Impact of the Black Sea region on world grain supply and ... KONFERENCIJE.pdf · Exports as a share...

© International Grains Council

Impact of the Black Sea region on world grain supply and demandArnaud PETITExecutive Director, International Grains Council

Serbia Grain Conference 201931th October 2019, Belgrade


Grains Trade Convention (GTC)

• Information sharing, analysis and data on global markets for wheat, coarse grains,

rice and oilseeds.

• Monitoring of national policy developments.

• Brings together on an equal footing, exporting and importing countries.

• Advocacy for freer trade.

• None of us know more than all of us!

Food Assistance Convention (FAC) • Its objectives are to save lives, reduce hunger and improve food security, while

enhancing the nutritional status of the most vulnerable populations.

• Grains remain the core food staple.

• Around 5m tons to 85 countries.

• Exchange of experiences in food assistance.

IGC administers two international treaties


International Grains Council (IGC)

Intergovernmental organisation established in 1949, that seeks to:

• Information-sharing, analysis and consultation on market developments.

• Daily monitoring of grains, rice and oilseeds market conditions, via circulation of reports andmaintaining web-based information services.

• Regular monitoring of international policy changes.

• Exchange of information at Market Conditions Committee meetings and Council sessions.

• The annual IGC Grains Conference, a public forum for discussion, and an opportunity to bringbuyers and sellers, industry representatives and policymakers together.

Further international cooperation in grains

trade

Promote expansion, openness and fairness

in the grains sector

Promote expansion, openness and fairness

in the grains sector

Through:


Regular information services

All IGC Information is provided without charge to member governments. Some available on subscription to other users.

IGC website

Includes comprehensive database of current and historical market information for members. Selection of information also available on the public area of the website.

www.igc.int

Daily Reports

Daily updates of grain and oilseeds developments, statistics and export prices.

IGC members only

GOI

A measure of international price movements across seven core commodities, calculated daily using 34 export quotations at leading origins.

GOFI

A weekly Index of freight costs

Available to public

Grain Market Report

Detailed review of the past month’s market developments and update of statistics and forecasts.

Subscription available

Grain Market Indicators

Weekly review of market developments and export prices.


Ocean Freight Rates

Weekly table of over 100 dry bulk rates on major grains/oilseeds routes.



World markets for grains and oilseeds have fallen considerably over the last year

170

175

180

185

190

195

200

205

oct.-18 déc.-18 févr.-19 avr.-19 juin-19 août-19 oct.-19

IGC daily grains and oilseeds index (GOI), Jan 2000 = 100.

IGC GOI is a weighted index, including 34 fob export quotations across a range of origins, spanning seven commoditiesFor further information, see: https://www.igc.int/en/markets/marketinfo-goi.aspx


o 2019/20 grains production to be the secondhighest ever, with larger harvests than lastyear of wheat and barley, but a smaller maizecrop.

o Production nearly enough to offset tighteropening stocks to keep overall availabilitiesbroadly unchanged y/y.

Total grains: supply and demand situation

70

80

90

100

110

120

130

oct. 18 janv. 19 avr. 19 juil. 19 oct. 19

Barley

Wheat

Maize

Rebased, 26 Oct 2018 =100

IGC GOI grains sub-Indices

Supply and Demand

o Consumption forecast at a record, includinggains for food, feed and industrial use.

o Global stocks to contract for third consecutiveseason, to a five-year low, mainly because of amaize drawdown in the USA and China.

o Trade at a new peak amid increases for wheat,barley and maize?

o Trade disputes; strong competition for exports;weaker prices; currency movements.

m t 16/17 17/18 18/19 19/20 y/y

(est.) (f’cast) change

Opening stocks 598 660 648 619 - 4.4%

Production 2,187 2,139 2,142 2,157 + 0.7%

Total supply 2,785 2,799 2,790 2,776 - 0.5%

Total use 2,125 2,151 2,171 2,184 + 0.6%

of which: Food 699 707 717 723 + 0.8%

Feed 945 961 971 972 + 0.1%

Industrial 356 366 365 371 + 1.8%

Closing stocks 660 648 619 592 - 4.3%

Major exporters a) 179 178 161 155 - 3.6%

Trade (Jul/Jun) 353 370 365 374 + 2.6%a) Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, USA


