Global grain trade review
Dec. 19, 2013
by Chris Lyddon
The outlook for global cereal supply in the 2013-14 marketing season remains generally favorable despite downward adjustments to forecasts for world cereal production and closing stocks, the United Nations Food and Agriculture Organization (FAO) said in its Crop Prospects and Food Situation Report for October.
Taking all cereals, including rice, it forecast 2013 production at 2.489 billion tonnes, “marginally lower (3 million tonnes) than reported in September, mainly reflecting poorer prospects for the South America wheat crop, following adverse weather.
“Despite the adjustment, world cereal production would still surpass the 2012 level by nearly 8%,” FAO said.
The organization noted a strong rise in global coarse grains output. “This significant growth in cereal production is mainly the result of an anticipated 11% expansion in coarse grains to about 1.288 billion tonnes,” it said. “The bulk of the increase is expected in the United States, the world’s largest producer, where the 2013 corn output is forecast at a record 348 million tonnes.
“However, also in Europe, production of coarse grains is forecast significantly up this year. Output of barley is estimated up by nearly 10% while the corn output is forecast to recover sharply from last year’s low,” it added. “In Asia, coarse grains output in 2013 are forecast to increase by almost 3%, largely as a result of another strong increase in China’s corn output.”
In Africa, coarse grains production was set to decline slightly.
“In Southern Africa, the main coarse grain crops were already harvested earlier in the year, and production declined, notably due to drought conditions in western parts of the sub-region,” FAO said. “Elsewhere in the southern hemisphere, good to record harvests were gathered throughout Latin America and the Caribbean.
RECORD WHEAT CROP
FAO also said that latest records put the 2013 wheat crop at a record high. Its own forecast is for a global wheat crop of 705 million tonnes, up about 7%. “However, although the bulk of the crop in the Northern Hemisphere has already been gathered and estimates for these countries are quite firm, this figure may yet be revised pending the outcome of the harvests toward the end of the year in the key southern hemisphere producing countries,” it said. “Most of the increase in global wheat production, compared to last year, reflects the recovery of crops in the major producing CIS countries in Europe and Asia.”
Wheat output in the Russian Federation is estimated 37% up from 2012. In Ukraine, the latest information points to an increase of about 34%, while in Kazakhstan a 66% recovery from last year’s low is expected,” FAO said. Elsewhere in Europe, aggregate wheat output of the E.U. countries also increased, rising 8% from the previous year to the highest level since the 2008 record.
“In North America, wheat output fell in the United States by some 7%, despite increased plantings, reflecting adverse conditions over the winter that led to above-average abandonment,” FAO said. “Despite delayed planting, wheat production prospects remain positive in Canada, and output is still on track to increase considerably from last year. At the current forecast it would be the largest crop since 1996.
“In South America, conditions for the 2013 wheat crops to be harvested from October have deteriorated, reflecting severe crop losses due to frost in Brazil and Paraguay and reduced prospects in Argentina because of dry conditions,” FAO said. “Nevertheless, at the latest forecast level, the aggregate wheat output of the sub-region is anticipated to recover from last year’s sharply reduced crop but would be below the five-year average for the second consecutive year.”
The prospects for the 2013 winter cereal crops in Australia are generally favorable, despite variable growing conditions over the winter, and output is officially forecast up 11% from the previous year, FAO said.
The IGC forecast, in its Grain Market Report at the end of September, an increase of around 2% in world wheat consumption to 687 million tonnes. Much of the increase was for direct use for human food.
“The majority of the increase continues to be in developing countries in Asia and Africa, partly because of the increasing popularity of wheat-based foods in place of traditional corn or rice staples, but also due to comparatively fast rates of population growth,” it said.
It noted that, in China, local wheat prices are high relative to corn, a factor it expected to lower consumption. “Nevertheless, a small year on year increase in world feed use of wheat is expected, led by gains in the E.U. and CIS following larger crops,” it said. “Global industrial use is also expected to show a small year on year rise, to 19.3 million tonnes (18.5 million), boosted by higher use for ethanol and starch in the E.U.”
The IGC predicts a rise in corn consumption.
