Digital Re-print - July | August 2014

Global Feed Markets: July - August 2014

www.gfmt.co.uk

Grain & Feed Milling Technology is published six times a year by Perendale Publishers Ltd of the United Kingdom.All data is published in good faith, based on information received, and while every care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of action taken on the basis of information published. ©Copyright 2014 Perendale Publishers Ltd. All rights reserved. No part of this publication may be reproduced in any form or by any means without prior permission of the copyright owner. Printed by Perendale Publishers Ltd. ISSN: 1466-3872

GFMT’s market analyst John Buckley reviews world

trading conditions which are impacting the full range of commodities used in food and feed production. His

observations will inf luence your decision-making.

World soyabean crush is

expected to rise by about

10m tonnes to supply

about 8.3m tonnes more

soyabean meal. Usage is

forecast to rise by about

9.6m tonnes – in China,

the EU, US, Brazil, Mexico

and a host of smaller/

moderate sized consuming

countries in response to

the lower price.

Feed raw material costs slump to four-year lows

There’s a simple and obvious equation behind the constant decline in raw material costs across the grain and oilseed sector: plantings are up, the weather has been mostly kind and the planned bumper crops are coming through. Even more importantly, though, production is now growing more than most observers expected - and

faster than demand. Where else can prices go but towards ‘clearance’ levels? Where that demand response lies has been an issue for lively debate from commentators

over the past couple of months during which wheat prices have dropped another 14%, maize by almost, and soyabeans by over, 20%.

Taking the drop from this year’s peak prices for these three commodities, wheat at the time of going to press is down by 25.6%, maize by 27.7% and beans by 23%. If we want to compare the price of soya as projected by futures for later in 2014, the drop is over 28%.

Back in May, world wheat output was projected at 697m tonnes – adequate to meet foreseen demand. Now it’s seen closer to 705m – just 7m off last year’s record (which exceeded demand by 7m too) after increases for most of the major producing/exporting countries as shown in the table 1.

Thanks to a bumper maize crop (see below), world wheat demand is expected to drop by about 5.5m tonnes this season, mainly in North America, the Middle East, China and other East Asia. That’s despite a forecast 5m tonne rise in European wheat consumption on the assumption that a larger crop will boost feed demand. Is that realistic, though, as the EU remains under competitive supply/price pressures from another year of near record maize imports from eastern Europe – plus its own larger domestic crop?

World wheat import demand is also seen falling in the year ahead by almost 9m tonnes due to less going to China, Iran, Brazil and others.

Overall, world wheat stocks will expand by over 5m tonnes with increases concentrated within China, Europe, former Soviet countries and the USA.

That’s the summary of the bearish news for a wheat market whose bellwether Chicago futures contract for soft wheat still, somewhat surprisingly, portrays a 13% premium on prices going into 2015. The Paris milling wheat futures market also carries a premium albeit a far smaller one of about 3.5% going into the forward new crop months. It might be noted, however, that futures have been demonstrably wrong over the past six months about the direction wheat prices would travel, largely because they didn’t anticipate supplies of this magnitude – or the willingness of speculators to short sell the market.

GRAIN&FEED MILLING TECHNOLOGY48 | COMMODITIES

GFMT’s market analyst John Buckley reviews world

trading conditions which are impacting the full range of commodities used in food and feed production. His

observations will inf luence your decision-making.

World soyabean crush is

expected to rise by about

10m tonnes to supply

about 8.3m tonnes more

soyabean meal. Usage is

forecast to rise by about

9.6m tonnes – in China,

the EU, US, Brazil, Mexico

and a host of smaller/

moderate sized consuming

countries in response to

the lower price.

Feed raw material costs slump to four-year lows

There’s a simple and obvious equation behind the constant decline in raw material costs across the grain and oilseed sector: plantings are up, the weather has been mostly kind and the planned bumper crops are coming through. Even more importantly, though, production is now growing more than most observers expected - and

faster than demand. Where else can prices go but towards ‘clearance’ levels? Where that demand response lies has been an issue for lively debate from commentators

over the past couple of months during which wheat prices have dropped another 14%, maize by almost, and soyabeans by over, 20%.

