World Grain - August 2014 - 20

GRAINMARKET REVIEW
Maize monthly price

Coarse grains

300

Bumper corn crop proves
bearish for feed grains

250

by Chris Lyddon

Jun-14

May-14

Apr-14

Mar-14

Feb-14

Jan-14

Dec-13

Nov-13

Oct-13

Sep-13

Aug-13

150

Jul-13

200

Jun-13

A positive outlook for corn (maize) production has taken prices
lower with most of the feed grain markets following suit. Low prices
may, however, stimulate increased demand.
"Looking beyond this fall's feed grain harvest for 2014-15, market-related discussion may transition from the topic of large production to the topic of even larger demand, similar to what occurred after
the bumper crop year of 1994," the U.S. Grains Council noted in its
Market Perspectives publication.
The FAO's quarterly Crop Prospects and Food Situation report described the market. "Export prices of maize decreased significantly
in June, with the benchmark U.S. maize (No. 2, Yellow) averaging
$202 per tonne, 7% lower than in the previous month and one-third
below its level a year earlier. The drop in international prices in June
reflects the positive outlook for this year's maize production in the
major producing countries, particularly in the United States, China
and several countries in South America."
The International Grains Council (IGC) described the bearish
tone in the maize market in its Grain Market Report. "With very
few sources of fundamental support, world maize export quotations
moved lower, with the IGC GOI sub-Index down by 7% compared
to the last GMR," it said. "Prices were pressured by a mostly positive U.S. crop outlook and prospects for strong competition from the
southern hemisphere."
U.S. futures slumped to more than four-month lows, falling by as
much as 7% compared to late May, as a favorable supply outlook
triggered speculative long liquidation, it said.
"Robust ethanol production data and worries about localized
flooding and possible replanting in some areas provided light support," it said. "With Gulf premiums slightly firmer on the drop in
futures, spot export prices were down by a net 5% m/m, at around
$208 fob."
Falls were not restricted to the U.S. market. "Up River prices in
Argentina were sometimes underpinned by harvest delays and resulting slow country movement," the IGC said. "However, with exporters still conscious of the need to remain competitive, prices were
around 9% lower m/m, at around $201 fob."
After a seasonal three-month absence, maize export quotations
were again available in Brazil, the IGC reported. "With exporters
still busy shipping soybeans, most quotes were for shipment after
August," it said.
"Given spillover from lower international markets and, with harvesting of a large second (safrinha) crop under way, export prices had
a mostly weak tone, quoted at around $206 fob (Paranagua, September)," it said. "Generally good crop weather has boosted production
prospects and local prices are well below earlier peaks. Particularly
steep losses have been recorded in Mato Grosso state, where another
large safrinha crop is expected."
The IGC also reported a 3% fall in old crop prices in the Black Sea
region. "New crop business for shipment from November onwards

(in U.S. dollars)

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

was reported to have been light so far, with many sales booked on
an optional-origin basis," it said. "However, exportable supplies are
expected to be quite ample and new crop prices were quoted significantly below spot positions, at around $205 (November)."
Barley prices have also fallen, but by much less. "The IGC GOI
barley sub-Index dropped by 1% over the past month, weighed by
mostly favorable crop conditions in Australia and the Black Sea region," the IGC said. "Despite some seasonal weakness, export prices
in the E.U. were supported by reduced production expectations, particularly in Spain, and stronger export interest.
"However, a $1 increase in export quotations in the E.U. (France)
since the last report, to$217 fob (Rouen), mostly reflected a slightly
stronger euro. Feed barley export values in Australia dropped by$2,
to $251 fob (Adelaide), pressured by improved prospects for the next
harvest. Nonetheless, prices remained relatively high due to reluctant
farmer selling ahead of a potentially drier winter and spring."
U.S. dollar denominated malting barley quotations firmed by $6,
to $278 fob (Adelaide), partly because of a stronger local currency,
but also supported by continued strong export demand from Pacific
Asia, it said.
"Black Sea values were seasonally weak as harvesting in Ukraine
got under way, dropping by $10, to $221 fob," it said.
In the U.S. at least, sorghum avoided following maize down.
"Firming basis levels amid sustained shipments to China helped to
keep U.S. sorghum export prices broadly steady during June, despite
a sharp decline in maize futures," the IGC said. "Since the last report, export quotations moved marginally lower, to $242 fob (Gulf),
resulting in a widening of the premium to maize to $34. At that level,
the premium is much bigger than normal, but still below the historic high reached in 2007-08 when the E.U. was an unusually heavy
buyer from the U.S.
"Values in Argentina declined by $13 to $164 fob (Up River), the
lowest since June 2012, weighed by harvest pressure and slow export
interest. However, the likely approval of shipments to China was expected to support values in coming months."
Chris Lyddon is World Grain's European editor.
He may be contacted at: chris.lyddon@ntlworld.com.
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August 2014 / World Grain / www.World-Grain.com

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World Grain - August 2014

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