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IGC REPORT: A CONTRACTION EXPECTED IN HARVEST OF ALL GRAINS BUT MAIZE

According to the monthly report released by the International Grain Council (IGC), due to the expected contraction in the production of almost all grains except for the maize, total wheat production is forecast to decrease to a three-year low at 2 billion 79 million tons.

London-based International Grain Council’s (IGC) November report is released. According to the report, there will be a decrease in the total amount of the grain produced. The expected increase in maize yield will not be enough to offset the decreases in almost all other grains. The production of all grains including wheat (-39 million tons) and maize (-6 million tons) is expected to decrease and the total production is predicted at 2 billion 79 million tons, a three-year low. Correspondingly, grain stock in 2018-2019 will remain at a four-year low of 560 million tons.
HIGHLIGHTS
With small adjustments for wheat, maize and sorghum, the forecast for world total grains (wheat and coarse grains) production in 2018/19 is lowered by 2million tons month-on-month, to 2,079m, about 1% down year-on-year. The outlooks for US maize and sorghum are trimmed, but the figure for Ukraine’s maize harvest is up from before. Total consumption is placed 1million tons lower than previously, mostly linked to adjustments for feeding and industrial uses of wheat and sorghum.

STOCKS AT FOUR YEARS’ LOW
The projection for stocks is unchanged month-on-month, at a four-year low of 560million tons, down by 58m year-on-year. At 368million tons, about equal to the previous season’s record, the trade forecast is reduced a little month-on-month, as cuts for wheat and sorghum are partly offset by increases for maize and barley. The Council’s first projection for all-wheat harvested area in 2019/20 is for a rise of about 1%, to 220m ha. Although gains are anticipated in the EU, Russia, the USA and India, inclement weather in the early part of the growing season is of some concern.

RAPESEED AREA MAY EXPAND
The global rapeseed/canola area may expand, despite an anticipated heavy fall in the EU. Largely on reduced US yield expectations, the forecast for world soybean production in 2018/19 is trimmed by 2million tons, to 367m, albeit up by 8% year-on-year and a new record.

With smaller carry-ins leading to a 5million tons cut in total supplies, world ending stocks are placed 3m lower month-on-month, at 51m. Nevertheless, this would still be a gain of about 30% year-on-year on prospects for heavy accumulation in the US. As a reduction for China’s imports is only partly offset by upgrades for other buyers, the projection of global trade is downgraded by 3million tons, to 152m, steady year-on-year.

ASIAN BUYERS TO KEEP RICE FIGURES ROBUST
Reflecting slow deliveries to sub-Saharan Africa, the prediction for rice trade in 2018 is cut slightly, but is steady year-on-year and above average amid robust buying in Asia. The 2018/19 global production outlook is fractionally higher year-on-year, at 491million tons. Given a marginal increase for carry-ins, the net month-on-month rise in supplies is channeled to higher use and inventories, placed at 125million tons (-2m year-on-year). Trade in 2019 is seen at a record of 49million tons on firmer demand from Africa and Near East Asia. The IGC Grains and Oilseeds Index (GOI) softened by 3% month-on-month. With the exception of maize, all the components were weaker.

OVERVIEW
At a three-year low of 2 billion 79million tons, world total grains (wheat and coarse grains) production is forecast to be down by 24m year-on-year, as an improved maize harvest (+26m) is entirely offset by reductions for other crops, including wheat (-39m) and barley (-6m).

BARLEY AT 23 YEARS’ LOW
Grains consumption is projected at a record 2,137million tons, up by 1% year-on-year. For wheat, higher food demand is expected to be balanced by reduced feeding, with overall use little changed year-on-year. Usage in the food, feed and industrial sectors are all seen reaching new highs for maize. As grains production is again expected to be outstripped by demand, a second consecutive season of world stock depletion is envisaged, with the pace of drawdown accelerating to 58million tons (-2m last season). The biggest falls are for maize (-39million tons, to a five-year low), wheat (-11m, the first decline in six seasons) and barley (-5m, to the least in 23 years), but with reduced inventories of sorghum, oats and rye as well. At 26.2% (29.4%), the ratio of world grains stocks-to-use is forecast to be the tightest since 2013/14. Global trade is predicted to stay at an elevated level, as record shipments of maize and barley are offset by drops for wheat and sorghum.

SOY HARVEST IN KEY PRODUCERS TO INCREASE
World soybean output in 2018/19 is predicted to rebound by 8% year-on-year, to a high of 367million tons, underpinned by larger or record harvests in all major producers. While southern hemisphere prospects are uncertain at this stage, early-season signs have been encouraging, with seeding progressing at a record pace in Brazil. Despite limited chance for growth in China, the rate of expansion of global uptake is likely to tick higher on increased processing in key exporters, led by Argentina. Given a huge crop and the likelihood of a contraction in exports, US inventories are expected to more than double year-on-year as world stocks increase by nearly 30%, to a record of 51million tons.

TRADE WAR TO HIT CHINESE SOY EXPORTS
Mostly related to an ongoing trade dispute with the US, China’s imports are likely to contract by 5% year-on-year. Nevertheless, bigger deliveries to relatively small markets may compensate, leaving global volumes steady year-on-year, at 152million tons.

POLITICAL UNCERTAINTY FOR RICE
World rice import demand in 2018 is forecast unchanged year-on-year as heavy buying in Asia, notably Indonesia and the Philippines, offsets reduced shipments to sub-Saharan Africa. Prospects for 2018/19 are tentative. Nevertheless, assuming gains in some Asian producers counter a potential policy-driven reduction in output in China, world production could match the previous year’s high. With consumption seen rising by 6million tons year-on-year, to a new peak, carryovers are likely to contract slightly, to 125million tons, including a fall in China. Major exporters’ reserves could edge up, mainly on an increase in the US. Trade in 2019 is predicted at around record levels, at 49million tons, up by 1m year-on-year on demand from Africa and Near East Asia.

We also suggest you to read our previous article titled "IGC: Change in Chinese wheat raises grain estimations".

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