Grain Market Review: Coarse grains
July 01, 1999
by Teresa Acklin
Global slump in hog markets contributes to expected stagnation in coarse grains use.
World coarse grains consumption in 1999-2000 is expected to be little changed from the previous season as poor profitability in the hog industry worldwide and continued economic sluggishness in some regions are expected to temper demand for feed use, according to a recent report by the International Grains Council.
The Council's consumption forecast of 879 million tonnes in 1999-00 is virtually unchanged from the 880 million tonnes estimated in 1998-99. World use in 1997-98 was 884 million tonnes and was 881 million in 1996-97.
The Council noted that if its forecast held, the 1999-00 season would mark the "third in succession without any significant growth" in world coarse grains use. The last time year-to-year global consumption turned stagnant was around 1990, the I.G.C. report said.
But the two stagnant periods have distinctly different causes, according to the Council. In 1990, the slowdown in growth was related to short supplies and relatively high prices. But the current stagnant market "is characterized by a lack of effective demand," the report said.
One of the biggest factors that should affect feed needs during the 1999-00 season is the virtual depression in the hog industry in Europe, North America and Asia, the Council said. Overproduction in recent years and outbreaks of disease among herds, particularly in Taiwan, have combined to push hog prices to the lowest levels in decades, forcing massive herd liquidations and driving many producers out of business.
The Council noted that poultry flocks also had been a major source of demand growth for coarse grains, especially in the mid-1990s. But the slowdown in the expansion of flocks in the past few years is expected to continue, as consumers "adjust their food habits to more difficult economic circumstances," the Council's report said.
Feed use of coarse grains in the European Union for 1999-00 is expected to slide by about 3.5% to 36 million tonnes. If realized, that level of usage would mark the third consecutive season of declines in E.U. consumption.
The Council said the reduction was due to an expected increase in the amount of non-grain feed ingredients, both domestically produced and imported, used in compound feeds. Most of the decline should occur in maize use, as smaller supplies should keep prices relatively firm.
In the United States, coarse grains use is expected to increase only marginally. Feed use may slide a bit, based on declines in exports and domestic consumption of pork, although seed, food and industrial use should increase.
The outlook for global coarse grains trade in 1999-00 includes a further rebound, albeit modest, to a forecast 94 million tonnes. That estimate compares with a trade figure of 93 million tonnes in 1998-99 and 88 million tonnes in 1997-98.
The increase reflects a predicted marginal expansion in demand from Far East Asia. Maize shipments should increase largely because of a small expansion in demand in South Korea, whose feed industry is recovering slowly after the economic turmoil of the past two years. Increased maize demand is predicted from South Africa and from countries in North Africa.
The Council predicts "substantial" export availabilities, especially in the United States, where maize supplies less domestic use should climb by 20 million tonnes from 1998-99.(The U.S. Department of Agriculture on June 11 forecast 1999-00 U.S. total coarse grains exports at 52.926 million tonnes.)
The I.G.C. projected Argentina's exports of maize in 1999-00 to increase by 500,000 tonnes to 9.5 million. China's maize exports will be dictated by price developments, although initial forecasts put 1999-00 maize exports unchanged at 3 million tonnes.