Miller Magazine Issue: 121 January 2020

48 COVER STORY MILLER / JANUARY 2020 in Argentina and Brazil. Availabilities in the latter ap- pear to be particularly tight, with local marketing year ending stocks forecast at their lowest in 13 seasons due to surging domestic and overseas demand, while the country’s export pipeline will not be replenished until next July’s main (safrinha) harvest. Besides, the new Argentine government’s export policy changes and worrisome crop weather have added to uncertain- ty about maize production and trade prospects in that country. Against this backdrop, US sales have picked up, as evidenced by improving export commitments data, but competition from Ukraine is set to remain stiff amid narrow fob spreads, suggesting that freight costs could be the key decisive factor for some buyers. Al- though the US is likely to boost its market presence in the months ahead, shipments in the year to June 2020 are projected to be about one-quarter lower y/y, resulting in a 10% contraction in the respective share of world exports, to 26%. This compares to 51% a decade ago. SOYABEAN MARKET: GLOBAL MARKET VERSUS CAPTIVE MARKET? After reaching a record of 359m t in the prior season, global soyabean production is forecast to contract by 5% y/y in 2019/20 as a plunge in US output – tied to reduced acreage and below-trend yields – is only partly offset by potentially improved harvests elsewhere, partic- ularly in Brazil. Nevertheless, although seeding is either complete or well advanced in the region, cutting is still some time away, with optimal conditions required in the weeks ahead to ensure good crop outcomes. This is es- pecially the case in Argentina owing to dryness in core growing areas. This season’s reduced global outturn is expected to result in a marked tightening of world stocks, by as much as one-third y/y. This mostly relates to a steep fall in the US where, despite prospects for below-par exports, the smallest harvest in six years could result in a halving of inventories. Furthermore, should positive developments in trading arrangements lead to more regular, sustained demand from China, US stocks could tighten even more than currently predicted. Largely stemming from expanded use of soyameal in Asia – particularly in the dominant Chinese feed sector – global consumption generally rose solidly over the past decade, averaging 5% per annum. However, the mar- ket has been characterised by significant demand-side uncertainty more recently. While world consumption is forecast at a record of 359m t in 2019/20, the rate of ex- pansion would be less than half the recent average and mostly reflects the prolonged negative impact of African swine fever (ASF) on pig inventories and demand for feed ingredients in the world’s most populous nation. Increas- ing uptake in poultry and aquaculture sectors will likely prove only partly compensatory.