IGC: Grain estimate increases to be absorbed by feed industry

23 May 20235 min reading
IGC raised its world grain production estimates for the upcoming 2023/24 season by 7 million tons. In the monthly report published by the Council, it was stated that the increase in supply was absorbed by the feed industry.

The London-based International Grains Council (IGC) released its monthly grain market report. According to this report,  almost entirely due to a larger wheat estimate, the forecast for 2022/23 global total grains (wheat and coarse grains) production is 2m t higher m/m (month-on-month), at 2,252m. The outlook for consumption is raised by 3m t, mainly on an upward revision for wheat, with end-season inventories (aggregate of respective local marketing years) placed 1m lower than before, at 584m. The Council’s trade estimate is increased slightly on stronger than expected maize shipments.

The projection for 2023/24 total grains production is up by 7m t from previously, to 2,291m, including increases for maize and barley. The supply boost is mainly absorbed by larger use, mostly for feed, but still allows for a slightly larger projection for ending stocks, pegged at 581m t. Including cuts for wheat, maize and sorghum, total trade is revised lower m/m.
According to the report, reflecting adjustments for South American producers, world soyabean output is seen unchanged m/m. With a further downgrading of consumption, carryovers are raised by 2m t m/m, while trade is pegged marginally higher. The 2023/24 production outlook is uprated by 2m t, with availabilities also boosted by a higher opening stocks figures – channelled to increased projections for uptake and inventories. Trade is predicted fractionally higher m/m, at 174m t (+3%).

Tied to potentially large shipments to Indonesia, rice trade in 2023 (Jan/Dec) is forecast slightly higher m/m, at almost 53m t. Prospects for 2023/24 are little-changed compared to March; with a modest reduction in carry-in stocks, aggregate end-season inventories are seen just a fraction lower m/m, at 174m t, up by 2m y/y (year-on-year). Expectations for an uplift in traded volumes are maintained.

With declines across most constituent components, apart from rice, the IGC Grains and Oilseeds Index (GOI) dropped by 3% m/m, down by more than one fifth compared to a year ago.

2022/23 CHANGE 
According to the data published by the IGC, there were mixed trends total grains (wheat and coarse grains) output in 2022/23, seen at 2,252m t, 2% lower y/y, as declines in maize (-71m) and sorghum (-3m) outweighed larger wheat (+22m), barley (+8m) and oats (+4m) crops. Despite softer overall demand, primarily for maize, a comparatively steeper fall in supply means closing stocks are expected to tighten for a sixth consecutive year, to 584m t (-2%).

Boosted primarily by a projected solid recovery in maize, 2023/24 grains production is forecast to reach 2,291m t (+2%), more or less equalling the 2021/22 record. Total use is anticipated to rise to 2,293m t, with y/y growth of 1% broadly similar to the recent average. Led by some tightening in wheat, global stockpiles are set to edge lower, to 581m t, potentially the smallest since 2014/15. Total trade is seen down for a third year in a row, to 407m t (-1%).

According to the report, wth a huge Brazilian crop more than offsetting declines elsewhere, 2022/23 world soyabean output is forecast to expand by 4% y/y. While record uptake is seen in some key consumers, a sharp contraction in Argentina – in spite of heavy imports – means that utilisation is placed steady y/y, at 366m t. Trade is forecast to expand solidly (+8% y/y). With gains predicted for the three majors, a record world outturn is foreseen in 2023/24, with total use projected at a new high on gains in Asia and the Americas. Stock accumulation is anticipated, while trade could advance to a new peak.

Reflecting smaller harvests in Asia and the Americas, global rice output in 2022/23 is seen contracting by 6m t y/y. While consumption is also set to recede slightly, stocks are expected to tighten – in large part due to smaller carry-ins. Projections for 2023/24 point to a rebound in world production to a new peak, linked to potentially bigger outturns in Asian growers. While expanded food demand is set to effect a rebound in total use, the bigger crop will still enable modest inventory gains, including in major exporters. Trade is predicted to increase by 1m t y/y on African demand.

Tied to a bigger global crop and improved availabilities, world lentils uptake is seen recovering solidly in 2022/23, with trade pegged at 4.3m t (4.1m) on firmer Asian demand. Linked to potential increases in Canada and India, global output is projected some 5% higher y/y in 2023/24. While gains in consumption are anticipated, traded volumes could retreat slightly.

Weighed primarily by a pullback in average soyabean export values, but with barley, wheat and maize also softer, the IGC GOI dropped by 3%, touching a near-16 month low in late March. With most export prices weakening in April, the IGC GOI wheat sub-Index eased by a net 2% over the past five weeks, down by 29% y/y. The IGC GOI maize sub-Index dipped by 1% m/m. While US values advanced, partly on renewed Chinese demand, quotations in Ukraine and Argentina were softer overall.

Largely on prospects for stronger demand from Indonesia, the IGC GOI rice sub-Index advanced by 3% m/m, with net gains across Asia. The IGC GOI soyabeans sub-Index retreated by a net 5%, pulled lower by weaker export quotations in South America, particularly in Brazil.

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