Wheat: production in selected countries

0

20

40

60

80

100

120

140

160

180

EU-28 China India Russia USA Ukraine Argentina

2019/20 2018/19 5-year average

m t

725

735

745

755

765

World

m t


Wheat: supply and demand outlook

Record opening stocks helped to cushion theimpact of smaller output in 2018/19 and theglobal market stayed amply supplied, even ifstocks fell for the first time in six years.

m t 16/17 17/18 18/19 19/20 y/y(est.) (f’cast) change

Opening stocks 227 248 271 265 - 2.1%

Production 757 762 733 762 + 4.0%

Total supply 984 1,010 1,004 1,027 + 2.4%

Total use 736 739 739 756 + 2.4%

of which: Food 505 513 518 524 + 1.1%

Feed 145 143 140 149 + 6.2%

Industrial 23 22 23 24 + 2.6%

Closing stocks 248 271 265 271 + 2.3%

Major exportersa) 79 83 70 69 - 1.0%

Trade (Jul/Jun) 177 176 169 173 + 2.5%a) Argentina, Australia, Canada, EU, Kazakhstan, Russia, Ukraine, USA

o Forecasts for production in 2019/20 point to asolid rebound : +4% with a good grade quality;

o Some uncertainties remain in southern hemisphere(Australia and Argentina), USA and Serbia (harvestdelays);

o Use is set to grow in 2019/20, mainly driven byfeed demand (+9m t), but with food (+6 m t) too;

o After the previous season’s fall, world stocks atend-2019/20 are projected to match the peak oftwo years ago, mainly with recovery in China andIndia;

o Nearly half of all stocks are in China and notaccessible. Ratio of stocks/use ex-China to staybelow recent average;

o Russia exports continue to lag the same time ayear ago, but the country is still expected to be thecurrent season’s top exporter;

o EU and Ukraine are maintaining a good pace withample supply.

Supply and Demand


Wheat: for the 1st time in six seasons world stocks contracted in 18/19, but could be a record next year

20%

22%

24%

26%

28%

30%

32%

34%

36%

38%

0

50

100

150

200

250

300

350

09/10 11/12 13/14 15/16 17/18 19/20

Others

India

China

Major exporters

Stocks-to-use

Stocks-to-use (ex. China)

m t Stocks-to-use

0

10

20

30

40

50

60

70

80

90

09/10 11/12 13/14 15/16 17/18 19/20

Argentina

Ukraine

Kazakhstan

Australia

Canada

Russia

EU

USA

m t

Major exporters’ stocks to be broadly unchanged y/y, but slightly below the five-year average

Nearly half of global stocks will be in China in 19/20 and not accessible. Ratio of stocks/use to stay relatively tight if China’s stocks are excluded.


Wheat: 19/20 y/y change in imports (Jul/Jun)

-2,0 -1,0 0,0 1,0 2,0 3,0 4,0 5,0

FE Asia

SS Africa

N & C America

N Africa

S America

Europe

NE Asia

World

y/y change, m t

Higher feed and food imports

Recovery in milling wheat imports, which fell in 2018/19

Increased local harvests– notable drop in expected purchases by Iraq

+2.5% y/y

Morocco to import more after a smallerharvest


Wheat: GOI sub-Index down 6% y/y amid generally comfortable supply outlook

150

175

200

225

250

275


5-year range 12 months to October 2019 Prior 12 months

Jan 2000 = 100

Uncertainty about crop prospects in some regions: wetness in US, but also dry in

Australia, Canada and hot in Europe and Russia. Spillover from maize gains.

Harvest delays in North America and deteriorating production prospects in Australia and Argentina. Solid export demand (EU, US, Ukraine ahead y/y)


Wheat: Export prices - competitive positions are evolving

175

185

195

205

215

225

235

245

juin juin juil. août sept. sept. oct.

EU (France) Russia SRW HRW

US$/t

195

205

215

225

235

245

255

265

juin juin juil. août sept. sept. oct.

