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04‐May‐18
1
13th Session of the AMIS Global Food Market Information Group
Food Markets Wheat & Maize Outlook 2018/19
THIRTEENTH SESSION OF THE AMIS GLOBAL FOOD MARKET INFORMATION GROUP
FAO Headquarters, Rome3-4 May 2018
13th Session of the AMIS Global Food Market Information Group
I. Macro conditions & food markets
II. Market Outlook for wheat and maize
Presentation Outline
04‐May‐18
2
13th Session of the AMIS Global Food Market Information Group
• “The global economic upswing that began around mid-2016 has become broader and stronger”
• World economy to grow at 3.9% this year and next
• Advanced economies to grow by 2.5% this year while emerging market and developing economies grow by 4.9%
• But “the prospect of trade restrictions and counter-restrictions threatens to undermine confidence and derail global growth prematurely”
World economy in 2018 to grow even faster than in 2017, but!
Source: World Economic Outlook, IMF April 2018
13th Session of the AMIS Global Food Market Information Group
Commodity and oil pricesDeflated using US consumer price index; index, 2014 = 100
• The IMF’s sub-indices of food and agricultural raw materials rose 4.1 percent and 6.0 percent between Aug. 2017 to Feb. 2018, respectively, mostly reflecting diminishing excess supply
• Commodity prices, notably of oil and natural gas, have risen since last year, “but the medium-term outlook remains subdued” – not so sure!
• Oil prices (not shown) continue to rise, hitting near 4-year highs recently
Source: World Economic Outlook, IMF April 2018
04‐May‐18
3
13th Session of the AMIS Global Food Market Information Group
VIX - CBOE Volatility (fear) Index
13th Session of the AMIS Global Food Market Information Group
Exchange rate uncertaintyWeaker or stronger US dollar?
Source: AMIS Market Monitor, May 2018
112114116118120122124126128
Apr
-17
Ma
y-17
Jun-
17
Jul-1
7
Aug
-17
Sep
-17
Oct
-17
Nov
-17
Dec
-17
Jan-
18
Fe
b-1
8
Ma
r-1
8
Apr
-18
Nominal Broad Dollar Index Apr 2017- Apr 2018
Jan 1980 = 100
AMIS Countries Currency April 2018
AverageMonthly Change
Annual Change
Argentina ARS 20.2 0.2% -31.7%Australia AUD 1.3 -0.7% 2.2%Brazil BRL 3.4 -3.6% -8.3%Canada CAD 1.3 1.7% 5.4%China CNY 6.3 0.4% 8.7%Egypt EGP 17.6 -0.2% 2.3%EU EUR 0.8 -0.3% 12.9%India INR 65.5 -0.7% -1.5%Indonesia IDR 13,791.9 -0.3% -3.7%Japan JPY 107.3 -1.2% 2.5%Kazakhstan KZT 325.2 -1.4% -4.1%Rep. Korea KRW 1,067.4 0.2% 5.8%Mexico MXN 18.3 1.3% 2.2%Nigeria NGN 305.2 0.8% 0.5%Philippines PHP 52.1 0.1% -4.5%Russian Fed. RUB 60.5 -6.0% -7.2%Saudi Arabia SAR 3.8 0.0% 0.0%South Africa ZAR 12.0 -1.8% 10.4%Thailand THB 31.3 0.0% 9.2%Turkey TRY 4.1 -4.5% -11.3%UK GBP 0.7 1.0% 10.4%Ukraine UAH 26.1 0.7% 2.6%Viet Nam VND 22,786.5 0.0% -0.5%
AMIS Countries' Currencies Against US Dollar
04‐May‐18
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13th Session of the AMIS Global Food Market Information Group
• FAO Food Price Index averaged 176.6 points in 2017, 8.2% above the 2016 average and the highest since 2014.
• Only sugar prices fell in 2017 while dairy and meat prices rose sharply. Prices of cereals and vegetable oils also rose.
• The index is up 3% (5 points) since the start of 2018, supported by firmer prices of cereals (up 12%) and dairy products (up 11%).
