Global 2017/18 grains output forecast lowered on poor maize prospects in Argentina, Brazil and South Africa – IGC

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The forecast for total grains (wheat and coarse grains) production in 2017/18 is 6m tonnes lower month-on-month (m/m) at 2,094m, a decline of 2% year-on-year (y/y) mainly because of poorer maize output prospects in Argentina, Brazil and South Africa, the International Grains Council (IGC) said.

With consumption unchanged and taking account of smaller opening inventories, the figure for carryover stocks is cut by 7m t, to 610m, it said in its latest monthly report.

The trade number is edged upward m/m, to an all-time high of 361m t (352m). In 2018/19, reductions in both area and average yields may see the global wheat harvest recede, and stocks are predicted to come down for the first time since 2012/13.

Little change in maize area is envisaged, but with potentially better results in South America, world production is seen a little higher y/y, the IGC said, adding that favourable market conditions might help to stimulate the first rise in barley output in three seasons.

The IGC cut the outlook for global soyabean production in 2017/18 by 2m t m/m, to 347m, down by 1% y/y, including a reduced figure for Argentina.

“However, due to an increased estimate for carry-ins, supplies are forecast higher m/m and, with uptake reduced, carryovers are raised to 44.1m t, slightly lower y/y,” it said.

  • With total grains production in 2017/18 a little lower y/y and amid strong demand, stocks are seen falling for the first time in five years.
  • A new high is envisaged for grains trade, underpinned by sustained expansion for maize.
  • Initial projections for 2018/19 suggest tighter supply and demand outlooks for wheat and maize.
  • World soyabean stocks are likely to contract slightly in 2017/18, but major exporters’ inventories should hold up as heavy accumulation in the USA offsets falls in South America.
  • Trade in rice in 2018 may not match last year’s high, but would still be more than 3m t above the prior five-year average.

Trade is little changed m/m, at a peak of 153m t, up by 4% y/y. The world harvested area is tentatively projected at a new high in 2018/19, including gains in Brazil and the USA, the report added.

The IGC maintained the forecast for rice output in 2017/18 at 484m t, marginally below last year’s high. With opening stocks cut, coupled with an upgrade for use, carryovers are lowered to 122m t, it said.

Major exporters’ reserves are revised down to 23.5m t, a contraction of one-fifth y/y. Owing to expected firm demand from buyers in Asia and Africa, the 2018 trade forecast is lifted to 44.8m t, only fractionally below the 2017 peak. In 2018/19, marginal area growth is anticipated, led by key exporters, namely India, Thailand and the USA.

With the exception of rice, global export prices posted solid gains in February, boosting the IGC Grains and Oilseeds Index (GOI) by 5% since last month’s GMR.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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