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OVERVIEW

There are few changes this month for 2017/18 global corn supply and use. Global corn production is largely unchanged as gains for the European Union, India, and South Africa virtually offset reductions for Argentina, Brazil, and Russia. Global corn trade is marginally higher, driven by larger imports for Canada and China. India’s imports are forecast lower with prospects for a record rabi crop. U.S. corn exports are forecast higher, reflecting competitive prices and continued strong foreign demand, while exports for Argentina and Brazil are cut. The U.S. season-average farm price is raised $0.05 to $3.35 per bushel at the midpoint.

PRICES

Global corn prices have continued their strong upward march since the previous WASDE. Argentine bids soared $19/ton to $186 amid continued weather concerns in Argentina. Brazil bids are seasonally unavailable. Black Sea bids were up $18/ton to $193 on strong overseas demand. U.S. quotes also rose $18/ton to $183 mainly due to Mississippi waterway disruptions along with robust foreign demand.

Barley Prices Fail to Curb China’s Demand

China’s resurgent demand and lower global barley production are driving prices to their highest point in nearly 3 years. Demand has particularly surged in the Chinese province of Guangdong (the origin for half of China’s imports) where imported barley is used as a profitable energy component relative to other feedstuffs. Robust malting demand in interior provinces has also contributed to resilient imports. In addition to China, Saudi Arabia’s relatively inelastic demand and the lowest projected global stocks in more than 30 years are also driving prices upward. Saudi Arabia, typically the world’s largest barley importer, is expected to continue its strong presence by accounting for nearly a third of world imports this year.

China’s imports began to surge at the start of 2017/18 with low global prices, as a record Australian barley crop drove prices downward. The combination of Australia’s record 2016/17 crop and a free trade agreement with China (effective December 2015) made the feedstuff a lucrative import. Since that period, however, Western Australia’s March FOB prices for barley have surged almost $80/ton (while wheat climbed $50/ton). Ever so, China’s imports are raised this month as its demand has shown little signs of waning but are still forecast lower than last year amid tighter global supplies.

As a result of robust global demand and lower world production, ending stocks in all major exporting countries are projected down by year’s end. Current projections have global stocks down more than a third compared to 2 years ago. China’s resurging presence has greatly influenced barley prices since last year, even as they fail to deter its robust imports

FeedDinner 2018