• In April, the Index averaged 173.5 points, unchanged m/m but up 2.7% from April 2017
Food prices higher than last year
Source: FAO www.fao.org/worldfoodsituation/
13th Session of the AMIS Global Food Market Information Group
Prices remain well below their peaks
Source: FAO
Food Prices IndicesApril
2018
March
2018m/m
Jan‐Apr
2018
Jan‐Apr
2017
Change: Jan‐Apr '18
over Jan‐Apr '17
% %
FAO Food Price Index 174 173 ‐0.2 172 173 ‐0.6
Cereals 168 166 ‐1.7 163 148 9.3
Oils 155 157 1.4 158 173 ‐9.7
Sugar 177 186 4.8 189 267 ‐41.3
Meat 169 171 0.9 169 164 3.4
Dairy 204 197 ‐3.4 193 190 1.5
Food Prices Indices April 2018
Change:
April 2018 over
peak values
%
FAO Food Price Index Feb‐2011 240 174 ‐28
Cereals June‐2008 268 168 ‐37
Oils Feb‐2011 287 155 ‐46
Sugar Jan‐2011 420 177 ‐58
Meat Aug‐2014 212 169 ‐20
Dairy Feb‐2014 275 204 ‐26
Peak values
04‐May‐18
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13th Session of the AMIS Global Food Market Information Group
Market outlook 2018/19
13th Session of the AMIS Global Food Market Information Group
• Generally good conditions in the northern hemisphere
• In the US, conditions continue to deteriorate in the southern Great Plains due to prolonged drought
• Exceptional conditions in the eastern parts of EU and southern Russia, owing to favourable temperatures and soil moisture
Crop Monitor - Wheat (as of late April 2018)
04‐May‐18
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13th Session of the AMIS Global Food Market Information Group
Wheat supply and demand outlook: still large supplies
100
145
190
235
280
400
500
600
700
800
18/1916/1714/1512/1310/1108/09
million tonnes million tonnes
Stocks (right axis)Production (left axis)
Utilization (left axis)
Production declines for the second consecutive season but still above-average
Russia down 8.9mt, at 77mt Australia up 2.5mt, at 23.7mt
EU down 2mt, at 150mt US up 1.1mt, at 48.5mt
India down 2.5mt, at 96mt
Argentina down 1.4mt, 17.1mt
Utilization growth to increase more slowly, on weaker feed use
2016/172017/18 estim.
2018/19 f'cast
Change: 2018/19 over 2017/18
%
World Balance Production 759.6 757.9 746.6 -1.5Supply 995.9 1 015.5 1 023.3 0.8Trade 176.5 173.6 174.1 0.3Total utilization 734.5 737.7 743.3 0.8Food 497.5 503.2 508.2 1.0Ending stocks 257.6 276.7 279.0 0.8World stock-to-use ratio (%) 34.9 37.2 36.9
million tonnes
World wheat market at a glance
13th Session of the AMIS Global Food Market Information Group
Record wheat stocks, but!
• Wheat stocks in China climbing to 115mt in 2018/19– up almost 12% y/y and representing over 40% of the global total.
• Excluding China, world wheat stocks falling for the seventh consecutive season. Inventories to decline in the EU, Russia and US.
• Stocks-to-disappearance (major exporters) to fall from 20.9% in 2017/18 to 19.2% in 2018/19.
0
80
160
240
320
2018/192017/182016/172015/162014/150
10
20
30
40million tonnes percent
Rest ofthe world
China
World stocks-to-use ratioStocks-to-disappearance ratio of major exporters
estim. f’cast
Majorexporters
04‐May‐18
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13th Session of the AMIS Global Food Market Information Group
Top 10 wheat importers*
Top 10 wheat exporters*
Leading wheat trading counties(July/June)
2014/15 ‐
2017/18
average (1 )
2017/18
est.
(2 )
2018/19
f 'cast
(3 )
Change (3 )
over (1 )
Change (3 )
over (2 )
% %
Russian Fed. 28.3 38.0 36.5 29.1 ‐3.9
EU 29.3 22.0 25.7 ‐12.2 16.8
United States 24.4 23.9 24.7 1.0 3.3
Canada 22.0 21.8 22.2 1.0 1.8
Australia 17.8 16.8 16.8 ‐5.8 ‐0.2
Ukraine 16.0 17.4 16.5 3.0 ‐4.9
Argentina 9.5 13.4 11.6 21.9 ‐13.4
Kazakhstan 6.9 7.3 7.3 5.4 0.0
Turkey 4.3 4.5 4.5 5.8 0.0
Mexico 1.1 1.0 1.0 ‐12.9 0.0
million tonnes
* Exports are based on a common July/June marketing season
2014/15 ‐
2017/18
average (1 )
2017/18
est.
