World Grain - January 2016 - 18

GRAINMARKET REVIEW

Coarse grains

Maize monthly price
(U.S. dollars per tonne)

200

Nov 2015

Oct 2015

Sep 2015

Aug 2015

Jul 2015

Jun 2015

May 2015

Apr 2015

Mar 2015

The unwillingness of Argentina's maize growers to sell has
proved supportive for the coarse grains market in recent months,
but the recent election in that country and the change in policy it
has triggered will likely have a bearish effect on maize markets in
2016.
For maize, the International Grains Council (IGC) said in its
most recent Grain Market Report that "the IGC GOI maize subIndex showed little overall net change, with lower prices in the U.S.
and Brazil balancing an increase in Argentina and the Black Sea."
Nearby U.S. maize futures dropped by 4% on heavy supplies
and generally sluggish demand for exports, it said. "However, with
prices turning more competitive as the month progressed, there
were some hopes for a pick-up in buying interest in the months
ahead. Compared to the last grain market report, Gulf prices were
also down 4%, at around $170 fob," it said.
"Up River premiums in Argentina were sharply higher, as farmers slowed sales in the run up to the presidential vote in late November. Nearby fob prices increased by 4%, to around $170, in line
with equivalent U.S. prices."
Once the vote was over, new President Mauricio Macri carried
through on his campaign pledge to eliminate export taxes on maize,
along with a group of other commodities. At the same time, a devaluation in the Argentine peso was expected to bring more grain to
the market. Both were taken as bullish signals by the market.
The USDA attaché in Argentina said that sales had been held up
in anticipation of changes. The Financial Times reported that Macri
had called on farmers to do more to add value to grains before
export and suggested that the chaotic nature of Argentina's grains
exports would be needed before producers stopped hoarding grains.
"Export values in Brazil (Paranagua) dipped slightly, to $166
fob," the IGC continued. "While local markets were underpinned
by strong export demand, U.S. dollar denominated export quotations remained competitive amid continued weakness in the value
of the Brazilian real. Black Sea prices were lightly supported by
tighter 2015-16 supplies, up by 1%, to around $169 fob.
"The IGC GOI barley sub-Index declined by 4% m/m, with pressure from reduced buying by China and seasonal weakness in Australia. Losses there were capped by rain delays to the harvest and
rumors that about 1 million tonnes had been sold to Saudi Arabia.
Export quotations (as of Nov. 18) were down by $11 from the last
grain market report, to $183 fob (Adelaide)."
Because of the less than ideal growing season, concerns mounted
about malting barley availability, contributing to export price gains
of $12, to $227 fob, it said, again quoting prices in Adelaide. "Waning demand from China, favorable crop conditions and a softer euro
weighed on quotations in the E.U. (France), falling by $9, to $175

Feb 2015

100

Jan 2015

by Chris Lyddon

Dec 2014

150

Nov 2014

Argentina's election set to
change maize market dynamics

U.S. No. 2 Yellow, FOB Gulf of Mexico, U.S. price
Source: U.S. Department of Agriculture

fob (Rouen). Declines in Black Sea prices were less pronounced,
underpinned by uncertainty about winter crop prospects."
The USDA's Economic Research Service highlighted reduced
U.S. maize exports.
"Projected 2015-16 trade year U.S. corn exports are reduced 1.5
million tonnes to 44.5 million," it said. "Census corn shipments for
October reached only 2.4 million tonnes, down almost 40% from
a year earlier. Inspections for November were 1.7 million tonnes,
down about 30% from a year ago, and close to the low level of
2012 when exports were constrained by tight supplies caused by
severe drought.
"This year, U.S. corn supplies are ample, but during most of September, October, and November 2015, U.S. corn export prices were
not competitive with prices in Brazil or Ukraine. Recently, U.S. corn
export prices have become more competitive, and sales have increased. But as of early December, outstanding export sales reached
10.9 million tonnes, down about a quarter from the previous year."
The ERS also quoted government statistics which showed that
Brazil's maize exports during October and November 2015 were
exceptional, reaching 5.5 million tonnes in October and 4.8 million
in November.
"Port loading data from Brazil's main ports indicate the exports
were even higher, but rain delays and other factors may be causing
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"The strong exports from Brazil's large 2014-15 second-crop corn
are the main cause for slow U.S. exports during the early months of
2015-16. In coming months, Brazil's corn sales and exports are expected to tail off, and most of Brazil's export capacity is expected to
turn to soybeans, especially from March to June 2016."
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
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