World Grain - April 2014 - 22

Grainmarket revieW

Coarse grains
maize firmer on demand, but
supplies still hold market down
by Chris Lyddon

297.5
270.03
242.56
215.09
187.63
Feb-2014

Jan-2014

Dec-2013

Nov-2013

Oct-2013

Sep-2013

Aug-2013

Jul-2013

Jun-2013

May-2013

Apr-2013

Mar-2013

(In U.S. dollars per tonne)

324.96

Feb-2013

Maize prices became firmer in February, but the market is still
down on a year-to-year basis on ample supplies. Oats are supported
by Canada's logistics problems, while barley was slightly up and sorghum followed maize's rise.
"While maize prices have been lifted 4% month to month on solid
international demand and occasionally slow producer selling, the
IGC GOI maize sub-Index remains down 23% year to year given the
relatively comfortable outlook for world supplies," the International
Grains Council (IGC) said in its monthly Grain Market Report.
"U.S. maize futures gained around 6% compared to late January, the
spot March contract touching a near-five month high, mainly on robust export demand," it said. "In Argentina, very slow producer selling
prompted exporters to raise prices in order to secure supplies."
Domestic prices in Brazil were mostly higher on support from the
recent weakening of the real against the U.S. dollar, as well as a spell
of potentially harmful weather, it said. "Local prices in parts of São
Paulo state increased particularly sharply, rising by as much as 25%
month to month," the IGC said.
With recent political events causing many farmers in Ukraine
to hold back sales, Black Sea export prices were up by around 6%
month to month, at $225 fob, it said. "Recent strong export demand
and tight port logistics also underpinned," the IGC said.
"The IGC GOI barley sub-Index increased by 1% compared to
late January, underpinned by increasing export demand," it said.
"Expectations for renewed East Asian buying following last month's
Chinese New Year holidays contributed to a firmer market tone in
Australia, with nearby demand expected to be buoyed by logistical
problems in Canada."
U.S. oat futures hit record highs during February, trading at a considerable premium to maize for the first time since 2005, the IGC said.
"A futures rally of 28% was mainly fueled by inadequate railcar
availability in Canada and resulting supply tightness in the U.S.," the
IGC said. "Quotations in Canada were considered nominal because
of the logistical problems. In the E.U., growers remained reluctant
sellers due to low prices. With domestic oats values at a discount
to wheat and barley, producers preferred to raise on-farm feed use."
In its quarterly Crop Prospects and Food Situation report, the United Nations Food and Agriculture Organization reported on crops. "In
South America, the first 2014 maize crops are already developing
or, in some cases, about to be harvested, and prospects are generally
favorable," it said. "In Brazil, following favorable precipitation, official forecasts point to production levels similar to the corresponding
season's output last year.
"Planting progress for the second season crop is also satisfactory
under good moisture conditions. However, the area is expected to
decline by 9% from last year's level due to lower prices and the high
level of the first season harvest."
In Argentina, official estimates indicate that maize plantings have

Maize Monthly Price

U.S. No.2 Yellow, FOB Gulf of Mexico, U.S. price
Source: World Bank

fallen by 7% from the record high of 2013 due to severe dry conditions during planting, FAO said. "Nevertheless, the estimated area
is still the second highest in the last five years and production is expected to remain above the country's average at 24 million tonnes,"
it said.
FAO forecasts strong growth in feed use of maize, up 52 million
tonnes to 554 million in 2013-14, especially in the United States,
where it may rebound by 22%, or 24.5 million tonnes, from 2012-13.
"In China, another record crop in 2013 is likely to foster a 10% (14
million tonnes) increase in maize feed use in the 2013-14 marketing
season," it said.
FAO also noted rising use of maize for ethanol in the U.S. in
2013-14, "officially forecast to rebound by 7.6% after a 7% decline
in 2012-13. Based on the latest official forecast, the ethanol industry would absorb nearly 36% of the 2013 maize production in the
United States."
The USDA's Economic Research Service pointed strong U.S.
maize imports in 2013-14 (October/September), with its forecast up
1 million tonnes at 42 million tonnes. "In recent weeks, U.S. corn
sales and shipments have accelerated," it said, noting that outstanding sales at the end of February were the highest since Feb. 14, 2008.
"Uncertainty remains about additional shipments to China due to
rejections of U.S. corn at ports that contained a genetically modified
organism (GMO) variety not yet approved by China," it said. "However, corn purchases by other destinations have more than offset the
China issue.
"Record grain and oilseed harvests, a rail system facing increased
shipments of petroleum, and frigid winter weather have combined
to produce a severe delay in shipments of Canadian grain. Oats, not
being a high-value commodity, have not received the railcars or locomotives to move the normal volume of shipments to the United
States. As a result, U.S. oats futures prices have increased to record
levels on the Chicago Board of Trade."
Chris Lyddon is World Grain's european editor.
He may be contacted at: chris.lyddon@ntlworld.com.
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