“Led by above-average growth in feed use, global consumption is expected to increase by 5% year on year to a record 917 million tonnes in 2013-14,” it said.
The FAO expects a 1.6% increase in world trade in cereals to 312.4 million tonnes.
“Trade in 2013-14 is expected to benefit from larger export availabilities of coarse grains in particular,” it said. “World wheat trade in 2013-14 (July-June) is put at 141 million tonnes, 1.4% above 2012-13. The largest increase in imports is forecast for China (Mainland), where high domestic prices and strong demand could result in imports rising from 3 million tonnes in 2012-13 to 7.5 million tonnes in 2013-14.
“Several other countries are expected to import more wheat in 2013-14, especially Egypt, Kenya, Pakistan, Saudi Arabia and Tunisia,” FAO said. “However, some may import less following a strong recovery in domestic production, such as Morocco and the Russian Federation. The projected increase in wheat import demand is expected to be met largely by higher exports from the CIS countries, while shipments from Australia and Argentina are likely to decrease and those from Canada, the E.U. and the United States are expected to remain close to the 2012-13 levels.”
World trade in coarse grains in 2013-14 (July-June) is set to increase by at least 2%, to an all-time high of 133.5 million tonnes, FAO said.
“Trade in corn is put at a record level of 103.5 million tonnes, 2% higher than in 2012-13. Among other major coarse grains, trade in barley is forecast to remain steady at around 19 million tonnes while for sorghum it could reach 7.5 million tonnes, 800,000 tonnes higher than in 2012-13. The main drivers behind the anticipated expansion in world trade of coarse grains are larger imports by China, Egypt, Kenya, Japan, Indonesia and Mexico. On the export side, improved supplies are expected to boost shipments from the United States and Ukraine, more than compensating lower sales by Argentina and Brazil.”
The IGC expects world wheat stocks to increase by 5 million tonnes to 180 million tonnes at the end of 2013-14, with the figure for the eight major exporters at 52.8 million tonnes, up from 49.7 million a year earlier. It forecast stocks in Canada at a three-year high of 6.6 million tonnes and E.U. stocks up at 12.9 million tonnes, from 9.3 million, reaching the highest level since the end of 2009-10.
China’s ending stocks are put at 57.3 million tonnes, up from 54.5 million.
RECORD RICE CROP
Increases in Asia, Africa and South America have contributed to a 4-million-tonne increase in world rice production to reach a record 469 million tonnes in 2012-13, according to
“Led by expanded use in key consumers, notably China and India, world consumption is seen up 9 million tonnes year on year, at 467 million,” it said. “With output set to exceed consumption for the eighth consecutive year, global end-season inventories are estimated to rise by 1.7 million tonnes year on year, to 108.4 million. Within the total, major exporters’ stocks are placed at an all-time high of 39.9 million tonnes (36.8 million), as government intervention buying boosts reserves in Thailand.”
It forecast world rice trade down 4% year on year in 2013 at 37.1 million tonnes, “mostly due to reduced deliveries to key markets in Africa, notably Nigeria following the introduction of import duties in January, and Far East Asia.”
Shipments to China, at 2.3 million tonnes, although down from 2.5 million the year before, would still be nearly three times larger than the previous five-year average of 800,000 tonnes.
RECORD SOYBEAN PRODUCTION
The IGC is expecting world soybean production for 2013-14 to increase by 4% year on year to a record 280 million tonnes, on the assumption that production in the U.S. and South America will be larger.
In Brazil, “current relative prices are expected to encourage farmers to plant more soybeans at the expense of maize, notably in southern states,” the IGC said. “Assuming a further, albeit marginal, improvement in average yields, production in Brazil is projected to rise by 5 million tonnes y/y, to a fresh record of 86.5 million.
“Argentina’s crop is also tentatively expected to be larger, up 8% y/y, to 52.5 million tonnes, on larger sowings and assuming beneficial weather aids yield potential,” it said. .
The IGC cut its estimate for the U.S. crop in 2013-14 by 2.9 million tonnes to 85.7 million, “given dry conditions and lower yield prospects, particularly in western growing regions,” but the figure is still 4% higher than the previous year’s estimate.