GFMT’s market analyst John Buckley reviews world trading conditions which are impacting the full range of commodities used in food and feed production. His observations will influence your decision-making.
The USDA expects world barley output to drop by about 12.6m tonnes in 2014/15, offset only partially by higher starting stocks (up by about 3.6m tonnes). Main declines are seen within the EU (minus 4m tonens), where less spring barley will be sown, reversing last year’s trend when a lot of spare land was left over from failed winter wheat plantings.
here will wheat prices be in six months time? Will the bellwether CBOT market be lingering in its recent range of $6.50/7.00/bushel - or down to
the mid $5’s as some investment bank analysts have recently suggested? Will
European milling wheat prices stick with the E200/205/tonne indicated by Paris futures – or reflect the US trend with a 20% decline by end-year?
Much depends on the fruition of recent favourable outlooks for the next world crop. The
USDA’s first take on this is for 697m tonnes – 17m less than last year’s, yet still just over estimated
consumption (seen down by 6.6m tonnes). FAO/AMIS meanwhile suggests something in the order of 700m-plus while others are even prepared to countenance the possibility of crop close to last year’s record 714m.It’s early days yet to be too complacent about crops that, apart from India’s, are not yet ripe, let alone ‘in the bins.’ Comfortingly for consumers, though, we might remember that last year’s first forecast from the USDA was about 701m tonnes – 13m lower than it turned out.
The International Grains Council was initially even more pessimistic about 2013 prospects,
looking for 680/682 in its early forecasts.
The biggest surprise last year was probably the extent of Canada’s crop increase as amazing
yields delivered a record 37.5m tonnes – over 10m more than the previous year. Canada will
also be the main component in this year’s anticipated decline. Though much of its predominantly
spring-planted crop isn’t even sown yet due to wet, cold weather, the USDA is looking for
a drop in production back to the 28.5m tonnes level – accounting for more than half the
anticipated decline in the world crop. Lower crops are also expected in Turkey (-3m), Ukraine
(-2.3m) and Australia (-1.5m) and smaller producers (a combined 4.5m tonnes). Outside of Canada, though, the biggest fall is in the USA where drought is expected to slash production
of its most important export class, hard red winter wheat, and total wheat production is seen
dropping by 4.5m tonnes to a ten-year low of just 53.4m.. The US, long the world’s leading
wheat exporter (but probably ceding that place to the EU this season), also starts with its
Season of plenty beckons
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