Weather for northern hemisphere winter-sown wheat and barley crops has remained mostly favourable in recent weeks and harvests prospects currently look promising. As expected, world wheat area has not dropped much in response to low prices and current estimates suggest output within 10m tonnes or so of last year’s bumper 680m tonnes. EU wheat production is actually expected to increase by 5m or 6m tonnes, creating a larger surplus over domestic and export demand – even with an extra 2m tonnes going to the new outlets in ethanol fuel plants.

1. Digital Re-print - May | June 2010
Feature title: Hygienic Global Feed Markets - May | June 2010
Grain & Feed Milling Technology is published six times a year by Perendale Publishers Ltd of the United Kingdom.
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2. COMMODITIES
GLOBAL
GRAIN & FEED MARKETS
Every issue 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 influence your decision-making.
At the moment,
Big crops on the way which - like Europe’ -
flattened in the past season,
there has been
under-rated as
W
has shown signs of picking some analyst s
eather for northern are also keeping downward pressure on prices up. Stronger maize import suspect, resulting
oilseed/protein hemisphere winter- across the feed raw material sector. buying has also been seen i m p or t n e e d s
sown wheat and barley Sowing progress and crop development has from some of the big Asian could become
markets still have crops has remained been slower for spring wheat in Canada, parts importers like South Korea an impor tant
mostly favourable in recent weeks of Europe, the former Soviet Union and Far East and Japan. China has also inflationary factor
to see what the and harvests prospects currently look Asia after a long hard winter, followed by too also brought a frisson of for feedgrain
promising. As expected, world wheat little rain in some areas and too much in others. excitement in the market, buying some meal consumer, second largest maize user) costs, including wheat.
weather brings area has not dropped much in response However, with no major weather problems yet, signicant volumes from the US for the first this factor – i.e. Chinese weather and crop International wheat trade also had a more
to low prices and current estimates adequate crops are still being built into most time in several years in an attempt to control progress - will certainly be watched closely active spell mid-way through the period
for Northern suggest output within 10m tonnes or analysts forecasts for these regions too. Global rising domestic feedgrain prices. Given the by the international grain trade in the weeks under review as some import buyers appear
so of last year’s bumper 680m tonnes. supplies will also be supplemented by huge wheat size of China’s market (the world’s top soya ahead. If China’s domestic grain supply deficit to have started to scent bargains. However
Hemisphere oilseed EU wheat production is actually and ample maize stocks being carried in from
expected to increase by 5m or 6m last season.
crops – and what tonnes, creating a larger surplus over World barley production will be down for a
South American
domestic and export demand – even
with an extra 2m tonnes going to the
second year running and below consumption
but that will not require much stock drawdown. Efficient conveying The Hydro-Probe II Moisture Sensor
new outlets in ethanol fuel plants. In Europe itself barley output should still exceed
farmers will The spring planting season for maize, soyabeans demand, keeping carryover stocks at the high level
Measures Moisture & Reduces Cost
and quality milling wheats has meanwhile got off of the past two years. World sorghum, oats and
actually sow later to a record fast start in the USA where larger rye supplies are also fairly well balanced. All this is
sown areas should also translate into higher promising for consumers’ costs in the year ahead.
this year. However, production – a probable new record for maize On the demand side of the market, world
if the rest of the growing season runs normally. import trade appears to be starting to respond
if these projections Big South American maize and huge soya crops to cheaper grain and feed prices. US feed demand,
are anywhere near
correct, consumers
can probably look
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GFMT quarter page vertical 105 x 147 plus 3mm bleed.indd 1 21/04/2010 09:56:21

3. 5O%D
8 KE
BO
so far, there are no windfalls for exporters exchange rate which has spurred more EU cost of this will halt EU growth have seen the
like last year’s, when Iran turned around export trade and raising the intrinsic value euro plummet to four-year lows versus the
world wheat trade, emerging as the largest of grains in euros. The price rise was also dollar as we go to press. With some financial
single importer when it took 9m tonnes. exaggerated by a previous long standoff analysts questioned the long term survival
INDONESIA’S NO.1 LIVESTOCK AND FEED INDUSTRY SHOW
In fact, this year’s, Iranian crops may have between farmers and consumers with their of the euro itself, it seems likely that the
recovered enough to allow it to export to opposing views on the value of grain. When currency will stay under pressure for some
its Arab neighbours. India is also exporting exporters and domestic users eventually time yet, keeping EU cereals more expensive
surpluses. started to run out of stock to cover their than expected – at least until the next crop
Even so, forward markets for both wheat commitments, farmers and merchants had a is seen to be on its way and farmers have to
and maize continue to point ‘North’ with strong hand to play and milling wheat prices clear more bin space.
