August 6, 2015
Maize (corn) and barley production forecasts have been reduced recently by concerns over the effects of weather as harvesting of both was about to get under way in the main growing regions.
“Global coarse grain production for 2015-16 is projected down 1 million tonnes to 1.275 billion as reduced prospects for the E.U. and the United States are partly offset by increases for Brazil, China and Russia,” the USDA’s Economic Research Service said in its Feed Outlook, published on July 14.
“The decline in projected 2015-16 world corn production is 2.2 million tonnes to 987.1 million, with barley (down 700,000), and rye (down 100,000) also forecast lower. Global oats production is virtually unchanged this month, with increases mostly offsetting declines. However, U.S. sorghum prospects are boosting global production 1.8 million tonnes, and mixed grain production is increased 200,000 tonnes.”
Prices in the main exporters were mostly firmer during June, the International Grains Council (IGC) said of maize in its Grain Market Report. “Led mainly by late-month gains in the U.S., the IGC GOI maize sub-Index increased by a net 3% month-over-month (m/m), but is still down 19% from a year earlier.”
U.S. old and new crop futures posted slight monthly net gains, underpinned mainly by heightened concerns about overly wet Midwest weather and spillover from neighboring markets, it said.
“While overall advances were capped by ample world availabilities, spot Gulf premiums also firmed on slow barge movement on local rivers, with nearby fob prices up 6% m/m, at $177,” the IGC said.
Owing mainly to a seasonal increase in supplies, prices in Argentina became more competitive during June, with cargoes now offered at a slight discount to competing origins, it said.
“However, with some support from gains elsewhere, Up River prices were up 1% m/m, at around $169 fob, some $8 below equivalent U.S. quotations. With very little offered for sale, nearby Black Sea prices were considered nominal, at $174 fob. New crop (October) was quoted at around $171 fob.”
Currency movements and adverse weather for 2015-16 crops largely shaped activity in world barley markets during June, it said.
“Overall, though, the IGC GOI barley sub-Index was only fractionally higher m/m,” the IGC said.
“Concerns about unfavorable dryness for crops supported prices in the E.U., with dollar-denominated feed quotations in the E.U. (France) $10 higher, at $197 fob (Rouen). Strength in the E.U. helped to underpin values in the Black Sea region, but support was also linked to a tighter supply outlook in Ukraine. New crop Black Sea export values firmed by $3, to $180 fob.”
Given the developing El Niño, recent better than anticipated weather weighed on prices in Australia, the IGC said.
“Pressure also stemmed from concerns about possible shipment delays to China,” it said.
In its Crop Prospects and Food Situation report, the United Nations Food and Agriculture Organization (FAO) gave its latest forecast for 2015 world coarse grain production, putting it at 1.304 billion tonnes, “a marginal improvement from the previous forecast in June, but still 2% below the record of 2014.”
The year-on-year decline is largely the result of a projected contraction in global maize output to 1 billion tonnes, it said.
“An expected decrease in Europe accounts for the bulk of this reduction, driven by a 7% fall in the E.U., where yields are forecast to return to near-average levels from last year’s highs,” the FAO said.
“Lower outputs in the Russian Federation and Ukraine are also forecast in 2015, further contributing to the tempered outlook. In South America, coarse grain production in 2015, mostly maize, is forecast just below the previous year’s good level. The reduction is mainly the result of a lower output in Argentina, following a price-induced decrease in plantings, more than offsetting a larger than previously foreseen maize crop in Brazil.”
Pointing out that maize harvesting in North America is expected to start in September and accounts for a third of global supplies, it said that current prospects indicate a likely 4% decrease in U.S. supplies as a result of reduced area.
“Somewhat lessening the impact, Canada’s maize production is forecast to rise by 7%, attributed to larger plantings,” the FAO said. “World barley production in 2015 is forecast at 142 million tonnes, revised marginally downward from earlier forecasts, now standing 1% below the 2014 level. The reduction is driven by a 7% decrease in Europe, mostly in the Russian Federation and the E.U., outweighing larger expected harvests in Asia, South America and North America.”
The FAO reported that international prices of maize also rose in June, with the international benchmark U.S. maize (No. 2, Yellow) price averaging $170, slightly up from May.
“This mainly reflected excessive rains in June, which slowed planting progress early in the month and caused some deterioration in crop conditions in the main producing areas of the United States,” it said. “Slow export demand and ample global supplies, however, prevented further price increases. In general, maize export prices were well-below their levels of June last year.”