A brighter grain and soya trade outlook

Around the world, signs of additional import demand for grain
and soya are becoming more prominent. A wide range of buyers
including China, Russia, European countries and North Africa
need increased quantities. Domestic harvest shortfalls, or rising
consumption trends, are providing a boost.
After a downturn in global wheat and coarse grains trade
during the crop year ending June 2010, recovery is proving weak.
But soyabeans and meal trade, which grew very strongly through
the marketing year ending September 2010, is continuing to
expand rapidly. Rising optimism about soya imports into China,
the European Union, and some other areas points to another
SOYA IMPORT PROSPECTS IMPROVE
Global soyabeans and meal trade has expanded quickly over the
past decade, and looks set to maintain a vigorous upwards trend
in the next twelve months. In marketing year 2009/10 the
volume rose by 12.8mt (million tonnes) or 10%, based on US
Dept of Agriculture calculations, reaching 141.1mt. A further
12.1mt (9%) advance, to 153.2mt is forecast for the current
2010/11 period ending September 2011.
China’s greatly increased buying of soyabeans has comprised a
large part of the recent global expansion. Domestic soyabean
production by Chinese farmers has fallen, amid rising soyameal
and oil consumption, resulting in much larger purchases of
imported beans for crushing. Most supplies are derived from the
USA and South America (Brazil and Argentina), long-haul routes
which employ many bulk carriers.
During the past marketing year, China’s soyabeans imports
reached a symbolic point, the 50mt mark, actually jumping by 22%
to reach 50.3mt. Another large advance is expected by USDA
analysts in the present 2010/11 period, raising the total by 13%,
to 57.0mt. Soyameal usage by livestock feed manufacturers, and
soyaoil consumption in food preparation and home cooking
continues to grow rapidly, while stockbuilding has added to
upwards pressure on imports.
Among other soya purchasers, positive signs are also evident,
including within Europe. In 2009/10 only a marginal (1%) rise in
EU countries’ soyabeans and meal imports was recorded, to
34.6mt. But the current year’s increase may be larger at about
8%, raising the total to 37.3mt, following last summer’s decline in
GRAIN IMPORTERS’ ADVANCES
Five years of growth in global wheat and coarse grains trade
ended in crop year 2009/10 when a decline occurred.
Reduced imports into the Middle East area (especially Iran) were
accompanied by lower volumes into North Africa and Europe.
The total fell by 9.3mt or 4%, to 239.6mt, according to
International Grains Council figures. A pick up is now
beginning, but it is anaemic.
In the Maghreb countries of North Africa (Morocco, Algeria,
Tunisia and Libya), stronger grain import demand is emerging,
resulting from smaller domestic harvests last summer and
buoyant consumption trends. This group’s foreign purchases in
the current 2010/11 crop year may be 15% higher, at 20.0mt,
although a lower 14.7mt in Egypt may be partly offsetting.
Crop shortfalls in the FSU (former Soviet Union) and Europe
are bolstering purchases on international markets. Devastating
harvest losses across parts of the FSU (in Russia, Ukraine and
Kazakhstan) last summer have greatly reduced their role as key
exporters and led to import demand as well. Imports by this
group in the present period could be 70% higher at 9.7mt based
on IGC calculations, with most of the additional volume required
by Russia.
European countries also are likely to substantially increase
purchases from foreign sources. Domestic grain production was
down again last summer, particularly within the coarse grains
category, mainly supplying livestock feed. Consequently EU
wheat and coarse grains imports are forecast to rise by almost
two-fifths during 2010/11, reaching almost 11mt.
One aspect not yet included in most forecasts is the
possibility of large Chinese corn imports. Over the past year
China bought some corn on international markets. But IGC
estimates show overall grain imports (wheat plus corn and other
coarse grains) at an almost unchanged 3.9mt within the current
crop year. The US Grains Council, and industry body, recently
suggested however that China’s corn purchases could exceed
NEGATIVE GRAIN IMPORT ELEMENTS
Contrasting with the positive features now emerging, lower grain
import demand is very noticeable in several areas. An extended
decline in the Middle East, due to better domestic harvests, could
reduce the region’s total by 10% to just over 38mt in 2010/11.
Expectations of another sharp decline in Iran’s imports to under
5mt, compared with an annual total of 15mt two years ago when
the harvest failed, is the main reason.
Coupled with some other, mainly minor negative elements,
and only modest additional volumes among countries with
domestic harvest shortfalls to offset, wheat and coarse grains
trade growth is expected to be restrained in the near future.
Forecast expansion, as suggested by IGC analysts, may be as little
as under 1%, resulting in a world total for crop year 2010/11 of
just over 241mt.
But the continued strong increase in predicted soyabeans and
meal trade brightens the wider outlook for the cereals and
oilseeds sector as a whole. Advantages could be derived by many
agricultural commodity suppliers, terminal operators and bulk