Taking the drop from this year’s peak prices for these three commodities, wheat at the time of going to press is down by 25.6%, maize by 27.7% and beans by 23%. If we want to compare the price of soya as projected by futures for later in 2014, the drop is over 28%.

Back in May, world wheat output was projected at 697m tonnes – adequate to meet foreseen demand. Now it’s seen closer to 705m – just 7m off last year’s record (which exceeded demand by 7m too) after increases for most of the major producing/exporting countries as shown in the table 1.

Thanks to a bumper maize crop (see below), world wheat demand is expected to drop by about 5.5m tonnes this season, mainly in North America, the Middle East, China and other East Asia. That’s despite a forecast 5m tonne rise in European wheat consumption on the assumption that a larger crop will boost feed demand. Is that realistic, though, as the EU remains under competitive supply/price pressures from another year of near record maize imports from eastern Europe – plus its own larger domestic crop?

World wheat import demand is also seen falling in the year ahead by almost 9m tonnes due to less going to China, Iran, Brazil and others.

Overall, world wheat stocks will expand by over 5m tonnes with increases concentrated within China, Europe, former Soviet countries and the USA.

That’s the summary of the bearish news for a wheat market whose bellwether Chicago futures contract for soft wheat still, somewhat surprisingly, portrays a 13% premium on prices going into 2015. The Paris milling wheat futures market also carries a premium albeit a far smaller one of about 3.5% going into the forward new crop months. It might be noted, however, that futures have been demonstrably wrong over the past six months about the direction wheat prices would travel, largely because they didn’t anticipate supplies of this magnitude – or the willingness of speculators to short sell the market.

GRAIN&FEED MILLING TECHNOLOGY48 | COMMODITIES

In recent weeks, wheat has effectively lost all of the premium it acquired during the most tense period of standoffs and conflicts between Russia and Ukraine during the early spring. That situation has, of course, been warming up again in the last few weeks and could yet cause disruption to exports from a region expected to supply the world with 28.5m tonnes – or about 19% of its wheat exports – in the coming year.

At this stage, at least, short of an outright war between the two countries, the markets appear to be banking on business as usual continuing, just as it did after all in first-half 2014. Certainly recent quotations coming out of Russia and Ukraine suggest they will be keen export competitors in the months ahead. Russia has been offered 11.5% protein milling at the low price of $239 per tonne, fob terms with 12.5% protein available for about $10 per tonne more. Ukraine meanwhile has been quoting 11.5% proteins at $235/238 and 12.5% at $250. Despite some concerns about untimely rains lowering harvest quality, these two do seem to be able to offer reasonable grade wheats. Those prices compare with US soft

Table 1: USDA wheat crop forecasts

mn tonnes 2013 Final

2014 May

2014 July

China 121.9 123 124EU 143.3 144.9 147.9

India 93.5 94 95.9USA 58 53.4 54.2

Russia 52.1 52 53Canada 37.5 28.5 28

Australia 27 25.5 26Ukraine 22.3 20 21

WORLD 714 697 705

July - August 2014 | 49GRAIN&FEED MILLING TECHNOLOGY

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red winter wheat recently offered fob around $225/230. However, the more expensive freight from the Gulf of Mexico doesn’t give the US much leverage in the contested markets where the most active sales opportunities lie, chiefly the Middle-East/North African region. Here it is the ‘Black Sea’ exporters who are beating most of the competition, including the EU’s own, cut-price seller Rumania, followed closely by Russia and Ukraine. French exports also seem to be doing quite well, with a big sale in late July (800,000 tonnes plus) to their loyal customer Algeria. However, there has been talk that second largest EU exporter Germany might struggle to keep up this year if its doesn’t get the big orders it won last season from Iran. In summary, this all seems to spell a competitive market ahead between the major EU exporters and against their CIS rivals - even before Canada, Australia and the US come into the frame for world wheat trade further afield. That must surely be broadly bearish for international wheat prices and it must be reflected to a large extent on the internal markets of the US, Europe and the CIS.

The previous Ukrainian flare up last spring also coincided with concerns that the US crop would come in much smaller than expected after droughts and a wet harvest. In fact the hard red winter harvest is coming in bigger than expected on better yields and some passably good protein levels. Stocks of this, the top class of wheat exported by the USA – the world’s largest wheat supplier, have also been revised considerably higher recently after the USDA cut is estimate of feed use for this grain. The US also seems to have planted a lot more spring wheat than markets expected which will be welcomed by overseas millers who want that high quality to improve their grists.

