The latest forecasts for grains are similar to before, though they do throw up some interesting predictions
Continuity is the order of the day when it comes to the outlook for grains, which can be seen as positive in comparison with the tariff-induced fluctuations for steel and the cuts for coal. The latest Grain Market Report from the International Grains Council (IGC) reveals that total grain trade for 2018–2019 is forecast to be the same as the estimate for 2017–2018. The report, released towards the end of February, puts the 2018–2019 trade estimate at 367m tons, unchanged from the 2017–2018 prediction.
“This report incorporates adjustments to supply and demand to reflect previously-announced revisions to official production estimates for China, with the biggest changes for maize,” says the report. “For total grains (wheat and coarse grains), forecasts for world production, consumption and stocks are all higher month-on-month, but trends in global supply and demand are broadly the same as described in recent Grain Market Reports. Non-China-related changes for 2018–19 include lower maize production in the US, cuts for wheat exports by the US and the EU and increased wheat shipments by Russia.”
According to the IGC, global total grains production is anticipated to drop by 20m tons in 2018–19 to a three-year low of 2.121bn tons — because greater maize output is outweighed by declines for other crops, especially wheat. Furthermore, with consumption expected to hit a new peak, world stocks are expected to contract for the second year in a row, to their lowest in four seasons, 593m tons (a loss of 53m year-on-year). The stocks-to-use ratio of 27.3% (30% the year before) would be the tightest since 2014–15, the report says, adding that trade lies unchanged year-over-year due to larger maize imports being offset by decreases for wheat, barley and sorghum.
Looking at the February estimates, wheat trade for 2018–19 is forecast to be 170m tons, a drop of 5m tons from the prediction for 2017–2018. With regards to maize (or corn), the 2018–19 trade estimate is 160m tons, an increase of 8m tons on the 2017–2018 estimate. Anticipated 2018–19 soybean trade is the same as the 2017–2018 prediction, at 153m tons. The figures are similarly unchanged when it comes to rice: the trade forecast for both 2018–19 and 2017–2018 is 47m tons.
It is corn that is the real standout star
Over at the Foreign Agricultural Service (FAS) at the United States Department of Agriculture (USDA), its latest report puts global trade year imports of wheat at 176.4m tonnes for 2018–19. Exports for the same period are 179.5m tonnes. These figures are against 2017–2018 figures of 178.4m tonnes for imports and 182.6m tonnes for exports.
“Global wheat production is lower this month, mainly on smaller crops in Iraq and Kazakhstan,” the report explains. “Global consumption is reduced, mainly in India. Global trade is nearly unchanged amid a plethora of offsetting changes to importers. Exports are raised for the EU but lowered for the US.”
However, James Webster, senior analyst for AHDB Cereals & Oilseeds, noted in a briefing: “Over the past month, the global market has been inundated with data. We’ve had multiple wheat tenders, some long-awaited USDA data and some basic payments data. The bulk of the global data has continued to present a bearish picture for both new and old crop markets. Although there is still a long way to go until harvest and the picture could very much change, we look set for a large 2019–2020 wheat crop. This has added pressure to futures prices, which have fallen considerably over the past month. Russia’s return to the gas party caused markets to move considerably lower in the last tender.”
Away from wheat
For milled rice, according to the FAS report, global trade year imports for 2018–19 stand at 44.8m tonnes, whereas for exports, the figure is 47.8m tonnes. For 2017–2018, the figures are 45.4m tonnes and 47.6m tonnes respectively. However, it is corn that is the real standout star: total global trade year imports have gone up from 149.6m tonnes in 2017–2018 to 161.1m tonnes in 2018–19, and exports have increased from 150.7m tonnes in 2017–2018 to 164.6m tonnes in 2018–19.
Offering an overview for 2018–19, the FAS says: “Global corn production is up this month, with larger crops for the EU, India and Russia more than offsetting reductions for Paraguay and South Africa. Global trade changes are minimal, with offsetting revisions mainly among exporters. Exports for Argentina, Brazil and Ukraine are higher, while lower for the US. Imports for the EU are larger.”
As for rice for 2018–19, it says: “Global rice production is raised as larger crops in India and Pakistan are only partially offset by the continuation of a lower expected crop in Brazil. Global consumption and ending stocks are forecast higher. Imports are up for the Philippines but lowered for Sri Lanka and Iran. Lower exports for Pakistan and Brazil are partially offset by higher exports for Ecuador and Kazakhstan.”
Overall, the different figures put forward regarding the outlook for grains don’t appear to offer much change from previously. But maintaining the status quo can be seen as a positive in an economy in a state of flux.
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