The Marketing year 2012/13 saw reduced grain availability with resulting high prices and low stocks. Cereal, oilseed and protein crop harvests in 2013 have so far improved considerably on last year. This means a large change for the start of the marketing year 2013/14. All major individual crops are seeing an increase in harvest from last year, up by more than 10% on average. For the time being, this signals the end of potential supply shortages and begins what many are terming as the start of a new era of plenty, where supply outstrips demand and the world can build its stocks of cereals. This has the potential of a bear market on pricing and ultimately more freedom to export for producers.
The Black Sea has again become a prominent exporter of grains and in Ukraine a record harvest of corn is anticipated. This country is destined to be one of the major future suppliers of corn to the world markets and with news of recent sales to China and South Korea, it appears the world’s major consumers are quick to exploit the opportunity of this new diversity of supply. The wheat supply is also improving and within the first few months of the new season Russia has exported more than 8.0 million tonnes of wheat to destinations as diverse as Vietnam and Indonesia. Quality is the key to this supply and with the correct logistics, organisation and control, quality sensitive destinations are being satisfied.
Following last year’s incidence of mycotoxin presence in many central European harvests, the region has seen a very cautious start to the new campaign. It is hoped that the issues that hampered exports from this region last year will be improved in many countries. A prudent approach is required and accurate supply chain monitoring, particularly in the Danube Region, is being exercised to control any risks and to ensure success of the eventual exports.
Western Europe has made a steady, but solid start to the new export season and longer term opportunities for France and particularly Germany, are anticipated. Cereal crops are plentiful and in most countries, better than last year, with good quality being seen in Germany and the Baltic states. Eventually, long export seasons will be seen, particularly on wheat from these countries, as their high quality becomes more important as others run out. Overall, production numbers on grains increased by approximately 9% for the EU 28, which should mean an overall increase in exports from this region of 2-3%.
North America has shown significant improvement after a severe drought damaged production volumes last season. Wheat, soybeans and corn all look to be excellent prospects for export from the USA. In Canada, the picture remains the same, with the addition of good prospects for Canola. China recently requested 8.0Mio MT of soft wheat, with the majority of early supply being loaded out of the USA. This situation will probably be the same for corn. According to some sources, China may require as much as 12-14Mio MT of corn imports prior to next season. The future looks busy for North American exporters.
In the meantime, southern hemisphere prospects also look strong, with the possible exception of Argentina, which has been experiencing some weather issues. Brazil looks as though it will produce its biggest soybean crop ever. Australians are anxiously awaiting their forthcoming wheat crop, which, if all continues to go well, will be excellent for export and may supply much of the increased import demand from China in the new year.
The scene is set for a large export season for the main agricultural commodities. Be sure to think of SGS when organising your logistics and quality control procedures. We are here to assist you in maximising the potential of this busy season and wish you every success in your trading.