Ahead of its annual conference in London on 12-13 June 2023, the International Grains Council has recently updated its outlook for global grain demand - covering consumption and trade prospects - and stocks in 2023/24. This article provides context ahead of the fruitful discussions in London.
More than 350 participants will gather on 12th and 13th June 2023 in London to exchange views on future market developments and to network with a range of eminent officials, business leaders and experts from across the grains industry spectrum.
Building on the successful format of past events, day two of the IGC Conference 2023 will be devoted to commodity-specific workshops, covering topical issues affecting world markets for grains, rice, oilseeds, pulses and related sectors. In assessing the challenges confronting specific sectors, each panel will be chaired by the IGC’s analytical team and comprise a number of leading international experts. Don’t forget to book your seat on https://www.igc.int/en/conference/programme.aspx
Ahead of the Conference, the Council’s recently updated outlooks for global demand – spanning prospects for consumption and trade – and stocks in 2023/24 are presented as follows. The analysis provides context ahead of fruitful discussions in London in June.
International Grains Council
International Grains Council
International Grains Council
Against a potentially challenging global economic backdrop, wheat world consumption is expected to increase only marginally in 2023/24, to 794m t (793m previous year). Projected food consumption is pegged at a peak of 552m t (546m). While growth is expected to be centred on parts of Asia and Africa - amid growing populations and likely sustained preference for wheat-based foods - prospects for some countries, including Bangladesh, Indonesia, Iran and Nigeria are scaled back.
At 148m t (152m), the forecast for feed use is slightly lower, with the annual retreat largely reflecting expectations for reduced wheat feeding in the EU and parts of Asia, amid increased supply of alternatives.
A predicted 5% y/y rebound in industrial use, to 25m t, largely hinges on an assumed improvement in processing margins in China and the EU, mainly for starch, although demand in the latter is seen below earlier peaks.
The world end-season stocks in 2023/24 are projected to drop by 7m t from the current year’s peak, to 277m. This a little higher than average, but with inventories outside China seen at a decade low of 134m t (144m). A retreat from elevated opening stocks in Australia and Russia is forecast to pull aggregate leading exporters’ carryovers below average. At 60.3m t, the projection is down by 12% y/y.
Although robust demand for milling wheat is envisaged in parts of Asia and Africa, wheat global trade in 2023/24 is forecast to contract by 2% y/y, to 193.1m t, assuming that deliveries to Europe and the CIS will retreat from prior year’s unusually high levels. China’s purchases may also moderate amid large local supplies, although much will rest on import margins and blending needs.
Projected global imports are down by 1.8m t m/m, including downgrades for Bangladesh, Iran, Indonesia, Nigeria and Thailand, albeit as projections for these countries remain higher y/y. Predicted buying by Pakistan is also scaled back on improved local supply prospects.
The outlook for the main exporters is highly dependent on developments in the Black Sea region. Conflict-related uncertainties aside, shipments by Russia and Ukraine are likely to recede y/y, given prospects for smaller crops, albeit the fall in the former should be capped by sizeable old crop stocks. Assuming increased exportable surpluses, the EU and Argentina may be well placed to accommodate any shift in demand. Increased dispatches are also envisaged from the US and Canada, aided by a likely pullback in Australia’s exports.
Following the prior year’s decline, world use is projected to rebound to 1,202m t (+2%), up 4.0m m/m, driven by increased feed and industrial uses.
At 715m t, feed use is anticipated to recover by 4% y/y, buoyed by ample supplies and expectations for lower maize prices. The total is lifted by 3.0m t, including increases for Asia, South Africa and the US.
Industrial use is expected to expand by 1% y/y, to 308m t. Projected growth is entirely linked to an expansion of Brazil’s ethanol sector, where three new plants are expected to become operational during 2023 and early-2024.
US demand for maize-based ethanol is anticipated to be broadly steady y/y. Demand from China’s deep-processing industry is expected to decline further amid falling profitability and political efforts to maximise domestic food security.
With projected recovery in US inventories more than compensating for reductions in China and Ukraine, global stocks are forecast to increase by 2% y/y, to 264.3m t, albeit still 9% below the recent average. Inventories in the major exporters are tentatively projected to rise to 56.6m t (+29%), including 49.1m in the US (+44%).
World trade (Jul/Jun) is projected to rebound to 172.2m t (+1%), but still 2% below the five-year average. Forecast gains are almost entirely linked to stronger import demand in Pacific Asia, including China, but with the upside tempered by likely smaller EU arrivals, tied to an outlook for improved domestic supplies.
Buoyed by a predicted solid recovery in production, US MY exports (Sep/Aug) are forecast to rise sharply, to an above-average 55.9m t (+19%). Owing to a smaller harvest, MY (Oct/Sep) dispatches from Ukraine are tentatively projected to contract to 15.0m t (-36%), potentially the smallest since 2012/13.
Given ample supplies and strong import demand, including from China, dispatches from Brazil could reach a fresh all-time peak in the year ending February 2024. Conversely, with drought severely limiting availabilities, shipments by Argentina over the same period will drop sharply y/y.
Consistent with expectations for a much-improved global outturn, total uptake is projected to expand by 6% y/y, to 389m t. While the Council expects further growth in Asian soya product requirements to underpin gains, a rebound in production in Argentina will be centrally important in boosting supplies for processing, chiefly to meet an anticipated increase in international demand for soyameal and soya oil; at a little above 42.0m t, local use could expand by almost 30% y/y.
Increased feedstock requirements in respective biofuel sectors will contribute to expanded processing in both Brazil and the US in 2023/24; together with feed/residual use, consumption in the latter is predicted at a record of 65.6m t (63.6m).
Primarily linked to rising feed sector demand, consumption in China is tentatively seen rising to a high of 118.2m t (+5%). However, the outlook is tentative in the context of official plans to scale back the proportion of soyameal utilised in feed rations through to 2025. Separately, direct food use of soyabeans is seen at a peak of 15.5m t (14.7m).
Combined carryovers are predicted to expand solidly in 2023/24, by almost one-quarter y/y, to 60.4m t, with a significant share of the overall increase linked to gains in major exporters. While US carryovers are seen rising to 7.5m t (5.1m), this would still be one-third below average.
Amid potentially heavy export availabilities and firmer demand from buyers in Asia, Europe and Africa, the Council foresees trade at a peak of 173.6m t in 2023/24 (Oct/Sep). However, the y/y gain of 3% would represent a less pronounced increase compared to the year before, chiefly linked to expectations for a return to normal imports by Argentina.
While US exports are predicted to expand in 2023/24 (Sep/Aug), gains will be capped by prospects for record utilisation and a tight carryout. Additionally, potential sales could be impacted by the ability of Brazilian exporters to shift big volumes during the tail end of the current local MY. At 55.3m t, US dispatches are seen just 1% higher
Canadian volumes may hold steady, but shipments by Ukraine could retreat after the prior year’s solid gain; much will depend on demand from the EU and Turkey.
Given projections for another record harvest and assuming sufficient logistical capacity, Brazilian exporters are expected to increase their share of world trade in 2023/24, exports moving ever closer to 100m t.