Near-Record Grain Supplies Support Growing Global Consumption

Global corn production in 2014/15 is expected to be unchanged from last year’s record, and above global consumption for the fourth year in a row. Global corn consumption is expected to climb at a weaker rate than last year with slower growth in feed demand. The resulting swell in global stocks is attributable entirely to the United States, where stocks are forecast to surge to the highest level in 9 years. Global trade is projected down marginally from last year’s record.

Wheat production is forecast down from last year’s record, but exportable supplies are still ample. Global consumption is slightly lower as corn continues to displace wheat in feed rations in some countries. Global trade is below last year’s record. The United States is projected to lose its place to the EU as the world’s largest exporter. Global ending stocks are up marginally.

Although rice consumption and production are forecast at record levels, consumption is expected to surpass production for the first time in 8 years, causing a small drawdown in global stocks. Trade is also projected at a record level, largely driven by growing demand in China and Nigeria. Ample exportable supplies in Thailand and India are likely to keep prices soft.

WHEAT: WORLD MARKETS AND TRADE

HIGHLIGHTS FOR 2014/15

Global wheat production is projected to reach 697 million tons, down from the 2013/14 record. Black Sea regional production is down, particularly Ukraine, but exportable supplies are still ample. In the Middle East, Syria and Turkey’s wheat crops are reduced because of drought. In North Africa, Morocco’s production is down significantly from last year, but Algeria, Tunisia, and Egypt all have larger crops. South America is projected to recover, boosting supplies in the region. The U.S. crop is projected lower than last year due to adverse weather in Hard Red Winter wheat growing areas. Global consumption is expected to decline marginally as corn continues to displace wheat in feed rations. Global ending stocks are forecast to rise marginally to 187 million tons. Exporter ending stocks, on the other hand, are nearly unchanged; a decline in the United States and Canada is mostly offset by gains in the EU and Russia.

Selected Importers

Global trade is projected down from last year’s record, but still sizable at 152 million tons. China has abundant domestic feedgrain supplies and imported feed-quality wheat prices have risen sharply. Brazil is lower because of a projected record crop. Most North African countries are lower due to a combination of recent large purchases and favorable crop prospects. The European Union opened a special duty-free Tariff-Rate Quota for Ukraine, which is expected to support a higher import volume. Mexico has a larger crop and imports are projected lower. The United States is forecast lower as a result of a smaller crop in Canada. Turkey is forecast at a record because production is expected to be the lowest in 20 years and the Government already announced that it would permit 2.5 million tons of duty-free imports over a 2-year period.

• Algeria is reduced 700,000 tons to 6.0 million.

• Brazil is down 1.0 million tons to 6.5 million.

• China plunges 4.0 million tons to 3.0 million.

• EU is boosted 1.7 million tons to 5.5 million.

• Iran is slashed 2.0 million tons to 4.0 million.

• Mexico is down 800,000 tons to 3.7 million.

• Morocco is reduced 300,000 tons to 3.0 million.

• Tunisia is lowered 350,000 tons to 1.5 million.

• Turkey jumps 1.3 million tons to a record 5.5 million.

• United States is cut 800,000 tons to 4.1 million.

Selected Exporters

The European Union is down slightly from last year’s record as more wheat is expected to be fed domestically. Canada is only marginally lower because it will continue to export its surplus from the record 2013/14 crop. Australia is up based on strong demand projected from the Middle East. The United States is projected lower as a result of a smaller crop and rebounding supplies in South America. Kazakhstan, Russia, and Ukraine’s exportable supplies are projected to be little changed.

• Argentina jumps 4.7 million tons to 6.5 million.

• Australia is raised 1.0 million tons to 19.0 million.

• Canada is down 500,000 tons to 21.0 million.

• EU is cut 2.5 million tons to 27.5 million.

• Kazakhstan is lowered 1.0 million tons to 7.0 million.

• Russia is up 800,000 tons to 19.0 million.

• Ukraine is down 1.0 million tons to 8.5 million.

• The United States is 5.5 million tons lower at 26.0 million.

PRICES:

Domestic: Wheat prices for most classes rose in the last month. Hard Red Winter (HRW) skyrocketed $35 to $365/ton based on reports of crop damage from prolonged drought. HRW is now more expensive than Hard Red Spring (HRS), which eased $2 to $355/MT. Soft White wheat (SWW) prices are up $10 to $299/ton. Meanwhile, Soft Red Winter (SRW) is $15 higher at $302/MT. Season-average farm prices in 2014/15 are projected in the range of $6.65 to $7.95/bushel, higher than the estimated $6.85/bushel in 2013/14 because of tightening supplies.

2013/14 OVERVIEW

Global trade is up slightly and forecast at a record.

TRADE CHANGES IN 2013/14

Selected Importers

• Morocco is boosted 1.0 million tons to 3.3 million on larger-than-expected April shipments.

• The United States is up 200,000 tons to 4.9 million on the strong pace of recent shipments from Canada.

Selected Exporters

• Canada is down 500,000 tons to 21.5 million on the slower-than-expected pace of shipments.

