The global grain market is in an unstable period. One moment the quotations show a sharp drop and the next moment they are on the way up again. The WASDE report of the United States Department of Agriculture (USDA) also has consequences for the quotations. What are the expectations for the global grain market?
According to the USDA, global production of coarse grains (such as grain maize and sorghum) will amount to 2020 billion tons in the 2021/1,44 season. That is a decrease of 11,1 million tons compared to last month. This decline is caused by lower production in the European Union, Ukraine, Russia and Moldova. For Ukraine, the grain maize harvest was adjusted downwards by 8 million tons last month to 37,7 million tons. This would put the harvest at the lowest level since 2012/2013. The higher production levels in South Africa and Laos cannot compensate for the significant reductions in these countries. As a result, global final stocks of grain corn will decrease by 9 million tons this month to 291,4 million.
Trade is marked by higher export figures for the United States, Turkey and South Africa, although this is offset by lower export figures in Ukraine and Russia. China in particular is purchasing more grain maize. For example, shipment data from exporting countries show that China will exceed the tariff quota of 7,2 million tons this season. The European Union also benefits from this, because significantly more barley went to China in the past period. Total Chinese imports of coarse grains are expected to reach a record level of 26 million tonnes, just above the previous record of 25,7 million.
The USDA expects lower production, higher exports and smaller ending stocks for the United States alone. Grain maize production is expected to amount to more than 368 million tons, a decrease of 5,4 million tons compared to last month. Export expectations have been increased by 8,2 million tons to more than 67 million tons. With supply decreasing and consumption increasing, final stocks of grain corn for the 2020/2021 season have fallen by 11 million tons to 43 million tons. This would be the lowest result since the 2013/2014 season. Reflecting these expectations, corn prices at the CBoT in Chicago rose $1,50 to $4,23 per bushel.
Plenty of increases for wheat
Global expectations for the wheat market are dominated by higher consumption, higher export figures and lower ending stocks. The USDA has increased the yield for the 2020/2021 season by 0,7 million tons to 1,07 billion tons. This has so much to do with higher production, but mainly with the fact that lower global production is compensated by higher starting stocks. Globally, Argentina leaves out the most. Production in that country has been reduced by 1 million tons to 18 million tons, which is the lowest yield in 8 years. As a result, the country also exports significantly less.
This decline in Argentine exports is offset by higher export figures for the European Union and Russia. As a result, global wheat exports increased by 0,9 million compared to last month to 190,8 million tons. The main customers are China, Pakistan and Turkey. China's import pace remains robust and at 8 million tonnes, imports would be the largest since 1995/1996. Global wheat consumption increases by 1,7 million tons to 752 million tons. This reduces the closing stock by 1 million tons to 320,5 million tons, although this remains a record. The closing stock in the United States is also declining, by more than 160.000 tons to 23,8 million tons. This is mainly the result of significantly higher food consumption.
The expectations of the US Department of Agriculture result in a revival of wheat prices on both the CBoT and the Matif. On the CBoT, the price for wheat has now returned to $6,08 per bushel, which is a slight increase compared to the beginning of the week. The wheat quotation on the Matif took a bigger step upwards and rose by €3 in a few days to €212 per tonne.
Fewer soybeans in the United States
Soybean production in the United States is estimated at more than 113 million tons, down 2,6 million tons from last month. The decline is mainly because the major soy producing states (such as Illinois, Iowa, Indiana, Ohio and Nebraska) are all recording lower production. As a result, the ending stock of soybeans also showed a decrease: -2,7 million tons to 5,1 million tons. If this becomes reality, the ending stock will be at the lowest level in the past 7 years. The expectations of the USDA ensure a new peak in the quotations on the CBoT. It is currently trading at $11,38 per bushel. A significant increase compared to the start of the week.