GRAIN & FEED MARKETS
Every issue GFMT’s market analyst John Buckley reviewsworld trading conditions which are impacting the full range of commodities used in food and feed production. His observationswill influence your decision-making.
So why haveprices – whichare still relatively high compared with their past tenor twenty yearaverages – stayedmore or less ‘range-bound’ rather thancollapsed sincethese ample supply outlooks weretouted in mid-May?
UGE, record crops of wheat, maize
and soyabean are on their way
according to the keenly awaited first
view of the new 2013/14 season from
the US Department of Agriculture.
USDA’s big supply numbers have surprised many
in the trade, implying more than enough of all the major grain and feed raw materials to meet
considerable growth in world demand during theyear ahead.
Moreover, if USDA is right, the low coarse grain
and oilseed stocks that have characterized the
world market for the past season can be rebuilt
to more comfortable levels while already adequate
wheat stocks will also get a useful top-up.
So why have prices – which are still relatively
high compared with their past ten or twenty year
averages – stayed more or less ‘range-bound’ rather
than collapsed since these ample supply outlooks
were touted in mid-May? The answer may be, ‘give
it time – and favourable weather.’
Certainly at this early stage there are various
reasons to be cautious toward these bearish supply
numbers. Wheat output, for example, has been
forecast to rebound from last year’s disappointing
655.6m to 701m tonnes – 21m more than the
International Grains Council’s preliminary forecast
issued in late April and 6m more than the UNFood & Agriculture Organization predicted two
days before the USDA forecasts.
Of the latter’s45.5m tonne global
year-on year increase,
a full 30m tonnes isdown to expected
wheat crop recoveries
in the former Soviet
Union, where yieldswere devastated in
some regions last year by prolonged drought
and heatwaves. Yet
Russian and Ukrainian
crops have hadnumerous problems
during the winter and
spring from frosts to
lack of rain and it remains quite feasible that their combined output could be over rated by USDAby as much as 6m to 8m tonnes.
Some analysts also have their reservations toward USDA’s EU crop forecast of 138.8m
tonnes (+6.7m on year) amid too much rain in
northwestern member states and some heat and
dryness issues already being reported in some
eastern/southern countries. Australia (seen
+2.5m) has also had some problems with lack
of rain in key states and could yet end up with a
similar or smaller crop that last year’s.The USA
also continues to suffer problems with drought inits key hard red winter wheat belt, normally the
largest source of wheat for this the world’s largest
exporter - although the USDA’s 56m tonne total
US wheat crop forecast has probably already been
fully factored in by the market in recent months.
On the other hand, Canada and Argentina should
have bigger crops on larger sown areas while India
seems to be heading for at least its second largestcrop ever.
Even if world wheat output only rises by, say,
30m tonnes, the concentration of extra supplies in
exporting countries suggests a more competitivemarket ahead in the search for import custom.
Wheat trade may decline slightly in 2013/14 due to
bigger domestic crops in some importing countries
like Turkey and Morocco and ‘swing’ importers of
feedwheat turning back to more abundant maize.
New crop forecasts keep on growing
fd milliG tcholoG52 | may - June 2013