Not all the developments over the last quarter have been so positive for wheat supplies. As we go to press, there remains a possibility that some EU wheat could be downgraded by wet harvest weather to feed

- chiefly in Bulgaria, Rumania, parts of France and Germany. It’s already reflected in some big premiums being demanded for milling over feed wheat. It also suggests Europe might have more feed grade wheat than usual. Amid a large EU maize crop and the competition from imported CIS maize, that suggests further downward pressures on European feed grain prices.

Canada meanwhile has had a huge problem with excess rain flooding fields, holding up and exaggerating farmers’ already downsized planting plans. Crops are developing late in cold, damp conditions. Perhaps 10-15% of acreage is at risk of abandonment or at best poor performance in terms of yield and/or sub-par quality. Canada is carrying 4m tonnes more stock into this season which can supplement export trade . This factor does have the potential to firm up prices at the quality end of the milling wheat market. However, for the time being, the market has plenty of wheat in total to eat through and questions over the strength of forward demand as competition grows from maize.

Maize surplus growsKey feedgrain maize remains on course for a big top of in supply and

lower prices amid market ideas that major producers may also out-perform forecasts for a slightly larger crop in 2014/15.

The key factor, as always is the US crop. The USDA estimates will be sown on 91.6m acres – 3.8m or 4% less than last year as farmers respond to the steep fall that has already occurred in producer prices. However, thanks to ideal weather, it is also forecasting a 4% rise in yield to 165.3bu/acre, so a crop not much below last year’s record 353.9m tonnes. The trade consensus is that this doesn’t fully reflect the crop’s stellar condition ratings – the best for 20 years – and that yield will be at least 170 bushels/acre. That equates to an extra 10m tonnes, ie a crop of about 364m.

US consumption of maize jumped by 32m tonnes or 12% over the past season as all sectors – feed, ethanol, food responded to far cheaper prices. The exception was US exports which dropped by 5m tonnes. yet carryover stocks still rose by 11m tonnes or over 50% from last year’s low levels, to a far more comfortable 31.7m tones. For the season ahead, USDA sees US demand about the same although some analysts think that might under-rate the expansionary effect of cheaper corn prices, especially on livestock profitability and on ethanol use (blending of corn ethanol with petrol is approaching maximum levels but with fuel costs down, total consumption could rise – and US exports of the green fuel are also rising.

The current USDA thinking, that US stocks will finish the new season at 45.8m tonnes (+14.1m or 45%) is a bearish influence on forward maize prices, both in the US and overseas. So is USDA’s reckoning that stocks will increase in China and the EU and stay relatively high in the second largest maize exporting country, Brazil (Table 2).

Against the bearish US figures, maize production is expected to decline somewhat this year in Ukraine and Brazil. However, while that may trim Ukraine’s exports back by about 4m tonnes from the past seaosn’s record 20m, USDA expects a lot more to be available to the world’s importers from other sources. Brazil and Argentina – which both have large stocks already – are expected to ship 9m tonnes (30%) more. Moreover, the USA (which USDA sees exporting 5m tonnes less because of this competition) can

easily export far more if the world needs it, without changing its own outlook for huge, if not burdensome carryover stocks in the following 2015/16 season.

It’s no wonder than that maize prices are falling fast and, like wheat, are at their lowest levels for four years. Both grains have, of course, been far lower in the last 20 years than the current futures markets show. Even at their lowest in four years, both wheat and maize are still poised about a third higher than the ten-year average prior to the great price boom of 2007/8, when Chicago wheat hit $13/bu or nearly $480/tonne.

