World Grain - January 2017 - 18

GRAINMARKET REVIEW

Coarse grains
Latest forecast shows new
record for this year's crop
by Chris Lyddon

Global maize supply and demand
(in 1,000 tonnes)

1,200,000
1,000,000
800,000
600,000
400,000
200,000

2016-17*

2015-16

Consumption

2014-15

2013-14

Production

2012-13

2011-12

2010-11

0
2009-10

Changes in coarse grain prices around the world in recent weeks have
been small and mixed, with currency as well as fundamental supply and
demand factors playing a role. The latest forecasts for this year's crop
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"With late-month gains in Argentina countered by lower prices in the
U.S. and Brazil, the IGC GOI maize sub-Index dropped by a net 1%
m/m," said the IGC in its most recent Grain Market Report. "Spreads
between competing origins have recently widened, with Gulf fob prices
quoted at an unusually wide discount to those in South America."
Nearby U.S. futures posted 1% net losses amid ample domestic availabilities and strength in the value of the dollar, it said.
"Active fund selling, sparked by an unexpected upward revision to
the USDA's yield forecast, contributed to mid-month losses, but with
declines subsequently partly reversed on robust export sales data and
occasional non-commercial short covering," the IGC said. "With Gulf
premiums weighed by easing CIF barge values and heavy spot supplies,
export quotations dropped by 5%, to around U.S.$161 fob."
The IGC said that in South America, old crop Up River premiums in
Argentina were sharply higher on limited farmer selling as the export
season began to wind down, while tight spot availabilities continued to
underpin domestic prices in Brazil.
"However, mainly because of some depreciation in the local currency,
U.S. dollar-denominated export quotations slipped by 3% m/m, to $179
fob," the IGC said. "At around $168 fob, Black Sea quotations were
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month, "boosted by gains at major origins, but with ample supplies of
alternatives capping further advances."
The IGC said slow export demand dampened market sentiment in
France, although some support from stronger wheat values contributed
to an overall gain of $1 on the month to $154 fob (Rouen).
"Prices in the Black Sea region were boosted by strong early-season
exports from Ukraine, rising by $9, to $163 fob," the IGC said. "Additional underpinning stemmed from logistical problems caused by a
shortage of rail cars and weight limits on trucks. Feed barley values in
Australia climbed by $4 m/m, to $159 fob (Adelaide), supported by harvest delays and signs of better buying interest from China. However,
strength was restricted by generally favorable crop prospects."
U.S. Gulf fob sorghum prices were reported down 3% on the month
at $167 fob.
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down by the advancing U.S. harvest," the IGC said. "However,
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by bigger-than-expected export sales data in recent weeks."
Local values in Australia were about 8% higher, drawing support
from tight old crop stocks and weather-related concerns for the next
outturn, although gains in dollar-denominated values were relatively

Ending stocks

*Projected
Source: U.S. Department of Agriculture

slender, owing to currency movements, the IGC said.
U.S. oat futures rose with underpinning from concern about adverse
harvest weather in Canada.
"This was seen potentially preventing some of the crop from being
combined before winter and leading to a possible supply shortfall,"
the IGC said.
The IGC described rye markets as generally quiet.
"Milling values in the E.U. (Germany) received some underpinning
from tight supplies," the IGC said. "Quotations in Ukraine were reported
to be nominally little changed."
The USDA ERS Feed Outlook report for December outlined the latest
USDA production estimates.
"Global coarse grain production in 2016-17 is forecast to increase
sharply, by 9.7 million tonnes this month to a new record of 1.329 billion," the USDA said. "This is almost 80 million tonnes higher than in
2015-16 and 23 million above the previous record in 2014-15. The largest increases are for China (based on the latest information released by
China's National Bureau of Statistics), up 3.7 million tonnes, and Brazil,
up 3 million tonnes (based on both area and yield increases). Coarse
grain output is also boosted for Canada, Russia and Indonesia."
The USDA predicted that an increase in Brazil's already large second
maize crop will provide stiff competition for U.S. exports late in 2016-17.
Global coarse grain domestic consumption in 2016-17 is projected
up 4.7 million tonnes in December to 1.319 billion, with multiple
changes mainly across corn-importing countries (all of them lower
than 1 million tonnes).
The USDA also projected an increase of 4.5 million tonnes in
world coarse grain ending stocks, to 254.9 million. The biggest rise
is 2.6 million tonnes in stocks in China, to 107.1 million following
an increase in maize production.
The USDA has revised its projection for 2016-17 world coarse
grain trade (October-September) up by 1.4 million tonnes to 179.1
million tonnes.
"Export prospects for Brazilian and Russian corn are revised up to
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Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
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January 2017 / World Grain / www.World-Grain.com

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