• EU is up 1.0 million to 30.0 million on strong late-season sales and licenses.

• Kazakhstan is raised 500,000 tons to 8.0 million on strong exports to neighboring countries.

• Russia jumps 700,000 tons to 18.2 million on increased pace of exports facilitated by warmer weather.

RICE: WORLD MARKETS AND TRADE

OVERVIEW OF 2014/15

Global production is expected to surpass 480 million tons, a record, but consumption is projected slightly higher, causing stocks to fall for the first time in 8 years. Trade is forecast at a record 41.3 million tons as Thailand and India meet rising demand with continued sales of their massive stocks. In the United States, expanded area in the South is expected to boost supplies, pushing up exports and stocks.

In 2015, trade is expected to reach a record for the fourth time in 5 years. In 1990, it would have been difficult to believe that the quantity of rice traded would more than triple, and the percent of global production traded would more than double in a quarter century. Despite this growth and numerous policy, weather, and macro-economic shocks throughout the period, there has been surprisingly little movement in which countries supply the rice. Thailand, Vietnam, and the United States have been among the top five exporters every year, while either India or Pakistan was occasionally supplanted by China. There has been more variability among importers, with 15 countries in the top five at some point, but no country making it all 25 years. The most frequent were Iran, European Union, Nigeria, and the Philippines. In 2015, China and Nigeria are projected to be the top buyers.

Selected Exporters

• Thailand and India are expected to switch places, with Thai exports rising 1.0 million tons to 10.0 million and Indian shipments falling the same amount to 9.0 million. Thailand is forecast to regain its position as top exporter, surpassing India for the first time in 4 years.

• Vietnam is up 200,000 tons to 6.7 million on continued demand from China and the Philippines.

• Pakistan is steady at 3.9 million tons.

• United States is forecast marginally higher at 3.3 million tons on larger supplies.

Selected Importers

• China is forecast up 500,000 tons to a record 3.7 million as lower prices in neighboring countries continue to make imports attractive.

• Nigeria is expected to rise 500,000 tons to a record 3.5 million as production is unable to meet growing demand.

• Philippines is forecast down 200,000 tons to a still robust 1.8 million as the government continues to boost reserves in spite of the larger crop.

OVERVIEW OF 2013/14

Global production is up marginally from last month while trade is down slightly. Both are still records. U.S. prices are down, mostly due to a drop in medium grain.

TRADE CHANGES

Selected Importers

• Cote d’Ivoire is cut 360,000 tons in 2013 (to 940,000) and 100,000 tons in 2014 (to 1.2 million) on trade data. By contrast, Ghana is raised 125,000 tons in 2013 to a record 725,000 tons.

• Nepal is down 100,000 tons to 250,000 in 2014 on a larger crop.

• Philippines is down 100,000 tons to 1.0 million in 2013 as shipments from Vietnam slipped into 2014.

• Syria is cut 130,000 tons to 120,000 in 2013 as the unrest limited trade.

• Thailand is halved in 2014 to 300,000 tons as the suspension of the paddy pledging scheme makes border trade less lucrative.

COARSE GRAINS: WORLD MARKETS AND TRADE

OVERVIEW FOR 2014/15

Global coarse grain production is forecast to fall slightly as crops in the European Union, Canada, and Ukraine are all forecast down. These declines more than offset record production in the United States and China. With global coarse grain consumption forecast to expand by just 16 million tons (almost entirely corn for feed), stocks will grow slightly—mainly as larger stocks in the United States offset lower stocks elsewhere. Coarse grain trade is nearly unchanged.

Global corn production is forecast at a record 979 million tons, nearly unchanged from last year. Larger projected crops in China, Argentina, and Sub-Saharan Africa more than offset smaller production in Ukraine and India. U.S. production is about unchanged from last year’s record. Although U.S. consumption is down, global consumption is projected to rise 17 million tons to a record 966 million, driven largely by China. Corn used for ethanol in the United States is unchanged from this year’s record and up slightly from the high 4 years ago. Global ending stocks are forecast up, as U.S. stocks are forecast to surge 50 percent to a 9-year high of 44 million tons. World corn imports are expected to be slightly weaker, with less demand coming from China and Mexico.

World barley production is forecast to drop sharply to more normal levels after last year’s huge harvest. The trade is forecast unchanged.

Global sorghum production and trade are forecast slightly higher. Robust demand from China is expected to continue as imported sorghum is lower priced than domestic corn and there are fewer import restrictions on sorghum. However, future Chinese demand remains highly uncertain as imports are dependent on overall feed grain demand, domestic production, and internal policies.

HIGHLIGHTS FOR 2014/15

Selected Exporters

• Despite a record crop, U.S. corn is forecast at 43.0 million tons, down 5.0 million, due to continued strong competition from South America. The season-average farm price is down to a range of $3.85 to $4.55/bushel, with the mid-point 45 cents lower than the current season estimate.

• Argentine corn is up sharply (7.0 million tons) to 17.0 million. A late harvest in 2014 is expected to result in a larger proportion of old-crop being shipped after October 1 than in a typical year.