(2 )
2018/19
f 'cast
(3 )
Change
(3 ) over
(1 )
Change
(3 ) over
(2 )
% %
Egypt 11.6 12.0 12.5 7.5 4.2
Indonesia 9.7 12.0 12.0 23.8 0.0
Algeria 8.2 8.0 8.1 ‐0.7 1.3
Brazil 6.7 7.2 7.0 5.1 ‐2.8
Bangladesh 5.0 6.2 6.0 19.8 ‐3.2
Japan 5.7 6.0 5.6 ‐1.4 ‐6.4
Philippines 5.3 5.5 5.5 4.0 0.0
EU 5.7 5.5 5.5 ‐3.5 0.0
China 5.2 5.6 5.4 4.4 ‐3.6
Nigeria 4.8 5.1 5.1 6.8 0.0
million tonnes
*Imports are based on a common July/June marketing season
• Russia number one exporter for the second consecutive season
• Wheat markets in Indonesia, Bangladesh and Nigeria show strong potential
13th Session of the AMIS Global Food Market Information Group
Wheat prices higher than last year
IGC Wheat Price Index CBOT wheat futures for September
150
160
170
180
190
200
210
DNOSAJJMAMFJ
2017
2018
January 2000=100
155
165
175
185
195
205USD per tonne
2017 values2018 valuesS O N D J F M A
• Wheat prices remain above last year, largely on concerns about the deteriorating winter wheat conditions in the US and weather worries over spring planting conditions
• Large export availabilities (Black Sea and the EU) have so far limited the increase
04‐May‐18
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13th Session of the AMIS Global Food Market Information Group
Wheat: CME net-length as % of open interest
In April managed money reduced its net position in wheat slightly – weather played important role in influencing prices and hence positions in recent months
-60
-40
-20
0
20
40
60
20182017201620152014
-60
-40
-20
0
20
40
60
20182017201620152014
percent
Commercial Managedmoney
Swapdealers
Jan 2014-Apr 2018 Apr 2017-Apr 2018
13th Session of the AMIS Global Food Market Information Group
• Production to decline but still above average
• Utilization to reach a new record, with most of the y/y increase in food consumption; feed use to decline
• Stocks to reach a new record, with higher inventories in China more than offsetting decreases in the EU and the US
• Trade to remain close to the 2017/18 high level, supported by strong import demand and adequate export supplies – another good year for Russia
• International prices to remain firm and above last year as supplies in major exporters decline
Wheat Outlook Supplies cautiously higher in 2018/19
04‐May‐18
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13th Session of the AMIS Global Food Market Information Group
• Harvests begins in southern hemisphere – good conditions in Brazil but not in Argentina
• Sowing is ongoing in northern hemisphere under generally favourable conditions
Crop Monitor - Maize (as of late April 2018)
13th Session of the AMIS Global Food Market Information Group
100
140
180
220
260
18/1916/1714/1512/1310/1108/09700
800
900
1000
1100
18/1916/1714/1512/1310/1108/09
million tonnes million tonnes
Stocks (right axis)Production (left axis)
Utilization (left axis)
Maize supply and demand outlook: markets a bit tighter
Production is projected down from 2017 record
US down 15.6mt, at 355mt Ukraine up 2.9mt, at 27mt
Brazil down 10.7mt, at 88.6mt China up 2.1mt, at 218mt
EU down 4mt, at 61mt
Argentina down 7.5mt, at 42mt
South Africa down 3.4mt, at 13.4mt
Total use up thanks to a projected 2.8% growth in feed use compensating for slower intake for industrial use
2016/172017/18 estim.
