GRAIN AND OILSEED PRICE PROSPECTS With the near-completion of the Northern Hemisphere harvest, raw material buyers will be looking at price prospects for the next few months, particularly in the light of recent developments in the EU and China. Cereal production in the European Union is forecast to be below
average for a second year in a row while the overall international market is experiencing record productions in some countries. According to the summer short-term outlook report published by the European Commission, adverse weather conditions in various regions in Europe point to cereal production being slightly below average. An unfortunate combination of heavy rain and severe droughts has pushed yields downwards particularly in Spain where the projected winter barley yield is 21 per cent below trend, and spring barley is a third below. Other areas of concern include north-western France and Belgium, where the combination of a dry May and a hot June resulted in unfavourable conditions for most winter and spring crops. As a result of this, the report forecasts that overall EU exports will be down and EU stocks are expected to tighten in the coming months. However, these unfavourable conditions will be counteracted by an
increase in international cereal production with the result that, overall, supplies are expected to be ample and world prices are not likely to be significantly affected. For the 2017-18 year, the global cereal harvest is estimated to be just over 2 billion tonnes and, even though this is 3 per cent lower than last year, the high level of supplies following two ample harvests suggests that global supplies will ‘remain strong’. The European Commission report goes on to note that the harvest
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of the 2016-17 crop year had been confirmed as being the largest global cereal harvest in history and that despite record levels of consumption, global stocks were expected to rise further at the end of this season to over 500 million tonnes. In the 2017-18 year, up to 740 million tonnes of wheat were expected to be produced globally, which is 2 per cent lower than last year’s record crop. The International Grains Council has issued its latest, August report
suggesting that, in 2017-18, the world will produce a total of 2,049.4 million tonnes of wheat and coarse grains, slightly down on 2016-17 but 11.6 million tonnes ahead of IGC’s July projection. IGC has increased its projection of world wheat production in 2017-
18 to 742.2 million tonnes; this is an increase of 10.3 million tonnes on IGC’s July projection but 12 million tonnes less that the estimated outturn for 2016-17. As far as the increased projection of production in 2017- 18 is concerned, the big winners are Russia, Ukraine and Kazakhstan, with Russia up by 9 million tonnes to 80 million tonnes and Ukraine up by 2.5 million tonnes to 26 million tonnes. Kazakhstan is boosted by half-a-million tonnes to 13.8 million tonnes. Chinese production has also been increased, compared with its July projection, by 0.9 million tonnes to 130.2 million tonnes. World consumption of wheat, at 738.4 million tonnes, is up by 3.5
million tonnes compared to IGC’s July projection with the result that world end-of-season inventories have been increased by 6.9 million tonnes to 247.8 million tonnes; this represents a 3.8 million tonne increase over the 2016-17 outturn. IGC is looking for maize production in 2017-18 of 1,017 million
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PAGE 10 SEPTEMBER/OCTOBER 2017 FEED COMPOUNDER Feed Compounder quarter page vertical 86 x
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tonnes; this compared with 1,019.7 million tonnes in IGC’s July estimate and an estimated 1,072.7 million tonnes during the 2016-17 crop year. The reduction in IGC’s August production largely reflects developments in the EU, down by a million tonnes to 58.5 million tonnes and China, down by 1.7 million tonnes to 211.5 million tonnes. However, it is the comparison of the projected maize harvest in 2017-18 with the estimated 2016-17 outturn which is the most significant aspect, showing a reduction in the projected 2017-18 maize crop of 55.7 million tonnes. Of this, 32.7 million tonnes consists of a reduction in the August projection in the US maize harvest, reflecting weather-generated effects on the area sown to the crop and the anticipated yields. There is also an 8.1 million tonne reduction in the Chinese maize crop compared with the 2016-47 outturn. IGC has recently assumed responsibility for analysing soybean
markets and is currently projecting world soybean production in 2017- 18 at 347 million tonnes, up 2.3 million tonnes compared with its July projection but 3.5 million tonnes down on its currently estimated outturn in 2016-17. There is a substantial increase in IGC’s projection of the 2017-18 soybean harvest in the US, from 112.8 million tonnes to 117 million tonnes. With continued growth in demand for soybean products set to push total use to a new high, global end-of-season stocks are likely to tighten, falling by 9 per cent, to 41 million tonnes albeit, as IGC puts it, ‘still remaining comfortable’. Within the total, major exporters’ stocks are seen contracting by almost a fifth, to 22 million tonnes. Trade is predicted to expand by 6 million tonnes compared to the previous
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