IGC members assess record grains crops

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Members of the International Grains Council (IGC) convened for the 44th Council Session on 5 December 2016. The meeting was chaired by Mr. Aly Toure, Permanent Representative of Côte d’Ivoire to International Commodity Organizations, London. The latest supply and demand outlook and market developments for grains, rice and oilseeds were assessed, while recent changes in national policies and administrative matters were considered.

Led by all-time highs for wheat and maize, world total grains (wheat and coarse grains) production was seen reaching a record 2,084m t in 2016/17, an increase of 81m y/y (year-on-year). A strong rise in consumption was  redicted to a new peak of 2,056m t (+73m y/y), as large supplies and attractive prices boost feeding, while population growth contributes to higher food demand. A solid gain in industrial processing was also anticipated,
mainly for ethanol and starch. Wheat and maize (corn) were expected to account for nearly all of a projected stocks expansion, with the global carryover above 500m for the first time. Despite a potential record for wheat, a 6m t retreat in grains trade was foreseen, to 338m, owing to reductions for barley and sorghum.

Northern hemisphere planting of winter wheat was well advanced by early December, with the preliminary forecast for world 2017/18 all-wheat harvested area showing little y/y change. Crop conditions were reported to be mostly favourable ahead of the winter.

With bumper crops expected in leading Asian producers, world rice output was seen rising by 3%, to an all-time high of 485m t. And despite an anticipated increase in total use, aggregate end-season stocks were predicted to edge higher as a contraction in the major exporters was more than offset by gains elsewhere, notably in China. Traded volumes in 2017 were expected to grow by 2% on firm demand from key importers in Asia and Africa, with India again expected to be the largest exporter.

Global soyabean production was forecast up by 7% y/y, to a peak of 336m t, including record crops in the US, where harvesting was complete, and Brazil. Although total uptake was anticipated to expand further, led by Asia, a solid increase in world carryovers was likely, linked to significant accumulation in the US. Trade was forecast to grow by 3%, to a fresh peak of 137m t, with shipments to China accounting for about two-thirds of the total.

The IGC Grains and Oilseeds Prices Index (GOI) was only modestly above year earlier levels, with declines for wheat, barley and rice, but increases for maize and soyabeans. Pressured by ample availabilities, average wheat prices were close to 10-year lows, barley were the weakest in around six seasons, while rice quotations were the lowest in about nine years. Soyabean markets, by contrast, were significantly higher y/y, as support from strong export interest more than offset pressure from a heavy supply outlook. Slightly stronger maize values y/y mainly reflected nearby supply tightness in South America, but a record harvest was pressuring US quotations. The Council also noted the impact on grains, rice and oilseeds prices of heightened volatility in currencies, logistical problems in some areas and a recent upturn in ocean freight costs. Although dry bulk freight markets had staged some recovery in 2016, to touch near-two year highs in November, the Baltic Dry Index was still nearly 90% below its May 2008 all-time peak amid excess tonnage capacity.

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