Coarse Grains. World Markets and Trade. March 2017 – USDA March 9, 2017
Coarse Grain and Wheat Exporter Stocks Expand While Rice Declines
Ending stocks for major exporters of coarse grains are expected to swell even further this month. In Argentina and Brazil, corn production is forecast to reach record levels with favorable crop prospects. For barley, Australia’s crop is projected to soar on account of record yields. As a result, barley ending stocks in Australia are expected to triple from the previous year. In the United States, corn ending stocks are forecast to increase about 35 percent (15 million tons) from a year ago. Hence, production from major exporters will more than satisfy global demand. Notably, a sharp seasonal drop in Argentine corn prices this month signals a 0 competitive market with abundant supplies. Major coarse grains exporters include Argentina, Australia, Brazil, European Union, Russia, Ukraine, and the United States.
Similarly, exporter-held wheat stocks are forecast to be the largest in 6 years. These are available to the world market and therefore have a direct impact on prices. U.S. stocks, representing the biggest piece of that total, are forecast to rise by 16 percent from last year. Projected stocks in Russia are nearly double and Australian stocks are up 30 percent following record crops in both countries. All of these more than offset the EU decline amid a much smaller crop. Despite record-high global consumption, production is still larger, resulting in higher stocks and lower prices.
In contrast to wheat and coarse grains, major rice exporters have seen a decrease in stocks recently. The Thai government is actively auctioning off old rice stocks, with levels declining to around half of what they were 5 years ago. Indian stocks have decreased by nearly a third over that same time, with robust exports. Stocks in Vietnam have also declined, though in Pakistan and United States they have grown. Despite much smaller stocks in India and Thailand, top exporters, prices have remained relatively stable over the past year because of weak import demand. A rise in China’s stocks more than offsets the decline in top exporters, leading to the highest global stocks since 2001/02.
The United States, a key player in corn, wheat, and rice trade, is forecast to have the largest stocks in nearly 30 years for each of these commodities.
Record coarse grains production for 2016/17 is raised from last month. Higher corn production forecast for Argentina, Brazil, India, and South Africa, coupled with Australia’s record setting barley crop, further augment global supplies. Demand from Iran and Vietnam support higher global corn trade, while demand from Saudi Arabia and China boosts barley. The U.S. seasonaverage farm price for corn is unchanged at $3.40 per bushel.
Corn prices in major exporting countries have converged amid increased competition and record supplies. In Argentina, prospects for a bumper crop and a change in the delivery month reflected seasonally lower FOB quotes, dropping sharply to around $171/ton. Despite prices trending downward for a brief period, U.S. quotes edged higher this month to $170, while Black Sea prices were unchanged at $171. Brazilian prices continued to be seasonally unavailable.
TRADE CHANGES IN 2016/17
- Argentine corn is up 500,000 tons to 26.0 million as larger supplies boost competitiveness.
- Australian barley is raised 1.1 million tons to a record 8.1 million on record production and continued robust demand from China.
- Brazilian corn is up 500,000 tons to 22.5 million on greater crop prospects (second crop) and expected stronger demand, particularly from Iran and Vietnam.
- Russian barley is cut 300,000 tons to 3.6 million on the tepid pace of shipments.
- South African corn is boosted 500,000 tons to 1.8 million on prospects for greater exportable supplies. Imports are slashed 700,000 tons to 1.8 million.
- Brazilian corn is up 400,000 tons to 2.2 million reflecting stronger shipments from Argentina and Paraguay as supplies dwindle in advance of harvest.
- Chinese barley is raised 400,000 tons to 5.4 million reflecting larger shipments, mainly from Australia.
- Iranian corn is boosted 1.0 million tons to 8.5 million on trade to date.
- Saudi Arabian barley is up 500,000 tons to 11.0 million reflecting projected strong demand for competitively-priced barley from exporters such as Australia.
- Vietnamese corn is raised 500,000 tons to 8.5 million on larger shipments from Argentina.