On the following day members attended an International Grains Forum co-hosted by the federal Department of Agriculture, Fisheries and Forestry and Western Australia’s Department of Agriculture and Food. This was followed by a tour on Dec. 9 of a major grain facility and a wheat farm.
Members noted the latest developments in the global grains industry, especially the sharp increases in prices seen since the IGC last met in June and the continuing day-to-day volatility in the main exchanges in recent months, only partly attributable to changes in market fundamentals.
World grain supplies are expected to tighten in 2010-11 as production of wheat, maize and barley falls short of forecast consumption. However, the slowing growth of industrial use, especially of maize used for ethanol in the U.S., will limit the rise in grains consumption to 1.5%, down from the previous year’s 2%.
The substantial fall in output in the CIS, especially in Russia, is expected to lead to a shift of around 30 million tonnes in wheat and barley exports to other suppliers, notably the U.S., the E.U., Argentina and Australia.
World trade in grains was placed at 241 million tonnes, marginally above the previous year. Wheat trade is set to fall in 2010-11, but this will likely be offset by increased maize shipments.
Having risen by 120 million tonnes in the previous three years, global carryover stocks of grain in 2010-11 are expected to decline by some 60 million tonnes, half of this due to tightening maize supplies.
As to the outlook for 2011-12, the global wheat area is projected to increase by 2%, partly in response to higher prices but also reflecting reduced abandonment in Canada and Russia after this year’s extreme summer weather conditions. The area likely to be planted to maize for the next U.S. crop will crucially depend on the price relationship with soybeans.
The IGC also examined the secretariat’s latest five-year supply and demand projections which, for the first time, included rice. For grains (excluding rice) it was noted that despite recent crop problems, grain availabilities are actually higher than forecast a year ago.
However, consumption projections are also lifted, and stocks are expected to show some further decline from those forecast at the end of 2010-11. Maize supplies, in particular, are likely to tighten. An average annual rise of 2% in world trade in grains is projected in the years to 2015-16. With regard to rice, world supplies and demand are expected to remain broadly in balance over this period, with yield improvements likely to raise output and with consumption rising in line with population. World stocks are projected to increase slightly over the period, and trade is expected to increase by some 5 million tonnes, driven mainly by demand from Asia and Africa.
Members took particular note of this year’s unusual conditions in Australia. Although wheat production is officially placed at a record, a severe drought in Western Australia had resulted in sharply reduced yields, while in eastern states excessive rains will lead to considerable downgrading of the crop.
The council received progress reports from the secretariat on its economic work program and on various administrative matters. It was agreed that certain aspects of the Grains Trade Convention, 1995 should be reviewed with the aim of making any necessary changes to improve its effectiveness and scope.
Members welcomed Saudi Arabia to the council, having acceded to the Grains Trade Convention with effect from Sept. 1.