World Grain - December 2014 - 20

GRAINMARKET REVIEW
Maize monthly price
(in U.S. dollar per tonne)

250

Coarse grains
Prices move higher after months
of losses, but underlying supply
and demand picture looks bearish

Oct-14

Sep-14

Aug-14

Jul-14

Jun-14

May-14

Apr-14

of substantial purchasing interest from North America, the IGC said.
The same has happened for sorghum. "U.S. sorghum export prices
moved to four-month highs, with spot quotations up 11% m/m, at
$250 fob (Gulf), some $57 above equivalent maize values," the IGC

Mar-14

October; the IGC GOI sub-Index gained 5% m/m," it said. "Because
of limited good quality supplies elsewhere, China's buying was
mainly focused on the E.U. (France). Dollar denominated feed barley
export quotations there gained $26, to $211 fob (Rouen)."

Feb-14

progressing and will likely be completed before December, many elers' preference to store on farm. The main driver of this has been a
reluctance to sell below breakeven prices."
The IGC also reported a rise in barley prices.
"Falling production prospects in Australia and strong purchasing

Jan-14

bid pulls available supply directly to end users," Rabobank said.
"Reluctant farmer selling is the most critical factor in determining

Dec-13

in a report looking at the effects of the late U.S. crop.
"Corn buyers that had been expecting a large harvest have driven basis values positive across the U.S. to satisfy short-term needs. The result

100

Nov-13

Markets in maize, barley and sorghum have moved higher in recent
weeks as a slow U.S. harvest and farmers' unwillingness to sell asserted themselves over what looks like a bullish fundamental picture.
"After months of near-continuous losses, world maize export prices moved higher during October," the International Grains Council
(IGC) said in its Grain Market Report. "Although underlying supply
and demand fundamentals remained bearish and prices stayed close
to four-year lows, values were supported by a delayed U.S. harvest,
technical buying and spillover from non-grain markets."
On Oct. 29, the IGC GOI maize sub Index was up by around 11%
month on month, but still 10% lower year on year. "U.S. futures traded mostly higher, with the nearby contract rising by 14% month on
month, to a two-month peak. This year's slow harvest pace and sluggish farmer selling were supportive, with bullish technical features
adding to gains," the IGC said.
"Recent volatility in equities and energy sectors also resulted in
increased buying in agricultural markets by speculative funds. Although Gulf export premiums were slightly lower, partly compensating for the rise in futures, spot prices were around 9% higher month
on month, at $193 fob."
The slowest corn harvest since 2009 will exacerbate the challeng-

150

Oct-13

by Chris Lyddon

200

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

said. "While strong gains in maize were supportive, export premiums
also increased, buoyed by continued buying by China, with purchases seemingly so far unaffected by proposed stricter quality inspections in the country."
The picture for oats was more mixed. "Harvest delays, quality
concerns and worries about logistical constraints in Canada contributed to a more bullish tone in global oats markets," the IGC said.
"With additional underpinning from a rally in maize, U.S. futures
climbed by 3%, although gains were limited by weaker demand from
food and feed processors. In the E.U., values were pressured by slow
demand from millers, whose nearby needs were reported to be well
covered. Heavy supplies of other feed grains also weighed."
The rise followed a bearish period described in the FAO report
of the year prices received some support from rising wheat values
and fears of trade disruptions because of escalating tensions in the
Black Sea region, large plantings and favorable climatic conditions,
combined with an abundance of feed wheat, have since then led to
sharp declines in prices of major coarse grains," it said. "Internationtheir values of the corresponding period last year.
FAO reported that "the benchmark U.S. maize price (yellow, No.
2, fob) averaged $164 per tonne in September, down 22% from September 2013 and 18% since the start of this year."
Its forecast for 2014 coarse grain production was an almost unchanged 1.308 billion tonnes, "with declines in South America and
Ukraine expected to be largely offset by an expected record maize
harvest in the United States."
billion tonnes.
FAO forecast global coarse grains trade in 2014-15 at 147 million
tonnes, down 11 on the year.
"The sharp contraction, if realized, would be the biggest in over two
decades (since 1993-94)," it said. "Falling maize trade is responsible for
the bulk of the expected decline in world trade in coarse grains."
Chris Lyddon is World Grain's European editor.
He may be contacted at: chris.lyddon@ntlworld.com.
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World Grain - December 2014

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