April’s forecast of International Grains Council (IGC) on world’s crop market situation, published on April 25, 2014, is, in general, quite bullish; and promises to increase the tensions on the world grain market during 2014/15 marketing year.
In particular, in the 2014/15 season, forecast of global gross production of grain was reduced by as much as 14 million tons, down to 1.935 billion tons, which will lead, as it might be expected, to some noticeable tension growth on world’s commodity market.
The forecasts were reduced, primarily, due to reduced expectations from the national corn yields in the U.S. by as much as 10 million tons. Now the harvest expected does not exceed 350 million tons. Such decrease is due, in part, to unfavorable for sowings agro meteorological conditions that were prevailing during last week over the Corn Belt area; this resulted in alarming delays right at the beginning of the sowing season and, naturally may have negative impact on the prospects for the future harvest.
Furthermore, the record high, as we remember, world’s corn yield in the previous year led to an obvious decline in prices for grain, making it less attractive for farmers compared to alternative crops. As a result, a considerable number of American farmers currently find it necessary to shift from growing corn to soybean production.
Accordingly, sowing areas that previously were under grain are transferred under oilseeds. This fact, without a doubt, has also been considered by the Council experts. In IGC’s latest report forecast for global corn production in 2014/2015MY was reduced by 11.2 million tons compared to the previous forecast, to 950.2 million tons. This is somewhat smaller than the total world production of corn during 2013/14 season, expected at the level of 965.2 million tones..
In the coming season forecast of grain harvest in Ukraine was reduced by 1.2 million tons, down to 26.8 million tons, and its export- reduced by 1 million tons, to 18 million tons. Since the end of March world prices for the queen of fields increased by 1%, driven, primarily, by alarmingly prolonged corn sowing campaign in the U.S. and, high-demand observed on the world commodity markets.
It is expected that world’s total corn production during 2014/15 marketing year will decrease in comparison with the previous season by 2%, yet its ending stock, however, will still increase by 10% compared with the previous year. Forecasted wheat production in 2014/15 MY was reduced for the U.S. by 1 million tons, to 59 million tons. Among experts, however, there is still a lot of worries associated primarily with the prospects of winter crops in the U.S., that were significantly affected (and in many regions of intensive agriculture- continues to suffer) by the drought over the Great Plains area. Nevertheless, grain crop conditions currently remain mostly good, and forecasts regarding the future of the U.S. wheat harvest- favorable.
Despite some price surge in the middle of the month, associated with somewhat anxious mood on the market, at the end of the month prices for U.S. wheat are down by 2% compared to the last month prices. Forecast for world wheat production in 2014/15 marketing year, however, as experts expect, will decline by 2% compared to the last season’s rich harvest, and season ending stocks of wheat will decrease, as experts predict, by 4 million tons.
Taking that, world’s total demand for imported wheat will increase slightly, even in spite of reduction from China, need of which to import wheat in the coming season will be lower than in the current season, and will amount to only 3 million tons, against 8 million tons in 2013/14 MY. The expected volume of world wheat trade in 2014/15 MY increased by 0.6 million tons, to 144 million tons. In particular, the forecast was increased for wheat exports from the United States- by 0.3 million tons, to 28.8 million tons and from Ukraine- 0.4 million tons to 8 million tons, as well as from Russia- 0..4 million tons, to 15.7 million tons.
Expected wheat export from the European Union increased by 0.3 million tons, to 23.4 million tons. Canada’s export forecast was raised by 0.2 million tons, to 22.3 million. In 2014/15 MY the Council experts projected global ending stock of wheat to decline by 3 million tons, down to 186.6 million tons; 3.6 million tons less than predicted by the results of 2013/14 MY. The changes observed in the IGC’s April forecast for Ukraine allow ascertaining some slight weakening of its position in the global corn market, where it was one of the three global leaders; and, strengthening its position on the wheat market. In particular, the forecasted share of the Ukrainian wheat exports in world’s overall export in 2014/15 season grew from 5.29% to 5.55%.
The global share of Ukrainian corn export has decreased from 17.27% to 16.02%. As for the forecasts of the Council experts, related to the world’s total soybean harvest, they continue to document record high levels of trade and oilseed production. This month’s forecasts of soybean harvest in Brazil were increased by 400 thousand tons, to 86 million tons- the country is in full swing of harvesting oilseeds and its interim results allow building quite optimistic forecasts. At the same time, in Argentina forecasts of soybean harvest were reduced by 500 thousand tons, to 53.5 million tons, due to unfavorable agro-meteorological conditions prevailing in the Argentine pampas. However, Brazilian, as well as Argentinian yields- both will be of historical record. In addition, experts expect no less than 6% increase of total acreage under soybeans in the United States, because of their much larger, in comparison with corn, price attractiveness to American farmers.