united nations conference on trade and development 2011 igc.int grains trade convention (gtc) •...
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United Nations Conference on Trade and Development
10th MULTI-YEAR EXPERT MEETING ON COMMODITIES AND DEVELOPMENT
25-26 April 2018, Geneva
Assessing the recent past and prospects for grains and oilseeds markets in 2018/19
By
Darren Cooper
International Grains Council
The views expressed are those of the author and do not necessarily reflect
the views of UNCTAD.
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IGC 2011
www.igc.int
igc.int
United Nations Conference on Trade and DevelopmentMulti-year Expert Meeting on Commodities and Development
10th session
Geneva25-26 April 2018
Darren Cooper
International Grains Council
Assessing the recent past and prospects for grains and
oilseeds markets in 2018/19
Some tentative observations
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IGC 2011
www.igc.int
igc.int
Grains Trade Convention (GTC)
• Information sharing, analysis and data on global markets for wheat, coarse grains,
rice and oilseeds
• Commodity coverage has expanded significantly in recent years
➢ Rice included in the definition of “grains” in the GTC from 1 July 2009
➢ Oilseeds formally included from 1 July 2013
• Monitoring of national policy developments
Food Assistance Convention (FAC) • Its objectives are to save lives, reduce hunger and improve food security, while
enhancing the nutritional status of the most vulnerable populations
http://www.foodassistanceconvention.org/
The International Grains Council (IGC)
www.igc.int
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IGC 2011
www.igc.int
igc.int
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Ap
r-1
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n-1
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Oc
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v-1
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De
c-1
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Jan
-18
Feb
-18
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r-1
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Ap
r-1
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IGC daily grains and oilseeds index (GOI), January 2000 = 100
+ 18%
Markets for grains, rice and oilseeds post solid gains,
particularly during the early months of 2018
For further information, see: www.igc.int/grainsupdate/igc_goi.xls; * refers to year-on-year change
IGC GOI is a weighted index, including 34 fob export quotations across a range of origins, spanning eight commodities
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IGC 2011
www.igc.int
igc.intGains have been broad based – in general,
a combination of production worries and export demand
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Ap
r-1
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May-1
7
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n-1
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p-1
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c-1
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Jan
-18
Feb
-18
Ma
r-1
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Ap
r-1
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Soybeans
Wheat
Maize
IGC daily sub-indices, rebased: 17 Apr 2017 = 100
Rice
Wheat: Markets have been volatile
over the period, with a particularly
sharp spike in prices in mid-2017, tied
to high-protein grades. In 2018, prices
climb on US Plains dryness, some
worries in the EU/CIS and logistics.
Maize: Supported by concerns about
South American crops, coupled with
robust demand for US supplies. Buying
interest in Ukraine also firm.
Soyabeans: Displays considerable
volatility, with dwindling crop prospects
in Argentina a major factor. But there
have been headwinds – huge crop in
Brazil and heightened worries about
US-China trade.
Rice: Strength tied to firm export
demand, especially from Asian buyers,
as well as tighter supplies in major
exporters.
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IGC 2011
www.igc.int
igc.intSentiment reflected by changes in traders’ net
positions – noting the soyabean complex shift
CME Wheat KCBT WheatMGE Wheat
CME Soyabeans CME Corn
Net long Net short
CME Soyameal
-60
-40
-20
0
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Ma
r-1
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Ap
r-17
Ma
y-1
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Jun-1
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Jul-
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Au
g-1
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Se
p-1
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Oct-
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No
v-1
7
De
c-1
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Jan
-18
Fe
b-1
8
Ma
r-1
8
Net position ('000 contracts)
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IGC 2011
www.igc.int
igc.intDuring a key phase of development, conditions in
Argentina have remained hot and dry
Precipitation anomaly Temperature anomaly
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IGC 2011
www.igc.int
igc.intGlobal markets strengthen on Argentine crop
worries, with particularly sharp gains in soyameal
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Ap
r-17
Ma
y-1
7
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n-1
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-17
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No
v-1
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De
c-1
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Jan
-18
Fe
b-1
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Ma
r-1
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Ap
r-18
IGC GOI soyabeans sub-Index, Jan 2000 = 100Soyabean export prices
US$/t % Chg. % Chg.
fob 1 Jan y/y
Argentina 423 +62 +21
Brazil 431 +52 +20
USA 321 +49 +16
Soyameal
US$/t % Chg. % Chg.
fob 1 Jan y/y
Argentina 429 +94 +36
Brazil 431 +111 +38
USA 457 +116 +32
Soyabean oil
US$/t % Chg. % Chg.
fob 1 Jan y/y
Argentina 753 -17 +9
Brazil 746 -13 +7
USA 725 -58 +1
Share of
Argentina
in trade *
7%
43%
46%
* 5-year average
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IGC 2011
www.igc.int
igc.int2017/18 soyabean production – Brazil’s crop
continues to get larger, Argentina’s gets smaller
0
20
40
60
80
100
120
09/10 11/12 13/14 15/16 17/18(f'cast)
m t Argentina
2017/18 Chg.
from Oct to Mar
- 18.4
0
20
40
60
80
100
120
09/10 11/12 13/14 15/16 17/18(f'cast)
m t Brazil
+7.0
0
20
40
60
80
100
120
09/10 11/12 13/14 15/16 17/18(f'cast)
m t USA
Average
Average
Average- 13.0
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IGC 2011
www.igc.int
igc.intFurther gains in global acreage projected for 2018/19
– again led by major producers
70
80
90
100
110
120
130
10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19
m haWorld harvested area
Average
(est.) (f’cast) (proj.)