higher prices. This is especially true of wheat leapt to three-month highs. Last but not least, world financial /
which this month displayed a hefty 17% Protein markets have been dominated commodity markets are also watching US
premium on the Chicago futures markets for by the conflict between tight US old crop and European government moves to curb
spring 2011 deliveries. The forward strength
is mainly driven by ‘outside’ investors
and record global new crop supplies. Latin
American soya output has met our most
the influence of speculative money in grain
futures markets with their huge influence
THE 5TH INDONESIA’S NO.
1
buying into distant futures markets on the
assumption that grains are ‘undervalued’
optimistic trade forecasts but slow marketing
caused by weather, currency differentials,
over the cost of grain in physical markets.
Given the key role the ‘outside’ forces
LIVESTOCK AND FEED INDUSTRY EVENT
versus other commodities and assets, that expensive Latin American freight costs and played in the record grain price boom of the
global economic recovery will ultimately fears of Argentine farmer/port strikes has previous season, such curbs will doubtless
be welcomed by grain and feed consumers.
Commodity highlights -
Chinese maize demand offsets record C
US sowing pace M
Market-leading US maize futures prices Y
have firmed up in recent weeks as big US
CM
crop hopes have been subdued by ideas that
China might continue to raid world supplies MY
to fill its growing deficit in this grain. China CY
used to be a major maize exporter itself, CMY
overtaking Argentina as the second largest
supplier earlier this decade on the back of K
annual rises in its domestic production. In
recent years, however, China’s own crop
expand demand at a faster rate and/or that forced top soya importer China and other expansion has slowed amid competition
something major might eventually go awry buyers to keep mopping up remaining US for dwindling agricultural land resources,
with crop weather. old crop supplies. Some analysts see this droughts and other weather problems. At the
However, until there is any evidence to buying (at a time when the world is facing same time, its domestic demand continues to
support that view – and with supply/demand a potential new crop glut of soyabeans) as reach new record levels, mostly driven by its
fundamentals as slack as they are right now evidence of a bigger problem with China’s expanding feed industry. As the price of corn
- it remains very hard to see how higher own oilseed crop and perhaps a pointer to on Chinese markets has begun to soar, the
forward prices can be justified. Consumption much greater feedstuff demand from this government has begun to make big inroads
of wheat, outside of shifts in feed demand buyer down the road. into its strategic reserve stocks, auctioning
Hosted by Supported by Media Partners Organised by
(mainly caused by fluctuations in maize Grain markets are also continuing to them off to feed users in an attempt to P
A R
T E
M
Directorate General
E
supply), is still growing only slowly over the struggle with volatile ‘outside’ influences – control the market. China is actually the
DE
N
of Livestock Services,
A N
P E
Department of
R
I
IN R DEPARTEMEN PERDAGANGAN
Agriculture D U S T REPUBLIK INDONESIA
long term and will not expand by enough in the macro-economic markets like equities, largest maize stockholder by far outside of Napindo
2010/11 even to match this year’s forecast gold, crude oil and currencies. Most of the the USA with an estimated 53m tonnes at ! " # $ % & $ ' # ( # '
production. That means wheat surpluses are news has centred on the problems in the the close of this season (end of August( equal
likely to keep growing in 2010/11, providing eurozone and the interminable efforts made to about a third of its annual use (compared
an ample security stock in the run-up to next by German, French and other leaders to with the US which seems to be quite relaxed
year’s harvest. assure markets that Greece’s economic about hold less than 16% of its consumption REPLY COUPON www.indolivestock.com
Ironically, the adequately supplied problems can be contained and will not be in stocks). Officially, the Chinese authorities
European wheat market has recently ignored repeated across south Europe. But even a say they can manage comfortably on their Please send me more information on exhibiting Name: .......................................................................................................................................................................................................
this global/domestic picture of plenty to rise trillion-dollar rescue package put together stocks but many western experts have at INDO LIVESTOCK 2010 EXPO & FORUM
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trend is down to the plunging euro/dollar that the EU is back in control. Fears that the Chinese crop figures are inflated and that last at INDO LIVESTOCK 2010 EXPO & FORUM
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For futher information, please call/ fax to:
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PT. Napindo Media Ashatama,
Jl. Kelapa Sawit XIV Blok M1 No. 10 Billy & Moon, Tel: ......................................................................... Fax: ..........................................................................................................................