If there is a factor that will eventually underpin and perhaps justify some price rallies, it is the cost of production. Many producers are already feeling the pinch – at or below break even - and there has been quite a bit of talk about cutbacks in acreage on the way. Longer term, bodies like the OECD are suggesting that relative crop values and margins will increasingly favour oilseed rather than cereal expansion, putting more and more onus on yields to deliver larger crops. These

GRAIN&FEED MILLING TECHNOLOGY50 | COMMODITIES

Table 2: USDA maize crop forecasts

(mn tonnes) 2013 Final

2014 May

2014 July

USA 353.7 353.9 352.1China 218.5 220 222Brazil 78 74 74

EU 64.6 64.7 65.6Ukraine 30.9 26 27

India 24.2 22 22Argentina 24 26 26

S Africa 14.5 13.5 13.5Canada 14.2 12.5 11.6

Russia 11.6 12.5 13Serbia 6.3 6.5 6.6

WORLD 984.5 979.1 981

July - August 2014 | 55GRAIN&FEED MILLING TECHNOLOGY

One of these samples has optimum gluten quality. The GlutoPeak® knows which.

With its innovative analysis process, the Brabender® GlutoPeak® determines the gluten quality of your milled cereal prod-ucts – quickly, reliably and at any time.

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Brabender® technology optimises the quality of your raw materials and ensures your success.

Brabender® GmbH & Co. KG · www.brabender.com

GlutoPeak_GFM_190x132_E.indd 1 26.05.2014 14:47:06

The 25th Annual IAOM MEA District Conference & Expo will be held at the Cape Town International Convention Centre (CTICC), Halls 4A & 4B on 3-6 December 2014.

Mideast & Africa District

Organized by:

ManagementKeynote Speaker

Dr. Beau LottoNeuroscientist & Founder,

Lottolab (UK)

Mike KruegerFounder & President,

The Money Farm (USA)

Top Notch Keynote SpeakersConference and Expo Highlights

REGISTER NOWwww.iaom-mea.com/IAOM-SOUTHAFRICA2014/Email: info@iaom-mea.com or call 0096824711755

Milling Industry’s Largest Gathering in the

Middle East & Africa

• Largest gathering of flour & feed milling industry machine suppliers, grain millers and commodity traders from the Middle East, Africa and all over the world

• Captivating and vibrant keynote speakers for Management, Technical and Trading sessions

• Extensive networking opportunities

• World renowned keynote speakers include Dr. Beau Lotto, Neuroscientist & Founder Lottolab (UK) and Daniel Basse, President & founder, AgResource Co. (USA)

• Evening Functions in Cape Town’s most elite venues

• English and Arabic simultaneous translation available

• Full access to conference presentations and expo

Trading Moderator & Keynote Speaker

Daniel BassePresident & Founder,

AgResource Co. (USA)

F

red winter wheat recently offered fob around $225/230. However, the more expensive freight from the Gulf of Mexico doesn’t give the US much leverage in the contested markets where the most active sales opportunities lie, chiefly the Middle-East/North African region. Here it is the ‘Black Sea’ exporters who are beating most of the competition, including the EU’s own, cut-price seller Rumania, followed closely by Russia and Ukraine. French exports also seem to be doing quite well, with a big sale in late July (800,000 tonnes plus) to their loyal customer Algeria. However, there has been talk that second largest EU exporter Germany might struggle to keep up this year if its doesn’t get the big orders it won last season from Iran. In summary, this all seems to spell a competitive market ahead between the major EU exporters and against their CIS rivals - even before Canada, Australia and the US come into the frame for world wheat trade further afield. That must surely be broadly bearish for international wheat prices and it must be reflected to a large extent on the internal markets of the US, Europe and the CIS.

The previous Ukrainian flare up last spring also coincided with concerns that the US crop would come in much smaller than expected after droughts and a wet harvest. In fact the hard red winter harvest is coming in bigger than expected on better yields and some passably good protein levels. Stocks of this, the top class of wheat exported by the USA – the world’s largest wheat supplier, have also been revised considerably higher recently after the USDA cut is estimate of feed use for this grain. The US also seems to have planted a lot more spring wheat than markets expected which will be welcomed by overseas millers who want that high quality to improve their grists.

Not all the developments over the last quarter have been so positive for wheat supplies. As we go to press, there remains a possibility that some EU wheat could be downgraded by wet harvest weather to feed

- chiefly in Bulgaria, Rumania, parts of France and Germany. It’s already reflected in some big premiums being demanded for milling over feed wheat. It also suggests Europe might have more feed grade wheat than usual. Amid a large EU maize crop and the competition from imported CIS maize, that suggests further downward pressures on European feed grain prices.