2018/19 f'cast
Change: 2018/19 over 2017/18
%
World Balance Production 1 046.6 1 087.8 1 047.3 -3.7Supply 1 283.7 1 330.6 1 301.5 -2.2Trade 139.8 145.5 143.6 -1.3Total utilization 1 039.5 1 067.2 1 072.4 0.5
Food 128.6 130.7 131.5 0.6Ending stocks 242.8 254.2 226.9 -10.7
World stock-to-use ratio (%) 22.7 23.7 20.2
million tonnes
World maize market at a glance
04‐May‐18
10
13th Session of the AMIS Global Food Market Information Group
0
100
200
300
2018/192017/182016/172015/162014/158
14
20
26
million tonnes percent
Rest ofthe world
China
World stocks-to-use ratio
Stocks-to-disappearance ratio of major exporters
estim. f’castMajorexporters
Maize stocks falling from a record level
• Global maize inventories in 2018/19 to fall by almost 11% or 27mt from their all-time high in 2017/18. This represents the first decline in five years.
• China’s stocks to decline for the third consecutive season, to 75mt, down 15mt from 2017/18. Stocks to decline also in Argentina, Brazil and Mexico.
S/U ratio falls more sharply because the biggest declines in stocks are in non‐exporting countries (China)
13th Session of the AMIS Global Food Market Information Group
2014/15 ‐
2017/18
average (1 )
2017/18
est.
(2 )
2018/19
f 'cast
(3 )
Change (3 )
over (1 )
Change (3 )
over (2 )
% %
United States 50.9 48.3 48.3 ‐5.1 0.0
Brazil 25.3 32.0 32.0 26.3 0.0
Argentina 22.0 27.2 26.0 18.0 ‐4.2
Ukraine 18.8 18.1 19.0 1.2 4.9
Russian Fed. 4.5 5.0 3.0 ‐32.9 ‐40.0
Paraguay 2.5 2.5 2.5 ‐0.6 0.0
South Africa 1.4 2.3 2.2 56.6 ‐4.3
Canada 1.3 1.4 1.6 22.2 14.3
EU 2.4 1.2 1.5 ‐37.8 25.0
Mexico 1.1 1.0 1.0 ‐7.8 0.0* Exports are based on a common July/June marketing season
million tonnes
Top 10 maize importers*
Top 10 maize exporters*
Leading maize trading counties (July/June)
• Maize shipments from the US (largest world exporter) to remain steady
• China’s maize imports to decline
2014/15 ‐
2017/18
average (1 )
2017/18
est.
(2 )
2018/19
f 'cast
(3 )
Change
(3 ) over
(1 )
Change
(3 ) over
(2 )
% %
Mexico 13.7 16.2 16.2 17.9 0.0
EU 13.0 15.8 15.5 19.1 ‐1.9
Japan 15.0 15.2 15.0 ‐0.1 ‐1.4
Korea Rep.Of 9.9 10.0 10.2 2.2 1.7
Egypt 8.8 10.0 10.0 13.2 0.0
Viet Nam 7.6 8.2 8.3 9.3 1.1
China 8.2 9.1 7.8 ‐4.7 ‐14.3
Iran Isl. Rep.Of 6.7 7.5 7.5 12.6 0.0
Colombia 4.7 4.9 4.9 3.7 0.0
Algeria 4.3 4.5 4.6 6.2 2.2
million tonnes
*Imports are based on a common July/June marketing season
04‐May‐18
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13th Session of the AMIS Global Food Market Information Group
Maize prices higher than last year
Maize export price (US No.2 yellow, Gulf) CBOT maize futures for September
Source: FAO, Food Outlook November 2017
130
140
150
160
170
180
190
DNOSAJJMAMFJ
2017
2018
USD per tonne
140
144
148
152
156
160USD per tonne
2017 values2018 valuesS O N D J F M A
• The US maize prices have risen sharply on brisk import demand
• Expectations of lower plantings in the US and reduced supplies in Argentina underpin the futures
13th Session of the AMIS Global Food Market Information Group
Maize: CME net-length as % of open interest
Tightening supply prospects have pushed up managed money from short to long positions.
Jan 2014-Apr 2018 Apr 2017-Apr 2018
-60
-40
-20
0
20
40
percent
Commercial Managedmoney
Swapdealers
04‐May‐18
12
13th Session of the AMIS Global Food Market Information Group
• Production to decline from last year’s record
• Utilization to expand fastest for feed
• Stocks to fall significantly with most of the reduction in China and in South America
• Trade to contract slightly, mostly on prospects for smaller purchases by China and the EU
• International prices to stay above last year, on reduced overall supplies in several major exporting countries
Maize OutlookSupplies getting tighter in 2018/19
13th Session of the AMIS Global Food Market Information Group