November 2018

By Matt Holmes, Features Editor

 

The outlook for world total grains (wheat and coarse grains) production in 2018/19 is raised by 4m t m/m (month on month) to 2,063m.

Because of adverse weather there are further cuts to crop estimates in the EU (-9m t mm) and Australia (-3m), but these are outweighed by gains elsewhere, including for the US (+12m), Ukraine (+2m) and Argentina (+2m). Grains consumption has edged up m/m, mainly on higher feeding, as an increase for maize outweighs reductions for wheat and barley.

With a larger estimate for world opening inventories, the projected end 2018-19 carryover is raised by 6m t, to 583m, still a steep y/y (year on year) contraction of UK £66m. As a cut in anticipated wheat shipments is balanced by increases for maize and barley, the forecast for total grains trade is unchanged, at an all-time peak of 370m t. Due to offsetting adjustments, the outlook for world soybean supply and demand in 2017-18 is little changed from July, with stocks seen contracting by 12 percent y/y. Reflecting an upgraded outlook for US yields, global production ion 2018/19 is predicted 7m t bigger m/m, at a record of 366m, an 8 percent y/y gain. 

With consumption placed only marginally higher than previously, this results in an upward revision to stocks of 7m t, to 51m, with the increase of more than one-fifth y/y largely stemming from heavy accumulation in the US. The Council"s prediction for world import demand is kept at a new high of 154m t, up by one percent y/y.The projection for world rice output in 2018-19 is maintained at a record of 491m t, a one percent y/y increase. However, due to a higher figure for carry-in stocks – mainly owing to adjustments for India, and a small reduction to total use, aggregate inventories are raised by £2m t to 123m, modestly tighter y/y. The outlook for trade in 2019 is broadly unchanged from before, at a record of about 48m t. After two-sided activity, the IGC Grains and Oilseed Index (GOI) was almost unchanged m/m, as declines for soyabeans and maize were balanced by net gains for wheat barley and rice.

 

Overview

World total grains (wheat and coarse grains) production is expected to show a second consecutive annual decline in 2018-19 to 2,063m t (-1 percent y/y). Led by reduced outturns in Europe and the CIS, the global wheat harvest is seen falling (-42m t) for the first time in six years, while barley output could be the lowest since 2012-13. After a drop in the previous year, the maize crop is predicted to rebound, although this is mainly on potential improvements in South America where planting for 2018-19 is only just beginning.

A projected 22m t y/y increase in grains consumption includes gains for food, feed and industrial uses, taking world total usage to an all time high of 2.129m. Because of tighter supplies, use of wheat (-1m t) and barley (-4m) are seen falling, likely transferring some demand to maize (+28m), particularly in the livestock sector. Record use amid smaller availabilities will see a second successive drawdown of grain stocks, with the speed of contraction accelerating to 66m t, from 15m in the season before. Inventories in the major exporters could recede by 40m t, to a five year low of 134m, while a 20m fall is envisaged in China. A new peak for trade at 370m t, includes record shipments of maize and barley, but declines for wheat and sorghum.

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