Canada meanwhile has had a huge problem with excess rain flooding fields, holding up and exaggerating farmers’ already downsized planting plans. Crops are developing late in cold, damp conditions. Perhaps 10-15% of acreage is at risk of abandonment or at best poor performance in terms of yield and/or sub-par quality. Canada is carrying 4m tonnes more stock into this season which can supplement export trade . This factor does have the potential to firm up prices at the quality end of the milling wheat market. However, for the time being, the market has plenty of wheat in total to eat through and questions over the strength of forward demand as competition grows from maize.

Maize surplus growsKey feedgrain maize remains on course for a big top of in supply and

lower prices amid market ideas that major producers may also out-perform forecasts for a slightly larger crop in 2014/15.

The key factor, as always is the US crop. The USDA estimates will be sown on 91.6m acres – 3.8m or 4% less than last year as farmers respond to the steep fall that has already occurred in producer prices. However, thanks to ideal weather, it is also forecasting a 4% rise in yield to 165.3bu/acre, so a crop not much below last year’s record 353.9m tonnes. The trade consensus is that this doesn’t fully reflect the crop’s stellar condition ratings – the best for 20 years – and that yield will be at least 170 bushels/acre. That equates to an extra 10m tonnes, ie a crop of about 364m.

US consumption of maize jumped by 32m tonnes or 12% over the past season as all sectors – feed, ethanol, food responded to far cheaper prices. The exception was US exports which dropped by 5m tonnes. yet carryover stocks still rose by 11m tonnes or over 50% from last year’s low levels, to a far more comfortable 31.7m tones. For the season ahead, USDA sees US demand about the same although some analysts think that might under-rate the expansionary effect of cheaper corn prices, especially on livestock profitability and on ethanol use (blending of corn ethanol with petrol is approaching maximum levels but with fuel costs down, total consumption could rise – and US exports of the green fuel are also rising.

The current USDA thinking, that US stocks will finish the new season at 45.8m tonnes (+14.1m or 45%) is a bearish influence on forward maize prices, both in the US and overseas. So is USDA’s reckoning that stocks will increase in China and the EU and stay relatively high in the second largest maize exporting country, Brazil (Table 2).

Against the bearish US figures, maize production is expected to decline somewhat this year in Ukraine and Brazil. However, while that may trim Ukraine’s exports back by about 4m tonnes from the past seaosn’s record 20m, USDA expects a lot more to be available to the world’s importers from other sources. Brazil and Argentina – which both have large stocks already – are expected to ship 9m tonnes (30%) more. Moreover, the USA (which USDA sees exporting 5m tonnes less because of this competition) can

easily export far more if the world needs it, without changing its own outlook for huge, if not burdensome carryover stocks in the following 2015/16 season.

It’s no wonder than that maize prices are falling fast and, like wheat, are at their lowest levels for four years. Both grains have, of course, been far lower in the last 20 years than the current futures markets show. Even at their lowest in four years, both wheat and maize are still poised about a third higher than the ten-year average prior to the great price boom of 2007/8, when Chicago wheat hit $13/bu or nearly $480/tonne.

If there is a factor that will eventually underpin and perhaps justify some price rallies, it is the cost of production. Many producers are already feeling the pinch – at or below break even - and there has been quite a bit of talk about cutbacks in acreage on the way. Longer term, bodies like the OECD are suggesting that relative crop values and margins will increasingly favour oilseed rather than cereal expansion, putting more and more onus on yields to deliver larger crops. These

GRAIN&FEED MILLING TECHNOLOGY50 | COMMODITIES

Table 2: USDA maize crop forecasts

(mn tonnes) 2013 Final

2014 May

2014 July

USA 353.7 353.9 352.1China 218.5 220 222Brazil 78 74 74

EU 64.6 64.7 65.6Ukraine 30.9 26 27

India 24.2 22 22Argentina 24 26 26

S Africa 14.5 13.5 13.5Canada 14.2 12.5 11.6

Russia 11.6 12.5 13Serbia 6.3 6.5 6.6

WORLD 984.5 979.1 981

July - August 2014 | 51GRAIN&FEED MILLING TECHNOLOGY

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July - August 2014 | 55GRAIN&FEED MILLING TECHNOLOGY

One of these samples has optimum gluten quality. The GlutoPeak® knows which.

