World Grain Supply and Demand

With the harvest progressing, the prospects for the 2014 crop year are becoming clearer.  The International Grains Council (IGC) has published its latest Grain Market Report, the figures are summarised in the table below. 

For both wheat and maize, a strong recovery for the 2013 harvest, after the terrible weather in 2012, has been followed by a dip in production for the 2014 harvest.  Wheat production is forecast to be down by 4.7% and maize output falls by 0.5% (5 million tonnes).  Whilst maize remains the driving force for price changes in global grains, this slight fall in production is unlikely to have a major impact on firming prices.

The most important crop in the UK is wheat, and the forecast for 2014 shows a tightening of the market with an increase in consumption and a reduction in production.  The latter mainly from an expected drop in output from North America.  However, global stocks are still plentiful, and there is little sign of any shortage that would see prices rise.

Whilst not shown in the table, soybean production, an important factor in animal feed prices, is forecast to increase by nearly 8%. 

Stocks are therefore also projected to rise substantially (up by over 25% on the opening levels). This explains a lot in the oilseed market. Farmers and long holders of pulses should also be aware that soybeans contain almost twice as much protein (meal) as oil and that it is traded as much for that as the oil. Those expecting pulse prices to come back into line with wheat shortly might be right.