GrainFeed
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30 | may - June 2010 Grain &feed millinG technoloGy Telp. +6221 8644756/ 85, 8650962, Fax. +62218650963 PREVIOUS PAGE NEXT PAGE
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crop is seen to be up and running. Others than last year’s). As always there is still time EU wheat prices up
are not so sure, questioning the accuracy for a mid-season drought, a heatwave to
of Chinese stock estimates and pointing to spoil pollination or a wet harvest but unless EU wheat markets staged a remarkable
a late cold spring delaying Chinese maize conditions do turn unfavourable the crop recovery last month as many consumers
sowing this year as possibly pointers to a outlook is very promising. Some sources also came in to cover long-delayed needs only to
greater deficit and perhaps 2m to 4m tonnes suggest US farmers might sow more than find farmers digging in their heels for higher
of imports this year (versus about 600,000 the officially forecast 88.8m acres, perhaps prices. Primarily, the move reflected the weak We pride ourselves in implementing > Turnkey installations
bought to date). as much as 90m or more. That could push euro stimulating more export demand for EU the latest technological
However, even if that were the outcome, production from the world’s largest maize grain. However, it was also fed by bouts of improvements > Cleaning equipment
the world maize market should have no supplier up by 15m or even 20m tonnes from strength in the US market, largely caused by
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causing a big jump in prices. The US, which Analysts are currently looking for a rise large short (sold) position in Chicago futures. services
exports about 50m tonnes a year (about of no more than 10m tonnes in US domestic However, while the US soft winter wheat > Extraction Control
57% of world maize trade) is hardly short demand, mainly down to higher ethanol use crop, as traded on Chicago, is expected to Our goal is complete customer > Packaging
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stocks of this grain increase in the coming another 1.5m. That would still leave the from last year are high and demand for this
season. About 38m tonnes of maize exports US able to export 5m tonnes more than in grade poor, especially on export markets
should also be available from other suppliers, 2009/10, without eating into the comfortable where much cheaper European and ‘Black
led by Brazil, Argentina, the Ukraine, other carryover stocks carried in from last season. Sea’ (former Soviet Union) soft wheat has
eastern European nations, India and South US stocks are larger than expected a few dominated most of the non-routine business
Africa. months ago after official surveys found less for months.
The world maize balance meanwhile looks had been used than expected - despite ideas Higher up the wheat quality scale there is
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to grow by about 26m tonnes in the coming might mean more grain having to be fed per A lot of higher protein Canadian wheat has Konya Organize Sanayi Bölgesi 7 Sokak
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The US maize crop picture could hardly remotely bullish for maize either in terms in Australia which failed to export as much as T: +90 332 239 1016 (pbx)
be much different from that of the past two of prompt or forward delivery prices. Yet it needed to in the first quarter of this year F: +90 332 239 1348
years when incessant rains delayed sowings some of banks and investment houses have from a bumper harvest. As a result, hard E: unormak@unormak.com.tr
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Unormak.indd 1 24/11/2009 15:56
32 | may - June 2010 Grain &feed millinG technoloGy Grain &feed millinG technoloGy PREVIOUS PAGE NEXT PAGE may - June 2010 | 33

5. COMMODITIES
US Dark Northern spring wheat for shipment rising sharply from Argentina (if the crop This situation is unlikely to last much
out of the Gulf fell from $294 to $270/tonne there recovers as expected) and moderately longer as the full weight of record Latin
compared with $325 this time last year. Hard for Europe too, based on crop expansion, American soyabean crops comes to bear
Red Winter Wheat also slipped from $199 to weak currency and smaller crops from key on the market. These are up by about 36m
$184 versus $243 a year ago. Unusually the competitors in the former Soviet Union tonnes in a season when US output also
VIVChina 2010
lower grade Soft Red Winter wheat has been (currently expecting a 5m tonne drop in rose 11m to a new record 91.4m tonnes.
trading at a premium of up to $6/tonne over production). Canada will also have a smaller The total increase in terms of world soya
HRW compared with its normal discount of crop but Australia should have another large meal equivalent is over 37m tonnes whereas
around $50/tonne. Along with the soaring one and with countries like India and Iran also demand for the latter is only up by about 7m
dollar, this has shut the US out of most soft joining the export fray, keen competition tonnes this season.
