Coarse Grains

by Chris Lyddon
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Weaker U.S. futures led the maize (corn) market down and other coarse grains tended to follow, but the move is more of a slight easing than a fall and there are parts of the world where demand is enough to support the market.

The International Grains Council (IGC) reported on April 1 that its GOI maize sub-Index had eased by 1%, with lower quotations across major exporters.

“U.S. maize futures (May) weakened by 3%, pressured by bigger than anticipated planting intentions and bearish market fundamentals, including ample spot availabilities and ongoing strong export competition,” it said. “With slightly lower Gulf premiums, fob prices eased by 2%, to $158.”

The IGC also reported a fall of 1% compared with late February in Up River prices in Argentina, at $163 fob, following weaker U.S. futures.

“Nearby bids were supported by solid export demand, which included sales to Brazil, worsening port congestion and rain-related harvest delays, but offsetting pressure stemmed from generally good field conditions and expectations for a large crop,” it said.

It also noted a weakening in Black Sea fob prices for maize, to $166 fob, “amid stiff global competition and expectations for a slowdown in buying by China.”

Movements in global barley markets were mixed in March, with activity characterized by heavy purchasing by traditional feed barley buyers and a mostly favorable outlook for new crop supplies in major exporters, the IGC said.

“With changes already anticipated to China’s domestic feed grain policies, recent official confirmation brought only modest downward pressure,” it said. “Signs of stronger buying interest in Near East Asia and North Africa helped to offset the favorable global new crop outlook.

“In the E.U. (France), feed barley export quotations climbed by $6, to $166 fob (Rouen). A stronger currency underpinned values in Australia, despite some pressure from ample rains ahead of new crop planting, leaving feed barley prices nearly unchanged m/m, at around $173 fob (Adelaide). In Argentina, plentiful local feed grain supplies pressured export values down by $8, to $157 fob (Up River).”

The IGC also reported a fall in U.S. export values for sorghum, which were influenced by developments in the U.S. maize market, amid sluggish export demand. “As of March 31, U.S. (Gulf) quotations were down by $6, to $168 Fob,” it said.

U.S. oats futures remained in a downward trend with the IGC reporting an overall loss of 1% in the May position.

“Abundant global grains supplies continued to weigh on values, with modest underpinning from concerns about a likely fall in 2016-17 area in Canada,” it said. “Unfavorable dryness ahead of planting in Canada’s southern prairies was also mildly supportive.”

In its quarterly Crop Prospects and Food Situation report, the United Nations Food & Agriculture Organization pointed out that the while the bulk of the 2016 global maize crop had yet to be planted in Asia, Europe and North America, in the southern hemisphere harvesting had already commenced, “with early indications pointing to reduced outputs in South America and Southern Africa.”

“The benchmark U.S. maize (No.2, Yellow, fob) value averaged $160 per tonne in February, virtually unchanged from its level in January, though still about 8% lower than the corresponding period last year,” it said. “A rebound in import demand and some concerns about crop conditions in the southern hemisphere provided support to maize export quotations, although abundant supplies and strong competition between exporters limited the gains.”

In its Feed Outlook report, the USDA’s Economic Research Service reduced its projection for 2015-16 world coarse grain usage by 1.7 million tonnes to 1.26 billion.

“Domestic consumption in Sub-Saharan Africa is projected down 3.4 million tonnes to 101.3 million, with most of the decline in expected food consumption. Sudan’s food, seed, and industrial use (FSI) is cut in half, down 3 million tonnes to 3 million. Ethiopia’s coarse grain FSI prospects are cut 1.8 million tonnes and Mozambique’s are reduced by 500,000 tonnes. FSI is forecast down 600,000 tonnes each for Japan and the E.U. as less coarse grain is used in industrial uses (but increased U.S. FSI offsets these reductions). FSI is increased 700,000 tonnes for South Sudan, with increased production.”