindling Brazilian availabilities and a pickup in US export demand, mainly from China.