With its innovative analysis process, the Brabender® GlutoPeak® determines the gluten quality of your milled cereal prod-ucts – quickly, reliably and at any time.

■ Flexible analysis of fl our, wholemeal fl our, coarse meal, vital gluten and baking mixtures■ Fast quality analysis in one to ten minutes■ Precise results from small samples■ Easy-to-use software for simple handling

Brabender® technology optimises the quality of your raw materials and ensures your success.

Brabender® GmbH & Co. KG · www.brabender.com

GlutoPeak_GFM_190x132_E.indd 1 26.05.2014 14:47:06

The 25th Annual IAOM MEA District Conference & Expo will be held at the Cape Town International Convention Centre (CTICC), Halls 4A & 4B on 3-6 December 2014.

Mideast & Africa District

Organized by:

ManagementKeynote Speaker

Dr. Beau LottoNeuroscientist & Founder,

Lottolab (UK)

Mike KruegerFounder & President,

The Money Farm (USA)

Top Notch Keynote SpeakersConference and Expo Highlights

REGISTER NOWwww.iaom-mea.com/IAOM-SOUTHAFRICA2014/Email: info@iaom-mea.com or call 0096824711755

Milling Industry’s Largest Gathering in the

Middle East & Africa

• Largest gathering of flour & feed milling industry machine suppliers, grain millers and commodity traders from the Middle East, Africa and all over the world

• Captivating and vibrant keynote speakers for Management, Technical and Trading sessions

• Extensive networking opportunities

• World renowned keynote speakers include Dr. Beau Lotto, Neuroscientist & Founder Lottolab (UK) and Daniel Basse, President & founder, AgResource Co. (USA)

• Evening Functions in Cape Town’s most elite venues

• English and Arabic simultaneous translation available

• Full access to conference presentations and expo

Trading Moderator & Keynote Speaker

Daniel BassePresident & Founder,

AgResource Co. (USA)

F

situations usually right themselves in the end through appropriate price signals but the question at what level cereal prices will bottom out, let alone when they will start to rally, will probably not be answered for a while yet. The UK’s Home-Grown cereal Authority and French analyst ODA have both warned of downward price pressures into the harvest period while an OECD/FAO report views a potential two-year slump. In the meantime, consumers can make the most of lower costs, particularly in the feed sector where some market advisors are suggesting the wisdom of taking on more cover than usual.

Oilseed supplies under-ratedGlobal oilseed supplies are promised to turn out far larger than expected

for the 2014/15 season, suggesting a long period of cheaper prices for the protein oilmeal sector.

As always, the key factor is the size of the soyabean crop, usually the source of well over two thirds of the world’s total oilmeal supply.

In the USA, farmers have sown far more than expected, and with probable record yields on the way, may produce a massive 103.4m

tonne crop – about 14m more than last year’s, equal to 11m tonnes more meal if all the extra were crushed.

At this stage, USDA is expecting only 2.3m of the additional supplies to be used in the coming season, the rest going to build up the biggest US stock for several years. USDA also sees Latin American producers turning out bigger crops for yet another year, raising world production for the new season by 20.9m tonnes and world carryover stocks (by September 2015) to a record 85.3m tonnes. This year they were already large at 67m and only two years ago, they were just 53.5m.

World soyabean crush is expected to rise by about 10m tonnes to supply about 8.3m tonnes more soyabean meal. Usage is forecast to rise by about 9.6m tonnes – in China, the EU, US, Brazil, Mexico and a host of smaller/moderate sized consuming countries in response to the lower price. Amid static or slightly lower crops of alternative oisleeds/meals, that means soya accounts for all the growth in world protein meal consumption in the season ahead. Those extra soyabean stocks also mean there will be ample supplies available to crush of the market demands more, keeping prices under control or heading ‘South.’ No wonder, soya has become the weakest commodity in the grain and oilseed complex.

KEY FACTORS AHEAD - WHEAT • Tensions between Russia and Ukraine are flaring again and have the

potential to ‘spook’ prices up. The trade is hoping the ‘business as usual’ we saw last spring will continue

• World stocks will grow more than expected this season as consumption falls faster than production

• World wheat trade is declining more than expected from last season’s record high

• Key quality wheat exporter Canada’s crop is exposed to downward revision as weather cuts harvest area, lowers yields and maybe threatens quality

• The EU has some wet harvest, possible quality issues to deal with• Wheat feeding levels and wheat value remain under further pressure

from rising maize supplies, especially within the EU.

