JEDDAH – Grains supply and demand estimates for 2012/13 have been revised up slightly, but output is still seen sharply lower, down 4 percent year-on-year (y/y,) at 1,777 million tons (mt), the International Grain Council said Thursday in its Grain Market Report. The world produced 2,241 million tons of grain in 2012, down 75 million tons or 3 percent from the 2011 record harvest. The drop was largely because of droughts that devastated several major crops—namely corn in the United States (the world's largest crop) and wheat in Russia, Kazakhstan, Ukraine, and Australia. Each of these countries also is an important exporter. Despite an expected contraction in consumption for the first time in 14 years, stocks are set to fall by 45m t to a six-year low. For wheat, the focus is now on the condition of the northern hemisphere 2013/14 winter crops, particularly in the parts of the US that have experienced drought conditions. Elsewhere, prospects are generally more promising and global output is tentatively projected up 4 percent y/y for 2013/14, with a 2 percent increase in area. The market is particularly tight with global end-season stocks expected to be down by 20m t y/y at a nine-year low. Among other coarse grains, barley availabilities are also limited, with output forecast down 3 percent y/y and major exporters' carryovers placed at the lowest level in 17 years. Rice markets remain relatively stable with support from tight export availabilities in Thailand and Vietnam mostly offset by pressure from limited export interest. Rice output is forecast unchanged y/y and, while global stocks are expected to show a small decline, major exporters' inventories are seen rising to a record 37.1m t. World soybeans markets have softened over the month as early pressure from improved weather conditions in Argentina and Brazil was only partly offset by recent speculative fund buying, strong export demand and renewed concerns about dryness in parts of South America. Record crops in the region underpin the forecast for a recovery in global inventories. Meanwhile, the World Agricultural Outlook Board said early this month in its World Agricultural Supply and Demand Estimates that global wheat supplies for 2012/13 are projected slightly lower based on reduced production prospects in Argentina and lower reported production in Russia. Argentina production is reduced 0.5 million tons with lower expected harvested area and yields. Heavy December rains have increased expected area losses and harvest reports also suggest lower-than-expected yields. Russia production is lowered 0.3 million tons based on the latest government reports that reduce yields slightly. Global wheat exports for 2012/13 are reduced slightly. Projected exports are lowered 0.5 million tons each for Argentina, Australia, and Canada, but raised 0.5 million tons for Russia and 0.2 million tons for Ukraine. Imports are raised 0.2 million tons for Iran. Feed and residual use for Russia is lowered 0.5 million tons as available domestic supplies tighten. World wheat ending stocks for 2012/13 are projected slightly lower with increases for Australia, Canada, and Iran mostly offset by reductions for the United States, Russia, and Ukraine. Global coarse grain supplies for 2012/13 are projected 2.9 million tons higher mostly reflecting the larger US corn crop and increased corn production for South America. Paraguay corn production is raised 1.1 million tons on a higher projected yield, which is in line with historical yield and production revisions this month. Brazil corn production is raised 1.0 million tons on higher expected yields with favorable December rainfall across the southern growing areas. Argentina corn production is raised 0.5 million tons as lower harvested area is more than offset by higher expected yields. Heavy rains and flooding in November and December delayed planting and reduced area prospects. Since then, clearing weather, the absence of threatening heat, and abundant soil moisture have set the stage for strong year-to-year yield increases, particularly in the central growing region. Partly offsetting these increases are reductions in corn output of 0.5 million tons for Russia and 0.1 million tons each for the Philippines and Serbia. Changes for Russia and Serbia reflect the latest government estimates. The smaller expected crop in the Philippines is based on the latest assessment of typhoon damage in December. Changes to 2012/13 global coarse grain exports, in the aggregate, are small this month, but increases in 2011/12 and 2012/13 local year corn exports for South American countries have substantial implications for US corn exports during the 2012/13 September-August marketing year. Exports for Argentina are raised 0.5 million tons for 2011/12 and 1.0 million tons for 2012/13. Exports for Brazil are raised 0.5 million tons for 2011/12 and 1.5 million tons for 2012/13. With the local marketing years in both of these Southern Hemisphere countries running from March through February, increases in both years weigh against US export prospects for 2012/13. Similarly, in Paraguay, where the local marketing year runs from January through December, corn exports are boosted 0.6 million tons and 0.5 million tons, respectively, for 2011/12 and 2012/13, also reducing prospects for US corn exports during the current marketing year. EU-27 corn exports are also raised 0.5 million tons for 2012/13. Global corn consumption for 2012/13 is raised 5.6 million tons mostly on the increase in US corn feeding this month. Consumption is raised slightly for Paraguay, but lowered slightly for Russia and Serbia. Global corn ending stocks for 2012/13 are projected 1.6 million tons lower with lower expected stocks in the United States, Brazil, and Argentina. Stocks are raised for Paraguay with the larger projected crop. — SG
