1.4m growth in the season now drawing to a close. The growth forecast is spread over a whole host of countries but led by major importers like Brazil and Egypt. As usual there will be winners and losers on the exporter side of the market, the former led by Europe, which the USDA expects to regain 5m tonnes of the near 10m tonnes of annual business it has lost in recent years to the competition from Black Sea exporters. USDA is more guarded on US export potential, however, adding just 1m tonnes to next season’s total which, at 25m is not the worst performance of recent years but still way below its longerterm average. For prices, USDA has a wide range of possibilities in the US market, viewing an average ex-farm return between US$4.50/5.50 per bushel – a median US$5 versus this season’s estimated US$4.70. The futures markets also continue to point higher by 11 percent one year hence and about 17.5 percent over current levels for the spring of 2020. Maize costs near two-year highs Dry weather has taken a heavier than expected toll on this year’s Latin American maize harvests. Worst-hit Argentina’s crop is now expected to reach only 33m tonnes compared with 40m expected earlier in the year and 41m actually produced in 2017. High hopes had been pinned on its larger neighbour Brazil coming to the rescue with another mega crop. However, this too has been pruned back – from an expected 95m tonnes in March to just 87m recently. Last year, Brazil produced 98.5m tonnes. For maize importers the impact has been softened by the larger than usual stocks both producers have carried in from the previous season of plenty. However, that means smaller stocks to start the next (2018/19) season so a probable greater sensitivity to any weather issues which may occur then. The USDA’s first look at 2018/19 global maize crops in May suggests Brazil could recover to produce 96m tonnes and Argentina rebound to the 41m tonne level. If the weather cooperates more, that spells reasonably adequate, if not abundant export supplies from Latin America. For the fourth largest corn exporter, Ukraine, USDA is looking for a potential crop rebound from last year’s relatively low 24m tonnes to as much as 30m, allowing a substantial increase in exports. Up and coming supplier Russia is also expected to produce a bigger 2018 crop – possibly a record 19m tonnes versus last year’s 13.2m, again allowing more for export. The EU’s own maize harvest on the other hand is seen fairly stable at around 61m tonnes, around the average of the previous two years. Increased maize usage within the bloc is expected to keep its import demand high, near to the current seasons estimated 16.5m tonnes. As usual at this time of year, maize market attention has also been heavily focused on how the US planting outlook will 106 106 | |June June2018 2018- -Milling Millingand andGrain Grain
influence supplies and prices worldwide. Cold wet weather has been delaying sowing and the possibility has emerged that some planting plans may not be fulfilled or that yield potential might suffer. At this stage though, the USDA is sticking with an 88m acre planted area forecast (versus last year’s 72.7m and 2016’s 86.7m and yields at a relatively robust 174 bushels/acre (last year 176.6 and in 2016 174.6bpa. That suggests a crop of about 357m tonnes – about 14m less than last year. Based on fairly steady US consumption (317m tonnes) and 4m less exports (53m), that works through to a US ending stock of about 43m tonnes – down 13m on the year but not small by historical comparison. Global maize stocks are also expected to drop as consumption increases by 22.5m tonnes, leading to a carryover of 159m. That would be down almost 36m on the year and 68m under the 2016/17 peak and the lowest for several years. Against record consumption it also generates a low 14.5 percent stock/use ratio. That may be enough to continue supporting maize prices near the recent higher levels, at least until the US crop is safely in the ground and preferably, up and running too. On that front, the latest update from USDA’s crop scouts was a little more encouraging, estimating 62 percent had now been sown – close to the long-term average, albeit with the some wide state-wise variations, some well ahead and others far behind normal. Nationally, average crop emergence seems fairly normal but some mixed weather in the near-term forecast suggests this factor will remain a key market focus in the weeks ahead. The USDA is currently forecasting US ex-farm maize prices in a range of US$3.30/4.30/bu for the new season that starts in September, compared with US$3.25/3.55 projected for the current season. The CBOT futures market projects values nine percent higher by mid-2019 but levelling off in the subsequent season. Other Coarse grains The USDA reports strong global demand supporting firm barley prices so far in 2017/18, revising up its forecast for world trade to 28m tonnes, seven percent over the five-year average. China, Iran and Turkey have all been importing more than expected although key buyer Saudi Arabia has recently been taking less as it works down large stocks, having so far imported 10 percent more than at this time last year. In the season so far global barley exports clocked up a 10 percent increase. Exports were led by Australia but its share shrank somewhat amid rising competition from Russia, now the second largest supplier, overtaking Ukraine, which filled that slot last year. Current pointers suggest 2018/19, starting stocks will be again at record low levels. Estimates of Chinese barley imports – already up 17 percent for the season to date, continue to increase and in 2018/19 season should propel this buyer into the top importer slot, ahead of Saudi. Brazil rescuing soya supply? Soya supply concerns have kept oilseed meal costs firm this