World Grain - September 2016 - 20

GRAINMARKET REVIEW

Coarse grains
Production, consumption records
forecast for 2016-17
by Chris Lyddon

1,200,000
1,080,000
960,000
840,000
720,000
600,000

*Projected

2016-17*

2015-16

Production

2014-15

2013-14

2012-13

Consumption

2011-12

2010-11

2009-10

(in 1,000 tonnes)

2008-09

The world is heading for record coarse grain production and consumption in 2016-17. However, reduced imports by China are expected
to limit trade, a factor that has put pressure on prices in some markets
In its Grain Market Report at the end of July, the International Grains
Council (IGC) said its GOI maize sub-index edged 1% higher in the
month following its previous report.
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availabilities, especially in Brazil, but spot quotations in the U.S. and
Black Sea region were weaker," the IGC said.
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"As concerns about a Midwest heatwave dissipated in the second
half of July, futures reversed course, with the spot contract touching a
22-month low, ending down by 6% from the last GMR," the IGC said.
"After recent heavy selling, non-commercial funds fully liquidated their
previous large net long position."
The IGC also reported a 6% rise in prices in Brazil on tight nearby
availabilities.
"With local stocks almost depleted by earlier, very rapid exports, values were underpinned by poor harvest results and slow producer sellLQJ´WKH,*&VDLG³%HFDXVHRI¿HOGZRUNGHOD\VDQGGLVUXSWLRQVFDXVHG
by a brief truck drivers' strike, some exporters in Argentina were reportedly short on spot supplies."
The IGC's index for barley fell by 3% on good harvest prospects in
Australia and the Black Sea.
"Favorable early harvest results weighed on prices in the Black Sea region," the Council said. "However, concerns about production prospects
underpinned in the E.U. (France), where prices were slightly higher."
For sorghum, U.S. Gulf export quotations eased to the lowest level
since mid-April "against the backdrop of weaker CME maize futures,"
the IGC said. "After the heavy purchases of recent years, the market was
also lightly pressured by an expected reduction in buying interest from
China. Potentially slower demand from China added to a negative tone
in sorghum in Australia, where ample availabilities of alternative feed
grains weighed on the market."
U.S. September oats futures fell by a net 2%, mainly driven by wheat
and maize.
"The large net short position held by speculative funds provided some
underpinning," the IGC said. "North American cash oats trade remained
light, as farmers were reluctant to sell at current prices."
In a report called "Lost in the Maize," Rabobank considered the effects of Chinese policy changes.
"China already announced plans to end its costly corn stockpiling program, effective as of the 2016-17 new crop," Rabobank said.
"The government is striving to relieve supply-demand imbalance and
cut massive inventory. China's massive feed grain imports, which account for 70% of the global traded sorghum and 25% of barley, will
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World corn production, consumption

Source: U.S. Department of Agriculture

corn consumption rises. International trading houses will have to keep
an eye out for unexpected risks by monitoring China's corn exports,
which potentially rise as well as soybean imports, which potentially face
a slowing growth."
In its Feed Outlook report, published Aug. 16, the U.S. Department
of Agriculture's (USDA) Economic Research Service forecast world record levels of production and consumption in coarse grains.
"USDA's world coarse grain production forecast for 2016-17 is raised
1.5% in August, and production is now expected to marginally surpass
its 2014-15 record as it rises 6%," the USDA said. "Global coarse grain
production in 2016-17 is forecast at 1.322 billion tonnes, with the yearto-year production increase primarily driven by rebounding corn production in the United States, Argentina, Brazil and South Africa. The
United States accounts for most of this increase, more than offsetting
lower expected production in China and Canada."
The USDA also raised its world coarse grain consumption forecast for
2016-17 by 0.7% in August.
"On a year-to-year basis, an unusually strong rate of global consumption growth is now expected at 5.1%," the USDA said. "This would be
more than twice the average rate of recent years. World coarse grain
consumption in 2016-17 is forecast to increase by 63.3 million tonnes
from the year before to a record 1.311 billion."
As with production, the annual change in world consumption of
coarse grains is primarily driven by changes in corn, the USDA said.
"World corn consumption in 2016-17 is expected to rise 6.1%, or 58.3
million tonnes, from the year before to 1.016 billion tonnes," the report
said. "Gains are spread over a number of countries, led by the United
States (up 14.2 million tonnes) and China (8.5 million."
Although ERS has raised its forecast by 1.9% to 173.2 million tonnes,
the level of coarse grain trade predicted for 2016-17 is still 3.1% below
the record 178.7 million traded in 2015-16.
Chris Lyddon is World Grain's European correspondent.
He may be contacted at: chris.lyddon@ntlworld.com.
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World Grain - September 2016

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