Soya meal prices have already eased in
recent weeks on US and European market
and, if the US crop continues to get good
weather, the trend is expected to remain September 6 - 8, 2010
Beijing
downward.
Next year, supply may not be quite so
loose as USDA expects soya production
in South America to slip back by 7m or 8m
tonnes. Even so, if the US crop again exceeds
90m, as currently seems likely, new supplies
a 2010
of soyabeans will again outpace growth in
world demand, leading to carryover stocks
IV Chin
(into 2011/12) rising to a new record 66m
d visit V
tonnes.
Moreover, even if soyabean output does
me an
slip back a bit in 2010/11, USDA expects
Co
wheat import tenders as buyers paid up to for import customs should continue for that to be offset by increases in supplies of
$25/30 less for EU/Black Sea grain. Even some time yet. This should help keep the cottonseed, rapeseed and sunflowerseed,
US hard spring wheat is struggling to find price of wheat down on international and leading to a decline in world oilseed
enough buyers amid the competition from EU markets. production of just 2m tonnes. That will be
similar Canadian grades. eclipsed by an expected 75.5m tonnes of
World wheat production in 2010/11 is Oilmeals/proteins various oilseeds carried into the new 2010/11
currently forecast by the IGC at 660m tonnes season this autumn – 11m more than last year.
versus last year’s 675m due to slightly lower Soya-meal costs had a brief run-up in At the moment, oilseed/protein markets
sown area and ideas that yields will probably April as top importer China continued to still have to see what the weather brings
slip from the past two years’ above-normal
levels. The USDA is more optimistic,
pitching output at 672m tonnes (680m) but
buy heavily from the US at the tail – end of
the latter’s season. Latterly, however, prices
of beans and meal have been working lower
for Northern Hemisphere oilseed crops
– and what South American farmers will
actually sow later this year. However, if these
www.viv.net
has consumption at 667m (up 15.8m) versus again amid confirmation of record crops in projections are anywhere near correct,
the IGC’s forecast 654m (+9m). The biggest South American and an excellent start to the consumers can probably look forward to
increases are seen in EU ethanol and feed US planting and growing season. some declines in oilmeal costs later in 2010.
demand (+3.2m in total) and former Soviet
countries (mainly in feeds, +3.8m tonnes).
Latest estimates suggest China will import
49m tonnes of soyabeans in 2010/11 (starting
The international platform
for the Chinese Feed to Meat industry
Demand is also expected to rise in India and September 1) – accounting for 57% of world
in aggregate in a number of smaller countries. trade. It was also consume about a quarter
The bottom line is that both the USDA and of all the world’s soya meal production
the IGC see world wheat stocks increasing (40m tonnes), putting it well ahead of the
next season - by 4.7m and 6m tonnes EU’s 32m and the USA’s 27.6m tonnes. In
respectively. At 198m tonnes, USDA’s stock recent months it has surprised the markets
forecast for July 2011 would be over 73m by buying up the USA’s rapidly dwindling For information about
more than the 2007/08 total and a nine- old crop stocks, partly because it is still
adverting opportunities within
year high.
USDA also sees world wheat exports
next season staying fairly flat at around 129m
cheaper to ship beans of the Northwest
American coast than from Latin America
and partly because of concerns that strikes in
GFMT, please contact
Caroline Wearn
New CIEC, Beijing
tonnes with no notable swings in importing Argentina, port congestion in Brazil and slow Tel: +44 1242 267707
country trade. Plentiful supplies should keep selling by producers will result in delays in
Email: carolinew@gfmt.co.uk
competition for sales brisk with exports shipments from the Latin American origins.
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