COARSE GRAINS • Maize supplies are looking even bigger than expected back in the spring,

led by a potential record US crop and ample supplies from Latin America, CIS & Europe

• Brisk export competition should keep prices under downward pressure• But consumption could turn out to be under-rated as livestock feeders

exploit improved margins flowing from lower corn costs• The EU will probably see its third season of massive maize imports• China continues to release some of its huge maize stockpile, cutting its

import needs.

OILMEALS/PROTEINS • Big US and LatAm crop surpluses continue signal cheaper global oilmeal

supplies• But further forward, will producers maintain crop expansions as the

value and income from their production falls?

Sohar Port and Freezone have grand plans for a new agro-terminal which will com-bine public service with private industry.

Plans for the agro-terminal include a ‘Food Cluster’ area, which will consist of a sugar refinery under the private ownership of the Oman Sugar Refinery Company (OSRC), and a governmental strategic food reserve facility, controlled by the Public Authority for Strategic Food Reserves (PASFR).

The terminal will thus become an important part of Oman’s food security

strategy, assuring a plenitude of silo storage for grain commodities.

However, the commodities held at the terminal will be continually replenished: the public joint stock firm Oman Flour Mills (OFM) has been challenged with a task of replenishment and creative selling for excess and ageing stocks, while simultane-ously reducing government expenditure.

Edwin Lammers, executive commercial manager of the Sohar Port and Freezone, outlined his vision for the agro-terminal:

“The Food Cluster is unique in that it

will feature the country’s first dedicated agro bulk terminal designed not only for the han-dling of wheat and grain shipments on behalf of the government, but also feedstock for the sugar refinery. The facility will also give new impetus to agro-bulk projects.”

Given that the OSRC is aiming to pro-duce one million tonnes per year of refined sugar, the Sohar Port and Freezone agro-terminal looks set to become a vibrant hub of public and private industry.

For more information on the Sohar Port and Freezone visit soharportandfreezone.com

As reported in Port technology International Magazine (PTI)

Oman plans dynamic new agro-terminalPORTS

1974 201440YEARS

This is a comprehensive description of what we do. Any questions?

Dry bulkhandling

www.siwertell.comSiwertell is a Cargotec brand

GRAIN&FEED MILLING TECHNOLOGY52 | COMMODITIES

www.oj-hojtryk.dk

Die and roll re-working machines

O&J Højtryk A/SØrnevej 1, DK-6705 Esbjerg ØCVR.: 73 66 86 11

Phone: +45 75 14 22 55Fax: +45 82 28 91 41

mail: info@oj-hojtryk.dk

AD_o&j.indd 1 21/11/2012 15:08

situations usually right themselves in the end through appropriate price signals but the question at what level cereal prices will bottom out, let alone when they will start to rally, will probably not be answered for a while yet. The UK’s Home-Grown cereal Authority and French analyst ODA have both warned of downward price pressures into the harvest period while an OECD/FAO report views a potential two-year slump. In the meantime, consumers can make the most of lower costs, particularly in the feed sector where some market advisors are suggesting the wisdom of taking on more cover than usual.

Oilseed supplies under-ratedGlobal oilseed supplies are promised to turn out far larger than expected

for the 2014/15 season, suggesting a long period of cheaper prices for the protein oilmeal sector.

As always, the key factor is the size of the soyabean crop, usually the source of well over two thirds of the world’s total oilmeal supply.

In the USA, farmers have sown far more than expected, and with probable record yields on the way, may produce a massive 103.4m

tonne crop – about 14m more than last year’s, equal to 11m tonnes more meal if all the extra were crushed.

At this stage, USDA is expecting only 2.3m of the additional supplies to be used in the coming season, the rest going to build up the biggest US stock for several years. USDA also sees Latin American producers turning out bigger crops for yet another year, raising world production for the new season by 20.9m tonnes and world carryover stocks (by September 2015) to a record 85.3m tonnes. This year they were already large at 67m and only two years ago, they were just 53.5m.

