Grains crops for 2015-16 are largely down on record levels achieved last year, but the world still has enough grain, with the International Grains Council (IGC) putting ending stocks at the highest level for 29 years.

“Based on the latest indications, the world cereal supply and demand balance in the 2015-16 marketing season is likely to remain in a generally comfortable situation,” the United Nations Food and Agriculture Organization (FAO) said in a Cereal Supply and Demand Brief. “While world production is expected to fall below last year’s record, supplies will be almost sufficient to meet the projected demand, requiring only a small reduction in global stocks by the end of the season.”

Of the wheat sector, Rabobank said in its AgriCommodities Monthly report that significant rallies will be difficult to sustain for the remainder of 2015 without adverse weather.

“Global prices will likely rise during the first half of 2016, after Black Sea export programs have slowed down, and E.U. exports should be the prime source, with U.S. supplies also possibly becoming more competitive.

“Despite an ongoing strong El Niño and some dryness in the Black Sea region ahead of winter wheat planting, there are no major threats to crops yet,” Rabobank said. “Winter wheat planting in the northern hemisphere is ongoing and we forecast no significant changes in wheat acreage.”

For corn (maize), Rabobank said reduced yields could push prices up. “The main factor capping any rally are the fierce export offerings out of Brazil that cut into the U.S. export market share and could potentially result in additional stock building in the U.S.,” it said. “Brazilian exports are generally competitive.”

The bank noted that increased competitiveness followed a devaluation in the Brazilian currency relative to the U.S. dollar. It forecast a 2% rise in Brazilian corn area for the coming season. Even so, current domestic prices in Brazil favor soybean plantings over corn, it said.

“U.S. farmer storing will, once again, become a critical factor to watch in the 2015-16 season,” Rabobank said of the corn market. “With grain and oilseed prices at the lowest levels in a long time, we expect farmers to once again store large amounts of grains, holding onto them until they might see more favorable prices, which can force a winter premium, especially as processors and exporters will begin strong buying programs once wide-scale harvest is under way.”

The FAO’s Oct. 8 report put world cereal production in 2015 at 2.534 billion tonnes, 6 million tonnes less than expected in September and 24 million tonnes (0.9%) below the 2014 record.

“This month’s revision results from lower production prospects for coarse grains and rice, which more than offset a higher estimate for wheat,” it said. “The forecast for global coarse grains production in 2015 has been lowered by around 5 million tonnes in recent weeks on less buoyant expectations in the United States and the E.U., more than offsetting improved prospects in Brazil.”

FAO’s latest forecast puts world coarse grains production at 1.306 billion tonnes, 1.8% down on 2014’s record. Its forecast for world wheat production is now 735 million tonnes, 6.4 million higher than its previous forecast in September and 0.3% over the 2014 record. “Higher wheat production in China and the E.U. accounts for most of this month’s upward adjustment,” it said.

The FAO predicts world grains utilization in 2015-16 approaching 2.530 billion tonnes, down 6 million tonnes from the previous forecast, but still 1.2% or 31 million tonnes above 2014-15. “This month’s revision mostly reflects downward adjustments to world food consumption estimates for rice,” it said. “Total food consumption of cereals is currently put at 1.097 billion tonnes, down 21 million tonnes from the previous forecast, but still 1.1% higher than the revised estimate for 2014-15.”

It projects total feed utilization of cereals at 904 million tonnes, 6.4 million higher than its previous forecast and 1.8% above 2014-15 level.

“Higher anticipated feed use in China, Canada and the E.U. accounts for most of the revision,” it said. “Total industrial use of cereals (for the production of ethanol, starch and brewing) is projected to increase marginally from 2014-15 as demand by the grain-based fuel ethanol industry is predicted to remain almost flat, mostly reflecting a sluggish growth in the maize intake in the United States. By contrast, a strong demand for starch is anticipated to boost the use of grains for starch production, with most of the increase concentrated in China.”

The FAO’s forecast for world cereal ending stocks in 2016 is 638 million tonnes, 5.4 million less than predicted in September. It is 4 million tonnes down on the FAO’s revised opening levels.