Key points m ha y/y
USA 36.6 + 1%
Given current soy prices relative to other crops, such
as maize, acreage gains possible, but limited by
rotational needs?
Canada 3.0 + 2%
Further modest increase in plantings likely, to new
record, but less pronounced than in 2017/18.
China 8.4 + 4%
Tied to continued aim of reducing grains (maize)
plantings in marginal areas, soy sowings to expand.
Ukraine 1.9 - 5%
Reports of reduced margins could discourage some
farmers from boosting area.
South America 59.4 + 3%
Tentative, and linked to northern hemisphere crop
outcomes. Anticipate gains in Brazil, some recovery
in Argentina on rotational needs and lower export
taxes.
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IGC 2011
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igc.int
0
3
6
9
12
15
18
06/07 08/09 10/11 12/13 14/15 16/17 18/19(proj.)
Heavy availabilities, especially in the USm t
Argentina
Brazil
World soyabean supply & demand situation and
prospects - US stocks at 11-year high in 2017/18
US
➢ 2017/18 world outturn smaller, but second largest
of all time, but to recover in 2018/19?
➢ Total use seen at a new peak, rising by 3% y/y.
➢ Trade to advance to a record of 153m t on growing
Asian needs.
➢ Stocks to tighten in the major exporters in 17/18
and 18/19 – we see a reverse of the situation from
recent past. US stocks now expected to be ample,
but heavy drawdowns likely in South America.
m t
15/16 16/17 17/18 18/19 y/y
(est.) (f'cast) (proj.) change
Opening stocks 34 33 47 42 - 10.6%
Production 315 350 341 354 + 3.6%
Total supply 350 383 389 396 + 1.9%
Total use 317 335 347 358 + 3.1%
of which: Crush 280 295 306 316 + 3.2%
Closing stocks 33 47 42 39 - 8.8%
Major exportersa)
16 23 19 16 - 11.5%
Trade (Oct/Sep) 134 147 153 159 + 4.0%
a) Argentina, Brazil and US
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IGC 2011
www.igc.int
igc.intAs with soy in Argentina, difficult weather impacts
maize crops in the southern hemisphere
0
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40
60
80
100
120
13/14 14/15 15/16 16/17(est.)
17/18(f'cast)
m t
5-year
ave.
Brazil
0
10
20
30
40
50
60
13/14 14/15 15/16 16/17(est.)
17/18(f'cast)
m t Argentina
0
3
6
9
12
15
18
13/14 14/15 15/16 16/17(est.)
17/18(f'cast)
m t South Africa
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IGC 2011
www.igc.int
igc.int2018/19 world maize area projected to be flat
150
155
160
165
170
175
180
185
190
195
10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19
m haWorld harvested area
(est.) (f’cast) (proj.)
Key changesm ha y/y
Ukraine 4.3 -3%
Poor results in 2017/18 and reduced profitability
expected to discourage some farmers.
USA 33.2 -1%
Amid comparatively better soyabean returns,
maize area could drop y/y. However, any decline
likely to be capped by rotation requirements.
China 35.2 -1%
Despite strong local prices, policy changes to lead to
a third consecutive decline in area.?
Russia 2.9 +5%
Area expected to continue its upward trend.
Abandonment projected to be lower y/y.
Average
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IGC 2011
www.igc.int
igc.int
0
25
50
75
100
125
150
175
200
225
06/07 08/09 10/11 12/13 14/15 16/17f'cast
18/19(proj.)
A tighter situation anticipatedm t
Ukraine
China
Global maize supplies set to tighten in 2018/19,
led by falls in China and major exporters
Argentina
US
Brazil
m t
15/16 16/17 17/18 18/19 y/y
(est.) (f'cast) (proj.) change
Opening stocks 284 295 337 308 - 8.7%
Production 984 1,088 1,045 1,052 + 0.7%
Total supply 1,268 1,382 1,382 1,360 - 1.6%
Total use 974 1,046 1,074 1,094 + 1.9%
of which: Food 113 119 121 122 + 1.0%
Feed 561 604 621 632 + 1.6%
Industrial 267 280 295 303 + 2.5%
Closing stocks 295 337 308 265 - 13.7%
Major exportersa)
59 81 73 58 - 21.0%
Trade (Jul/Jun) 136 138 149 150 + 0.7%
a) Argentina, Brazil, Ukraine, USA
➢ Production to edge lower, with tentative rebounds
in South America contrasting with a fall in the US.