• Brazilian corn is raised 500,000 tons to 21.5 million because of abundant supplies and another expected bumper harvest.

• South African corn is 300,000 tons higher at 2.3 million because of large exportable supplies from the current harvest.

• Ukrainian corn is forecast at 16.0 million tons, 3.0 million lower than last year, based on an expected smaller crop.

• Argentine barley is down 500,000 tons to 2.5 million on sharply lower crop prospects.

• Australia is forecast to tumble from its position as the world’s largest barley exporter, with shipments falling by 1.0 million tons to 4.7 million on sharply lower exportable supplies.

• Canadian barley is expected to drop 600,000 tons to 1.2 million on reduced crop prospects.

• EU is forecast to be the world’s largest barley exporter with shipments up 1.4 million tons to 5.5 million on reduced competition.

• Russian barley is boosted sharply by 1.2 million tons to 3.5 million on greater exportable supplies and diminished competition.

• Ukrainian barley is reduced 300,000 tons to 2.0 million on smaller exportable supplies and less demand from Saudi Arabia.

• Argentine sorghum is boosted 800,000 tons to 2.0 million on larger exportable supplies and strong demand from China.

• U.S. sorghum is forecast down 700,000 tons to 4.0 million on a smaller crop and strong Argentine competition.

Selected Importers

• Chinese corn is projected 1.5 million tons lower at 3.0 million because of high domestic stocks, government incentives to purchase domestically, and uncertainty regarding imports of new varieties of genetically modified corn.

• Egyptian corn is projected at 6.5 million tons, unchanged from last year because of large carryin stocks, despite expected growth in demand for feed from the poultry sector.

• EU corn is forecast unchanged from last year at a robust 13.0 million tons. Abundant global supplies of corn and strong forecast EU wheat exports are expected to maintain corn as a competitively priced feed ingredient.

• Japanese corn is forecast up 500,000 tons to 16.0 million based on less usage of feedquality wheat and sorghum.

• Mexican corn is down 600,000 tons to 10.9 million on a larger crop.

• South Korean corn is projected unchanged at 9.5 million tons as growth in feed grain demand for poultry is offset by sluggish demand from the pork sector.

• Chinese sorghum is raised 300,000 tons to 3.7 million on strong feed demand; however, barley is cut 300,000 tons to 3.0 million with less demand for feed barley.

• Japanese barley is expected to remain steady at 1.3 million tons.

• Saudi barley is forecast to drop 500,000 tons to a more typical level of 7.5 million tons as large carryin stocks sustain strong growth in feed use.

OVERVIEW FOR 2013/14

Global corn production is up but consumption is down slightly. Trade is slightly higher, as stronger demand from EU, Iran, and Chile more than offsets weaker demand from China. U.S. exports are boosted sharply, more than replacing smaller exports from Argentina (and minor exporters). The season-average farm price is raised slightly.

PRICES:

U.S. corn quotes have moved up nearly $7 to $238/ton since the release of the April WASDE report on weather-delayed plantings and strong exports. Argentine prices are also up similarly but continue at only a small discount to U.S. corn. Ukrainian prices are maintaining a substantial premium to U.S., fueled by uncertainty over the present political situation and slow farmer selling. Brazilian corn remains unquoted for nearby positions.

TRADE CHANGES IN 2013/14

Selected Exporters

• U.S. corn is up sharply by 3.0 million tons to 48.0 million because of continued brisk shipments and large outstanding export sales.

• Argentine corn is cut 2.0 million tons to 10.0 million on slow sales and shipments, and strong competition from the United States and Brazil.

• Canadian corn is cut 300,000 tons to 1.2 million based on the pace of shipments; however, barley is boosted 300,000 tons to 1.8 million as logistics improve.

• Russian corn is up 300,000 tons to 3.5 million on the strong pace of shipments.

• Thai corn is doubled to 1.0 million tons on the strong pace of shipments especially to the Philippines. (Philippine corn imports are doubled to a record 600,000 tons.)

• EU barley is lowered 400,000 tons to 4.1 million as old-crop shipments begin to slow.

• Argentine sorghum is cut 300,000 tons to 1.2 million on a sluggish pace of exports.

Selected Importers

• Chilean corn is up 400,000 tons to 1.5 million because of a smaller crop and strong purchases.

• Chinese corn is cut 500,000 tons to 4.5 million based on the continued cancellation of U.S. sales.

• EU corn is boosted 1.0 million tons to 13.0 million based on the continued strong pace of import licenses (and higher wheat exports).

• Iranian corn is raised 500,000 tons to 5.0 million on the pace of shipments to date (barley is halved to 500,000 tons).

• Turkish corn is boosted 350,000 tons to 1.0 million based on strong recent shipments and reports of tight new-crop supplies.

• Chinese barley is raised 500,000 tons to a record 3.3 million because of reported purchases and strong shipments from Australia.

• Chilean and Colombian sorghum are down a combined 500,000 tons to 150,000 and 250,000, respectively, on sluggish exports from Argentina