London, United Kingdom
December 18, 2008
Under the chairmanship of Mr
Itumeleng Winston Makabanyane (South Africa), the
International Grains Council
held its regular Session on 10 December 2008, in London. Members
examined the latest developments in global grains and oilseeds
markets, exchanged information on national policy changes,
considered progress with the Secretariat’s programme of economic
work and agreed in principle to extend the Grains Trade
Convention from 1 July 2009, when it would also be formally
expanded to include rice. The Session was followed by a round
table on futures markets with representatives from the world’s
leading exchanges.
Members examined the global grains* situation on the basis of
detailed Secretariat presentations, noting the sharp falls in
export prices and ocean freight rates over the past six months.
The declines in grains prices coincided with an improving supply
outlook but day-to-day price movements were mostly dictated by
global financial and economic developments, other commodities,
energy markets and currency factors. For many buyers, the
financial crisis had made it difficult to arrange the necessary
credits. Grains production in 2008/09 is expected to climb to a
record 1,769m. tons following a 12% rise in wheat output.
Consumption is also forecast to rise, with both industrial and
feed use significantly higher. Ethanol use is expected to reach
126m. tons, or 29m. more than in 2007/08, with maize (corn)
likely to account for 117m. tons. Because the rise in production
exceeds the forecast increase in use, world carry-over stocks in
2008/09 are projected to recover by around 24m. tons, to 307m.
World trade in grains is expected to decline by some 8m. tons in
2008/09, to 230m., with a marked upturn in wheat more than
offset by sharp falls in maize and sorghum after the previous
year’s unusually big purchases by the EU.
Although world availabilities had turned out significantly
higher than originally projected, with very large harvests in
the Black Sea region and the EU, concerns remained about a tight
short and medium-term outlook for grains supplies given likely
production and consumption trends, even when taking into account
the possible impact of the global economic downturn. Despite
generally favourable northern hemisphere conditions a decline in
planting and reduced yields will likely lead to a smaller wheat
crop in 2009/10, but no significant fall in stocks. In
subsequent years, a major shift in feed use from maize and other
coarse grains to wheat could result in stocks again declining,
while the continuing rise in industrial use, especially in the
US ethanol industry, if at a slower pace than hitherto, is
projected to also keep stocks of maize tight.
The Council noted that there were indications that world rice
output would again increase slightly in calendar 2009 but that
market availabilities could remain tight. World trade in 2009 is
forecast to contract by 1%, to 28.9m. tons, with a sharp cut
expected in imports by the Philippines. Rice export prices had
fallen heavily in recent months but remained at a significant
premium to wheat. World trade in oilseeds and meals is expected
to rise by only 1% in 2008/09: having climbed by 20% in the past
two years, shipments of soyabeans are forecast to be smaller
following a bigger crop in China.
Members of the Council agreed in principle that the Grains Trade
Convention,1995, due to expire on 30 June 2009, should be
extended by two years from that date. As agreed in June 2008,
the Convention would formally be expanded to also cover rice.
Members confirmed the appointment of Mr Matthew Koval, of
Australia, as Vice-
Chairman of the Council for 2008/09. It was also agreed that the
next IGC Grains Conference would be held in London on 9 June
2009.
Following the Council Session, an informal round table was held
to examine recent developments in world grains futures markets,
in particular their increased volatility and whether there were
lessons to be learnt from the past year’s experiences. The panel
included: Mr Lifeng Qu, Executive Vice-President, Dalian
Commodity Exchange, China, Mr Rod Gravelet-Blondin, Senior
General Manager, JSE Limited, South Africa, Ian Dudden, Director
Commodity Derivatives, Liffe UK and Jeffry Kuijpers, Associate
Director, Sales & Marketing, CME Group UK. The panel exchanged
views on the impact of increased speculative flows, recent
proposals to further increase transparency in US markets and to
what extent, if any, higher costs were affecting the
participation of commercial operators in futures markets.
* Wheat and coarse grains (excluding rice). See also Grain
Market Report GMR no.384 of 27 November 2008.
The International Grains Council (IGC) is an
intergovernmental organisation administering the Grains Trade
Convention, 1995 (GTC), the latest in a long series of
multilateral agreements in operation since 1949. It seeks to
further international cooperation in grains trade; to promote
expansion, openness and fairness in the grains sector; to
contribute to grain market stability and to enhance world food
security. These objectives are sought by improving market
transparency through information-sharing, analysis and
consultation on grain market and policy developments. The IGC
also administers the Food Aid Convention, 1999 (FAC) which,
together with the GTC, forms part of the International Grains
Agreement, 1995. (See FAC Press Release circulated on 16
December). For more information, including the latest grains
supply and demand forecasts, please consult IGC’s web site
(www.igc.org.uk) or contact the Secretariat. |
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