World Grain - May 2016 - 18

GRAINMARKET REVIEW

Coarse grains
Bearish fundamental balance
weighs on market

Monthly corn prices
(in U.S. dollars per tonne)

200

150

100

by Chris Lyddon
50

Mar 2016

Feb 2016

Jan 2016

Dec 2015

Nov 2015

Oct 2015

Sep 2015

Aug 2015

Jul 2015

Jun 2015

May 2015

Apr 2015

0
Mar 2015

Weaker U.S. futures led the maize (corn) market down and other coarse grains tended to follow, but the move is more of a slight
easing than a fall and there are parts of the world where demand is
enough to support the market.
The International Grains Council (IGC) reported on April 1 that its
GOI maize sub-Index had eased by 1%, with lower quotations across
major exporters.
"U.S. maize futures (May) weakened by 3%, pressured by bigger
than anticipated planting intentions and bearish market fundamentals, including ample spot availabilities and ongoing strong export
competition," it said. "With slightly lower Gulf premiums, fob prices
eased by 2%, to $158."
The IGC also reported a fall of 1% compared with late February
in Up River prices in Argentina, at $163 fob, following weaker U.S.
futures.
"Nearby bids were supported by solid export demand, which included sales to Brazil, worsening port congestion and rain-related
harvest delays, but offsetting pressure stemmed from generally good
¿HOGFRQGLWLRQVDQGH[SHFWDWLRQVIRUDODUJHFURS´LWVDLG
It also noted a weakening in Black Sea fob prices for maize, to
$166 fob, "amid stiff global competition and expectations for a slowdown in buying by China."
Movements in global barley markets were mixed in March, with
activity characterized by heavy purchasing by traditional feed barley
buyers and a mostly favorable outlook for new crop supplies in major
exporters, the IGC said.
"With changes already anticipated to China's domestic feed grain
SROLFLHVUHFHQWRI¿FLDOFRQ¿UPDWLRQEURXJKWRQO\PRGHVWGRZQZDUG
pressure," it said. "Signs of stronger buying interest in Near East
Asia and North Africa helped to offset the favorable global new crop
outlook.
"In the E.U. (France), feed barley export quotations climbed by
$6, to $166 fob (Rouen). A stronger currency underpinned values in
Australia, despite some pressure from ample rains ahead of new crop
planting, leaving feed barley prices nearly unchanged m/m, at around
$173 fob (Adelaide). In Argentina, plentiful local feed grain supplies
pressured export values down by $8, to $157 fob (Up River)."
The IGC also reported a fall in U.S. export values for sorghum,
ZKLFKZHUHLQÀXHQFHGE\GHYHORSPHQWVLQWKH86PDL]HPDUNHW
amid sluggish export demand. "As of March 31, U.S. (Gulf) quotations were down by $6, to $168 Fob," it said.
U.S. oats futures remained in a downward trend with the IGC reporting an overall loss of 1% in the May position.
"Abundant global grains supplies continued to weigh on values,

Maize (corn), U.S. No.2 Yellow, FOB Gulf of Mexico,
Source: U.S. Department of Agriculture

with modest underpinning from concerns about a likely fall in 201617 area in Canada," it said. "Unfavorable dryness ahead of planting
in Canada's southern prairies was also mildly supportive."
In its quarterly Crop Prospects and Food Situation report, the
United Nations Food & Agriculture Organization pointed out that
the while the bulk of the 2016 global maize crop had yet to be planted
in Asia, Europe and North America, in the southern hemisphere harvesting had already commenced, "with early indications pointing to
reduced outputs in South America and Southern Africa."
"The benchmark U.S. maize (No.2, Yellow, fob) value averaged
$160 per tonne in February, virtually unchanged from its level in
January, though still about 8% lower than the corresponding period
last year," it said. "A rebound in import demand and some concerns
about crop conditions in the southern hemisphere provided support
to maize export quotations, although abundant supplies and strong
competition between exporters limited the gains."
In its Feed Outlook report, the USDA's Economic Research Service reduced its projection for 2015-16 world coarse grain usage by
1.7 million tonnes to 1.26 billion.
"Domestic consumption in Sub-Saharan Africa is projected down
3.4 million tonnes to 101.3 million, with most of the decline in expected food consumption. Sudan's food, seed, and industrial use (FSI)
is cut in half, down 3 million tonnes to 3 million. Ethiopia's coarse
grain FSI prospects are cut 1.8 million tonnes and Mozambique's are
reduced by 500,000 tonnes. FSI is forecast down 600,000 tonnes each
for Japan and the E.U. as less coarse grain is used in industrial uses
(but increased U.S. FSI offsets these reductions). FSI is increased
700,000 tonnes for South Sudan, with increased production."
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
We want to hear from you - Send comments and inquiries to
worldgrain@sosland.com. For reprints of WG articles, e-mail reprints@sosland.com.

May 2016 / World Grain / www.World-Grain.com

http://www.World-Grain.com

World Grain - May 2016

Table of Contents for the Digital Edition of World Grain - May 2016