World soyabean crush is expected to rise by about 10m tonnes to supply about 8.3m tonnes more soyabean meal. Usage is forecast to rise by about 9.6m tonnes – in China, the EU, US, Brazil, Mexico and a host of smaller/moderate sized consuming countries in response to the lower price. Amid static or slightly lower crops of alternative oisleeds/meals, that means soya accounts for all the growth in world protein meal consumption in the season ahead. Those extra soyabean stocks also mean there will be ample supplies available to crush of the market demands more, keeping prices under control or heading ‘South.’ No wonder, soya has become the weakest commodity in the grain and oilseed complex.

KEY FACTORS AHEAD - WHEAT • Tensions between Russia and Ukraine are flaring again and have the

potential to ‘spook’ prices up. The trade is hoping the ‘business as usual’ we saw last spring will continue

• World stocks will grow more than expected this season as consumption falls faster than production

• World wheat trade is declining more than expected from last season’s record high

• Key quality wheat exporter Canada’s crop is exposed to downward revision as weather cuts harvest area, lowers yields and maybe threatens quality

• The EU has some wet harvest, possible quality issues to deal with• Wheat feeding levels and wheat value remain under further pressure

from rising maize supplies, especially within the EU.

COARSE GRAINS • Maize supplies are looking even bigger than expected back in the spring,

led by a potential record US crop and ample supplies from Latin America, CIS & Europe

• Brisk export competition should keep prices under downward pressure• But consumption could turn out to be under-rated as livestock feeders

exploit improved margins flowing from lower corn costs• The EU will probably see its third season of massive maize imports• China continues to release some of its huge maize stockpile, cutting its

import needs.

OILMEALS/PROTEINS • Big US and LatAm crop surpluses continue signal cheaper global oilmeal

supplies• But further forward, will producers maintain crop expansions as the

value and income from their production falls?

Sohar Port and Freezone have grand plans for a new agro-terminal which will com-bine public service with private industry.

Plans for the agro-terminal include a ‘Food Cluster’ area, which will consist of a sugar refinery under the private ownership of the Oman Sugar Refinery Company (OSRC), and a governmental strategic food reserve facility, controlled by the Public Authority for Strategic Food Reserves (PASFR).

The terminal will thus become an important part of Oman’s food security

strategy, assuring a plenitude of silo storage for grain commodities.

However, the commodities held at the terminal will be continually replenished: the public joint stock firm Oman Flour Mills (OFM) has been challenged with a task of replenishment and creative selling for excess and ageing stocks, while simultane-ously reducing government expenditure.

Edwin Lammers, executive commercial manager of the Sohar Port and Freezone, outlined his vision for the agro-terminal:

“The Food Cluster is unique in that it

will feature the country’s first dedicated agro bulk terminal designed not only for the han-dling of wheat and grain shipments on behalf of the government, but also feedstock for the sugar refinery. The facility will also give new impetus to agro-bulk projects.”

Given that the OSRC is aiming to pro-duce one million tonnes per year of refined sugar, the Sohar Port and Freezone agro-terminal looks set to become a vibrant hub of public and private industry.

For more information on the Sohar Port and Freezone visit soharportandfreezone.com

As reported in Port technology International Magazine (PTI)

Oman plans dynamic new agro-terminalPORTS

1974 201440YEARS

This is a comprehensive description of what we do. Any questions?

Dry bulkhandling

www.siwertell.comSiwertell is a Cargotec brand

GRAIN&FEED MILLING TECHNOLOGY52 | COMMODITIES

www.oj-hojtryk.dk

Die and roll re-working machines

O&J Højtryk A/SØrnevej 1, DK-6705 Esbjerg ØCVR.: 73 66 86 11

Phone: +45 75 14 22 55Fax: +45 82 28 91 41

mail: info@oj-hojtryk.dk

AD_o&j.indd 1 21/11/2012 15:08

1974 201440YEARS

This is a comprehensive description of what we do. Any questions?

Dry bulkhandling

www.siwertell.comSiwertell is a Cargotec brand

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• NIR Multi Online Technology: Real-time analysis for early detection of grain quality fluctuations

• Feed Focus Pigs

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• Dust control with bulk bag

discharger and flexible screw conveyors

• Mycotoxins How to analyse and reduce the hazard to humans and animals

• Storage and silos special

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