“The main revisions since the previous report concern rice and coarse grains,” FAO said. “Given record crop prospects this year, world wheat inventories are forecast to approach 206 million tonnes, 4 million tonnes more than anticipated in September and 3 million tonnes above 2015. End-of-season coarse grain stocks are projected at 267.6 million tonnes, down marginally (1.6 million tonnes) from their all-time high level in 2014. On the other hand, with global production expected to fall short of utilization, world rice stocks are forecast to drop by 6 million tonnes to 164.3 million tonnes in 2016, 5.3 million tonnes less than foreseen last month.”

According to FAO, world cereal trade in 2015-16 is forecast at nearly 364 million tonnes, 3.3 million tonnes more than the earlier estimate, but still 11 million tonnes or 2.9% below the 2014-15 record. “Most of this season’s contraction stems from sharp expected drops in wheat and coarse grains shipments, while trade in rice is anticipated to rebound in 2016,” FAO said. “Based on the latest indications, international wheat trade in 2015-16 (July/June) could reach 150 million tonnes, down almost 6 million tonnes from 2014-15, as lower imports by Morocco and several countries in Asia are predicted to more than offset increased imports by some other countries.”

The FAO puts total coarse grains trade at around 169 million tonnes in 2015-16 (July/June), down about 6 million tonnes from the previous season, “mostly on lower expected imports by Mexico and several Asian countries.”

In its Grain Market Report issued on Sept. 24, the IGC put total wheat and coarse grains production at 1.996 billion tonnes, down from the 2014-15 record of 2.017 billion tonnes.

“The y/y (year-on-year) fall mainly reflects an anticipated drop for maize (corn), seen down by 38 million tonnes, with the projection trimmed from before by a further downgrading of the E.U. crop,” the IGC said.

It had raised its forecast for global grains consumption by 1 million tonnes to 1.986 billion, slightly higher year on year, “mainly because of stronger demand for feed wheat.”

“Tighter supplies of maize will increase interest in alternative feeds, and use of wheat is seen at its second highest level ever, including a jump in the E.U.,” the IGC said. It predicted an end 2015-2016 total grains stock level of 456 million tonnes, up 2% on the year and the highest level for 29 years. “At 313 million tonnes, trade is forecast to remain high, but down by 3% from the 2014-15 record,” it said.


World production of rice in 2014-15 is estimated marginally higher year on year, at a record of 479 million tonnes (milled basis),” the IGC said. “Favorable growing conditions boosted yields in key countries, with the exception of India, where both summer-sown and winter-planted crops were smaller than expected. Nevertheless, at 104.8 million tonnes (106.7 million), output was still 4% above the five-year average.”

The IGC put China’s production at 144.6 million tonnes, a 1% rise on the year, with Thailand’s harvest put at 19 million tonnes, a fall of 6% “owing to a drought-affected off-season outturn.”

For the following year, IGC predicts a smaller crop. “World rice production is seen at 477 million tonnes, marginally lower than in the previous year, owing to lower area and yields on anticipated below-average monsoon rains in Asia,” it said. “The forecast is cut by 2.2 million tonnes, mostly due to long-grain reductions in the U.S. and medium/short grain revisions for Egypt.”

FAO has also cut its estimate for rice production by 8 million tonnes to 493 million (milled basis), “reflecting the numerous setbacks endured since the onset of the season and the diminishing scope for recovering losses through larger secondary crops as the season advances.”

The figure is 1.9 million tonnes down on the estimate for 2014.

The FAO forecast rice trade in 2016 (January/December) at near 45 million tonnes, 1 million tonnes, or 2.2%, more than in 2015 and almost 3 million more than it forecast a month earlier. “Besides reassessing trade availabilities and requirements in light of more pessimistic 2015 crop prospects, the new figures take unrecorded trade flows into better consideration,” it said.


Soybean production is high, but just off the record achieved last year.

“With only marginal adjustments from last month’s report, global soybean output in 2015-16 is seen broadly unchanged, at 317 million tonnes, a fall of just 2% from the previous year and the second largest outturn ever,” the IGC said. “Largely reflecting expanded sowings in the world’s major producers – notably in South America – the area for harvesting is tentatively seen increasing by nearly 1% y/y, to a new peak of 123 million hectares.”

Rabobank again made the point about likely U.S. farmer retention and its potential to tighten the market, at least temporarily.

“On the other hand, the ongoing lackluster U.S. export pace – due to the strong U.S. dollar and fierce export competition from South America – are bearish market factors for CBOT soybean futures,” it said.