Source: U.S. Department of Agriculture
Source: U.S. Department of Agriculture
“With late-month gains in Argentina countered by lower prices in the U.S. and Brazil, the IGC GOI maize sub-Index dropped by a net 1% m/m,” said the IGC in its most recent Grain Market Report. “Spreads between competing origins have recently widened, with Gulf fob prices quoted at an unusually wide discount to those in South America.”
Nearby U.S. futures posted 1% net losses amid ample domestic availabilities and strength in the value of the dollar, it said.
“Active fund selling, sparked by an unexpected upward revision to the USDA’s yield forecast, contributed to mid-month losses, but with declines subsequently partly reversed on robust export sales data and occasional non-commercial short covering,” the IGC said. “With Gulf premiums weighed by easing CIF barge values and heavy spot supplies, export quotations dropped by 5%, to around U.S.$161 fob.”
The IGC said that in South America, old crop Up River premiums in Argentina were sharply higher on limited farmer selling as the export season began to wind down, while tight spot availabilities continued to underpin domestic prices in Brazil.
“However, mainly because of some depreciation in the local currency, U.S. dollar-denominated export quotations slipped by 3% m/m, to $179 fob,” the IGC said. “At around $168 fob, Black Sea quotations were little changed m/m, lightly supported by ongoing logistical difficulties in Ukraine and underlying firm demand.”
Barley is firmer, with the IGC GOI barley sub-Index up by 3% in a month, “boosted by gains at major origins, but with ample supplies of alternatives capping further advances.”
The IGC said slow export demand dampened market sentiment in France, although some support from stronger wheat values contributed to an overall gain of $1 on the month to $154 fob (Rouen).
“Prices in the Black Sea region were boosted by strong early-season exports from Ukraine, rising by $9, to $163 fob,” the IGC said. “Additional underpinning stemmed from logistical problems caused by a shortage of rail cars and weight limits on trucks. Feed barley values in Australia climbed by $4 m/m, to $159 fob (Adelaide), supported by harvest delays and signs of better buying interest from China. However, strength was restricted by generally favorable crop prospects.”
U.S. Gulf fob sorghum prices were reported down 3% on the month at $167 fob.
“Losses reflected weaker maize futures, with basis levels weighed down by the advancing U.S. harvest,” the IGC said. “However, downside was trimmed by firmer international demand, highlighted by bigger-than-expected export sales data in recent weeks.”
Local values in Australia were about 8% higher, drawing support from tight old crop stocks and weather-related concerns for the next outturn, although gains in dollar-denominated values were relatively slender, owing to currency movements, the IGC said.
U.S. oat futures rose with underpinning from concern about adverse harvest weather in Canada.
“This was seen potentially preventing some of the crop from being combined before winter and leading to a possible supply shortfall,” the IGC said.
The IGC described rye markets as generally quiet.
“Milling values in the E.U. (Germany) received some underpinning from tight supplies,” the IGC said. “Quotations in Ukraine were reported to be nominally little changed.”
The USDA ERS Feed Outlook report for December outlined the latest USDA production estimates.
“Global coarse grain production in 2016-17 is forecast to increase sharply, by 9.7 million tonnes this month to a new record of 1.329 billion,” the USDA said. “This is almost 80 million tonnes higher than in 2015-16 and 23 million above the previous record in 2014-15. The largest increases are for China (based on the latest information released by China’s National Bureau of Statistics), up 3.7 million tonnes, and Brazil, up 3 million tonnes (based on both area and yield increases). Coarse grain output is also boosted for Canada, Russia and Indonesia.”
The USDA predicted that an increase in Brazil’s already large second maize crop will provide stiff competition for U.S. exports late in 2016-17.
Global coarse grain domestic consumption in 2016-17 is projected up 4.7 million tonnes in December to 1.319 billion, with multiple changes mainly across corn-importing countries (all of them lower than 1 million tonnes).
The USDA also projected an increase of 4.5 million tonnes in world coarse grain ending stocks, to 254.9 million. The biggest rise is 2.6 million tonnes in stocks in China, to 107.1 million following an increase in maize production.
The USDA has revised its projection for 2016-17 world coarse grain trade (October-September) up by 1.4 million tonnes to 179.1 million tonnes.
“Export prospects for Brazilian and Russian corn are revised up to reflect changes in supplies and competitiveness,” the USDA said.