Miller Magazine Issue: 117 September 2019

92 MARKET ANALYSIS MILLER / SEPTEMBER 2019 the previous peak in 2017/18. Larger shipments of wheat, barley, sorghum and rye are foreseen, but trade in maize is forecast to recede for the first time in 11 seasons, albeit only modestly. Amid record production and relatively modest growth in usage, global soyabean carryovers in 2018/19 could rise by one-quarter y/y, to a fresh high. World output is expected to fall markedly in 2019/20 as a plunge in US production – tied to a heavy reduction in acreage and below-trend yields – is only partly offset by increases elsewhere. And with an expansion of uptake, inventories are predicted to tighten, albeit remaining above average. Much of the drawdown will be due to the US, where stocks are set to drop by about 9m t y/y. Traded volumes are forecast to edge up to 150m t, although demand and policy uncertainties persist. Despite historical revisions to consumption and stocks for China, the broader fundamental backdrop for rice in 2018/19 is little-changed from before, with production, consumption and stocks set to scale fresh highs. However, amid weak demand from buyers in Asia, world trade could decline by 3% y/y in 2019; smaller dispatches by India and Thailand contrast with bigger exports by China and Viet- nam. Output could grow in 2019/20, but with main crop harvests some way off, prospects are highly provisional. Further gains in use and inventories are anticipated, while trade may advance on larger shipments to Africa. Led by a sharp decline in maize values, which fell steep- ly following the mid-month WASDE report, the IGC GOI slipped to a three-month low, down by 4% compared to late-July. Against a background of comfortable glob- al supplies and generally slack export demand, the IGC GOI wheat sub-Index dropped by 4% m/m, to levels last seen in June 2017. And the IGC GOI maize sub-Index plummeted by 16% in the five weeks since the last GMR, as speculative funds liquidated long positions in reaction to USDA’s larger than expected area and yield estimates. Strategie Grains has made a sharp increase to its forecasts for European Union production and exports of soft wheat this season, citing strong harvest expec- tations in France and Britain together with increasingly competitive EU export prices. The French consultancy now sees 2019/20 soft wheat production in the EU at 142.9 million tonnes, up from 140.6 million tonnes projected in July and 12% above last year’s drought- hit crop, it said in a monthly grain report. The upward revision, which reversed a similar-sized cut last month, was in keeping with rising market expectations for a large EU wheat crop despite record-breaking heat- waves this summer. “Production is lower than expect- ed in Bulgaria, but very good results in France and an uplift compared with expectations for the UK harvest have more than outstripped the losses in the south- eastern EU,” Strategie Grains said in its report. Its monthly EU estimates incorporated increases it has made in the past month to its harvest outlook for France, where it expects soft wheat production to rise to about 39 million tonnes. For barley, the Strategie Grains analysts raised their EU produc- tion forecast to 60.5 million tonnes from 59.3 million tonnes, now 9% above last year’s level, again citing large French and British crops. A 500,000 tonne increase to Strategie Grains’ pro- jection for 2019/20 EU maize output, now pegged at 63.2 million tonnes, reflected excellent conditions in southeast Europe, which offset heatwave damage to maize in France and to a lesser extent in Germany and Poland, it said. For exports, forecast EU soft wheat shipments were put at 24.8 million tonnes, up from 21.9 million tonnes estimated by Strategie Grains a month ago and also well above the 21 million tonnes exported in 2018/19. A fall in west European prices had improved their competitiveness against Black Sea suppliers such as Russia, it said. “This has produced two im- portant consequences: Ukrainian wheat is no longer competitive for import into the EU, and EU wheat is in the process of attracting international export demand away from Russian wheat,” Strategie Grains said. Official EU data shows soft wheat exports in the 2019/20 season, which started on July 1, are running 30% below last season’s pace. But analysts say volumes for the new season are underestimated because of delays in receiving customs data from EU member states. Increas- ing competitiveness of wheat for use in livestock feed could also absorb more of the harvest and help to push down EU wheat stocks by the end of the season, Strategie Grains added. Strategie Grains raises forecasts for EU wheat harvest and exports