➢ Feed and industrial needs to drive consumption
higher.
➢ Further tightening of stocks likely in 2018/19, on
drawdowns in China and major exporters.
➢ Trade seen little changed y/y, at a peak of 150m t.
Feed demand to underpin large imports across a
number of regions.
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IGC 2011
www.igc.int
igc.intA third consecutive drop in
world wheat area is projected in 2018/19
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205
210
215
220
225
10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19
m ha World harvested area
(est.) (f’cast) (proj.)
Average
Key changesm ha y/y
N & C America 25.5 +2%
Increased spring wheat area forecast in Canada
and the USA.
Europe 26.7 -1%
Sowings in parts of Northern Europe were limited
by overly wet soils during planting.
CIS 49.6 -1%
Not all planned winter grain area was sown in
Russia. Planting weather in Ukraine was better
compared to the previous two years.
North Africa 6.8 -6%
Earlier dryness in Morocco expected to have
restricted seedings.
Far East Asia 67.5 -2%
Despite high support prices, sowings in India seen
4% lower y/y, with some area switched into pulses.
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IGC 2011
www.igc.int
igc.int
0
10
20
30
40
50
60
70
80
90
100
110
120
130
06/07 08/09 10/11 12/13 14/15 16/17(est.)
18/19(proj.)
Major exporters’ stocks tighterm t
China
Major exporters
m t
15/16 16/17 17/18 18/19 y/y
(est.) (f'cast) (proj.) change
Opening stocks 207 224 240 256 + 6.7%
Production 737 754 758 741 - 2.2%
Total supply 945 978 998 997 - 0.1%
Total use 720 738 742 744 + 0.3%
of which:Food 491 499 509 517 + 1.6%
Feed 142 151 146 142 - 2.7%
Industrial 22 22 23 23 + 0.0%
Closing stocks 224 240 256 253 - 1.2%
major exportersa)
66 75 78 66 - 15.4%
Trade (Jul/Jun) 166 176 174 179 + 3.0%
➢ Production seen 2% lower but, due to high carry-
ins, supplies close to peak levels.
➢ Food demand to underpin consumption growth
➢ Leaving aside nominal inventories in China, major
exporters’ stocks set to tighten
➢ Global trade likely to advance to a new high of
179m t, with bigger purchases by Iran and India
notable.
World wheat supply & demand
situation and prospects
a) Argentina, Australia, Canada, EU Kazakhstan, Russia, Ukraine, US
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IGC 2011
www.igc.int
igc.intWheat trade potentially at a new high in 2018/19,
with share of Black Sea exporters staying elevated
0
20
40
60
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120
140
160
180
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1
11/1
2
12/1
3
13/1
4
14/1
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15/1
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16/1
7
17/1
8
18/1
9
m t
Russia
Kazakhstan
Argentina
Ukraine
Australia
Canada
EU
USA
(est.) (f’cast) (proj.)
0
20
40
60
80
100
120
140
160
180
200
10/1
1
11/1
2
12/1
3
13/1
4
14/1
5
15/1
6
16/1
7
17/1
8
18/1
9
m t
Asia Africa Others
(est.) (f’cast) (proj.)
Asia & Africa at about 80% of trade Black Sea volumes close to record in 18/19?
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IGC 2011
www.igc.int
igc.int
8
10
12
14
16
18
2008 2010 2012 2014 2016 2018(f'cast)
Average
7
9
11
13
15
17
2008 2010 2012 2014 2016 2018(f'cast)
Far East Asia
m t (milled basis)
7
9
11
13
15
17
2008 2010 2012 2014 2016 2018(f'cast)
Other importers
Average
m t (milled basis)
Sub-Saharan Africa
m t (milled basis)
Average
Rice trade to stay high in 2018, at close to 46m t
– compares to 41m five-year average
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IGC 2011
www.igc.int
igc.intIndia to remain the biggest exporter in 2018, taking
market share from Thailand?
0
2
4
6
8
10
12
14
2008 2010 2012 2014 2016 2018(f'cast)
Thailand
India
m t (milled basis)
0
2
4
6
8
10
2008 2010 2012 2014 2016 2018(f'cast)
m t (milled basis)
Vietnam
0.0
0.5
1.0
1.5
2.0
2008 2010 2012 2014 2016 2018(f'cast)
m t (milled basis)
ChinaWill this trend
be sustained?
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IGC 2011
www.igc.int
igc.intWorld rice stocks kept high by accumulation in
China...but those available to world market tighten
0
5
10
15
20
25
30
35
40
45
50
07/08 09/10 11/12 13/14 15/16 17/18(f'cast)
Thailand
India
m t (milled basis)
Others *
* Pakistan, USA, Vietnam
…Stocks in Thailand to fall to a decade low?
0
20
40
60
80
07/08 09/10 11/12 13/14 15/16 17/18(f'cast)
Major exporters
China
m t (milled basis)
World stocks seen steady y/y…
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IGC 2011
www.igc.int
igc.int