EU (France) Russia SRW HRW

US$/t

Free on Board (FOB) Cost and Freight (C&F) to Egypt


Wheat: Russia starts MY slowly, but still forecast to be the largest exporter

0

2

4

6

8

10

12

14

16

18

18/19 19/20

m t

0

5

10

15

20

25

30

35

40

18/19 19/20

m t

Exports to end-Aug 2019/20 forecast


Maize: production in selected countries

0

15

30

45

60

75

90

105

120

Brazil EU Argentina Ukraine Russia

2019/20

2018/19

5-year average

Column1

0

50

100

150

200

250

300

350

400

USA China

m t m t


Maize: Record area is predicted in Ukraine in 19/20, with average output projected in Russia

0

1

2

3

4

5

6

0

5

10

15

20

25

30

35

40

01/02 03/04 05/06 07/08 09/10 11/12 13/14 15/16 17/18 19/20

Production

Harvested area

m t

<

>

m ha

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

0

2

4

6

8

10

12

14

16

01/02 03/04 05/06 07/08 09/10 11/12 13/14 15/16 17/18 19/20

Production

Harvested area

m t

<

>

m ha

Ukraine Russia


Maize: Evolving position of main Black Sea exporters

0%

5%

10%

15%

20%

25%

01/02 03/04 05/06 07/08 09/10 11/12 13/14 15/16 17/18 19/20

Share of global production

Share of global exports

Ukraine & Russia


Maize: Evolving position of main Black Sea exporters

0%

20%

40%

60%

80%

100%

01/02 04/05 07/08 10/11 13/14 16/17 19/20

Exports as a share of production

Russia has turned from a regular importer to a major regional exporter

Growing focus on exports in Ukraine

-1,0

0,0

1,0

2,0

3,0

4,0

5,0

6,0

01/02 04/05 07/08 10/11 13/14 16/17 19/20

Exports Imports

MY (Oct/Sep), m t


Maize: Ukraine is boosting market presence, but competition from South America is stiff

Ethanol margins &

export demand?

0

10

20

30

40

50

60

70

09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20

USA

Brazil

Argentina

Ukraine

Exports (Jul/Jun), m t

Ukraine - world’s No.2 exporter, first time ever


Ukraine is gaining competitiveness to some markets in Africa and Asia amid harvest pressure

IGC COST & FREIGHT tool: Maize c&f prices to Egypt


Ukraine is gaining competitiveness to some markets in Africa and Asia amid harvest pressure

IGC COST & FREIGHT tool: Maize c&f prices to South Korea


Soyabeans: Asia (China) has been the driving force behind growth in soyabean & products uptake… *

7%

4%

25%

61%

3%

* Share of total increase in demand in 10-year period to 2017/18


-4,0

-3,0

-2,0

-1,0

0,0

1,0

2,0

3,0

World China Mexico Egypt Turkey Argentina

m t, annual change in imports

0

20

40

60

80

100

120

140

160

09/10 11/12 13/14 15/16 17/18 19/20

World China

m t

Soyabean trade growth has slowed 2019/20 vs. 2018/19

Soyabeans: After the surge of recent years, a period of slower growth in trade is likely


Pulses: World trade is mainly driven by Asian imports, notably India

Global trade Regional imports

o World trade in 2019 (Jan/Dec)forecast at 16.6m t, + 3% y/y;

o Firm demand in Asia, includingBangladesh, India, Pakistan andTurkey;

o China emerged as the major globalimporter, however an 11% contractionin imports of dry peas due to smallerfeed demand would see a slight dropin total purchases;

o Buying by the EU may fall by 9% y/y

due to prospects of larger availability.

0

2

4

6

8

10

12

14

16

18

20

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Other*

S America

N&C America

Europe

Africa

Asia

m t

* Includes CIS, Oceania, unspecified


Dry bulk freight market near multi-year highs, but upturns in volatility remain a notable feature

The BDI touched a near nine-year peak in early-September, while gains on grains/oilseeds routes

were less pronounced

Uncertainty about trade and global economic growth contributes to high volatility at times, as the market approaches the implementation of IMO 2020 rules

20

40

60

80

100

120

140

160

180


IGC Grains and Oilseeds Freight Index (GOFI)

Baltic Dry Index (BDI)

Rebased, 24 Oct 2018 = 100

0

10

20

30

40

50

60

70

80

90


5-year range

Volatility

5-year average

HV20 (%)


Join us the 28th Grains Conference in London

2 days event350 delegates

6 workshops sessionsIGTC contributions


Follow International Grains Council (IGC) on

www.igc.int@IGCgrains

https://twitter.com/IGCgrains

https://twitter.com/IGCgrains

Impact of the Black Sea region on world grain supply and ... KONFERENCIJE.pdf · Exports as a share...

Documents

Transcript of Impact of the Black Sea region on world grain supply and ... KONFERENCIJE.pdf · Exports as a share...