Grains and oilseeds markets have been mixed over the last month. While the IGC Grains and Oilseeds Index is down by 2% month on- month (m/m), this masks divergent underlying trends. The soyabean and rice sub-Indices have declined by 7% and 1%, respectively, offsetting gains in maize (up 7%), and a modest rise in wheat (up 1%).

The grains supply and demand forecasts for 2012/13 have been revised slightly as harvests have been completed in some countries, but the outlook is largely unchanged. Total grains production is expected to fall by 5% year-on-year (y/y), and despite a contraction in consumption for the first time in 14 years, stocks are set to fall by 45m t to 324m.

In the wheat market, speculation about dwindling Black Sea supplies and the prospect of export curbs in Ukraine have dominated, yet flows from the region have defied expectations. This has limited price upside from weather-related worries for 2012/13 crops currently being harvested in the southern hemisphere, and conditions for the recently planted winter wheat in the north. Given high prices, the total wheat harvested area for 2013/14 is set to increase by 2%, although conditions for parts of the US crop are a concern.

Wheat

• Wheat prices have stayed firm, with crop concerns offset by higher than anticipated exports from the Black Sea region.
• Following slight revisions for Australia and the EU, the forecast for world wheat production is trimmed by 1m t, to 654m, a 6% y/y decline.
• While global consumption is also expected to fall 2% y/y, stocks are still set to contract by 23m t y/y.
• Stronger than anticipated early season imports by China and Iran contribute to a 2m t increase in the world trade forecast, but it is still sharply lower than last season

Table below shows current world estimates from IGC for wheat.

Read the full IGC report here

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